Perth and Western Australia’s incredibly high costs dilemma
With Perth hosting Australian Tourism Exchange 2012 this week, with the Tourism Australia events team doing a great job as always, their efforts may well have been wasted, at least in terms of showcasing WA, by the astronomic costs being experienced by delegates in Perth.
I spoke to both sellers and buyers at ATE and all are appalled at the cost of restaurant meals, drinks and hotel rooms, with the majority saying they could never recommend their clients visit Perth, with that having an ongoing knock on effect for WA and Australian tourism in general.
A major Italian tour operator told me that he was aware that Australia was expensive but he was stunned by the costs in Perth, which were astronomically higher than any other city he had ever visited, including Rome, Tokyo, Dubai and New York!
A US based operator told me that his clients would be shocked at the price of coffee, snacks and even a beer in Perth and he would recommend to them they stay perhaps one night and no more in Perth, if they had to, but getting out as soon as they could, although he added that the incredible cost of hotel accommodation in Perth would recommend him to say not to bother with Perth.
A seller representative of a major international hotel group also told me that even though he worked for the group, he was having to pay over $300 a night to stay in their budget property in Perth, with was astronomic.
I experienced the same scenario, when I asked the Pan Pacific for a rate to stay on one night when I arrive back from the Cocos Keeling and Christmas Islands and was told I could have the media rate of $350!
I also had lunch in the very average and tired Fienan’s pub which is part of the Novotel Perth and what a mistake that was, with the bill for two burgers one draft beer and tow draft ciders coming to a massive $79 and a very basic fish pie a colleague bought an unbelievable $23. Also, one starter, two main courses and a bottle of cheap [well at least in the bottle shop] wine in a rather average Indian Restaurant cost $150!
Finally WA’s preoccupation with mining, which has caused this massive escalation of costs was further exemplified by WA Premier Colin Barnett, when he spoke at an ATE lunch this week, when he announced he knew little about tourism, continuing to tell the travel audience all about the strength of mining in WA and the state’s relationship with China – very strange when cindering the audience.
So, perhaps, sadly for the state’s tourism industry it may be time for travelers to give WA a wide berth until the mining boom is over with the consensus being that could be as short as five years.
John Alwyn-Jones reporting for Global Travel Media TV from Australian Tourism Exchange 2012.
When we all came into the business down here in the Margaret River Wine Region we were gobsmacked at rates of some other local accommodation.
We decided to keep a rate affordable by all groups ensuring that all people have access to a special retreat away from their everyday lives, to be able to relax on 134 acres in a beautiful spa suite including full breakfast and usually a bottle of wine of bath treat as well at a maximum of $325 per night for our Honeymoon spa suite, this full rack rate being for peak time Christmas/New Years Hioliday period, Easter and Public Long Weekends, other normal weeeknds and midweek cheaper……
There are some suurprising, well maintained places to stay in the Regional Parts of W.A. that are beautiful holiday destinations…perhaps the Margaret River Region needs to be adressed and sold also as corporate destination by the Tourism or Government if they would take more interest in supporting the Regional W.A. Tourism Markets!!!
Hi Anya
Thx for your comments.
I am sure your place is awesome, but even $325 per night for your honeymoon spa suite compared to international destinations is very high – the question you need to ask yourself is why someone should choose you at your prices, over locations in Asia at lower prices?
The facts are sadly simple, Australia is pricing itself out of the market.
Another question……why do you charge more for peak times, i.e. Christmas/New Years Hioliday period, Easter and Public Long Weekends, when other normal weekends and midweek are cheaper, when your costs I imagine remain pretty static all the year round?
I am sure you will say supply and demand, but doesn’t that mean you and other operators are taking advantage of customers by charging them more when you are busy and when they can travel?
May I urge you to consider charging the same rate all the time, based on what it costs you to provide that room, plus a reasonable profit.
I reckon that would be a very smart and customer focussed way to do business!
Keep the comments coming!
J
Hi John,
Being a Perth resident and working in the industry I have to agree with most of your article however having travelled extensively through Europe hotel pricing can easily be the same if not more. Your idea of charging a flat rate is an interesting one, as you would know the majority of hotel companies across the globe have moved to a dynamic pricing structure not to mention every major airline. These two industries are not lone in their pricing strategy with many others also pricing goods on what a customer is willing to pay not their intrinsic value. I would actaully suggest that with in reason it would actaully be a very poor business decision to move to static pricing, the vast majority of people live with demand based pricing everyday and are well accustomed to it and no doubt many also benefit from it .
Hi Tim
Thx for your comments
We do not have to abide by John Maynard Keynes theory of supply and demand and wouldn’t it be refreshing to see tourism operators charging fairly for their products, that is their costs plus a fair profit, not basing pricing on demand.
I ask the question, why should families with children be charged more for their accommodation, just because it happens to be school holidays, when the cost of providing that product is very likely static?
Perhaps dynamic pricing might be better called “gouging pricing” as that is what it is in reality, with increasing prices for busy periods actually taking advantage, by charging customers as much as they can when they can as evidenced by prices in Perth.
Perhaps I am dreaming, but some honesty, fairness and demonstrating care for customers by charging fair and consistent prices might be a unique tourism business proposition moving forward!
Ah well – dream on John!
As much as WA has some wonderful places to visit it is expensive particularly in the city & major regional centres.
In the city demand has allowed accommodation rates to stay high. Regional centres have all ways had peak period pricing due to big fluctuating demand between peak & off peak periods, the tip is to avoid travel in peak periods when often there is little accommodation available.
The other issue is that I’m not sure tourist coming over here appreciate how far flunked some of the attractions are, they hear of seeing the dolphins at monkey mia and think that sounds great, if your not put off when you realise it’s a 900km drive it may come as a surprise that there is not much in between.
Coral bay is a lovely spot but some 1200km drive from Perth and again not much in between unless you go way out of the way. With two drivers you would be pushing to do that trip in a day.
Prefer to fly? I had to do a business trip to Carnarvon & Exmouth & thought I’d fly to Carnarvon then on to Exmouth. When try to arrange flights I found I would have to fly back to Perth to get a flight to Exmouth.
I would not discourage people from travelling around WA but just suggest people do the research & have plenty of time & of course money unless you have a tent.
This is not a tourist state because it is very conservative, very expensive even compared to eastern states, don’t employ properly trained hospitality staff snd do not work together to create a mass of attractions but pockets of individual ideas.
Joe almost hit it square on the head, except he left out the exhorbitant cost to do what he did. The fact that Tourism WA have their hands tied makes matters worse. I have travelled south many a times for work and private and I would not holiday south more than once every 3 years because of the same themes in all of the cottage like holiday places and the costs. Most of the people who travel south are Perthites escaping from the big smoke and it would be smarter for operators to do what they do in Europe and that is encourage people to do it as a yearly holiday destination. In Europe practically everyone can and does do it because the tourist destinations cater for the low budget as well as the well to do. Not one location in the south cater for the low income, low budget traveller, not one. You are missing out on those who want to travel on the spur of the moment with a low budget and find themselves flying all the way to Bali to a 4 star hotel for half the price that it costs just to get accomodation in the south of WA. What these operators neglect to admit is that they are trying to do the exclusive reclusive type tourism destination, problem is too many of them are doing it and not enough of the $10 lunch with drink type establishments.
I am disturbed that this article appears to address the tourist or business person who demand “soft” accomodation, without taking into account the thousands of travellers who are touring by road, and would not therefore be the type to be interested in staying in 4 and 5 star hotels, dining in exclusive restaurants or drinking in upmarket bars.
On the road, pricing is generally realistic, although you will always find someone trying to take advantage of their exclusivity in some areas. These people should not be discouraged to visit Western Australia by your article, as this state has much to offer any traveller.
Unfortunately, this state is populated mainly in the South West, and is therefore also the playground of the locals. And because the population is not great, our South West operators are dependent on a tourist dollar which is expended mainly in summer months and during school holidays. It is all very well to sit in your office and make judgement over what people should charge for their services, but it needs to be remembered that bills need to be paid during off peak as well as during high peak seasons, and it is the income from the latter that needs to stretch for quiet times. Hence prices need to reflect that, and cheaper prices are offered during the off peak to encourage people to buy in those times.
Hi Joe, Nick and Laurie
Thx for your comments, all good!
Sorry to hear you are disturbed by my articles Laurie!
My research and experiences extended across all types of accommodation and eateries and in Perth they are all comparatively expensive, compared to the rest of Aus and much more so compared to major competitors overseas.
Sorry, pricing in Aus in general and especially in Perth is not realistic compared with other destinations and while I agree that people should not be discouraged to visit Western Australia as it has much to offer any traveller, they will make their own choices and that is evidenced by the decline in inbound and domestic travel, includign to WA – the facts speak for themselves!
I cannot agree that operators should charge more in the busy summer seasons and school holidays.
That is a highly flawed business and customer related proposition and please be assured I do not sit in my office and make judgement over what people should charge for their services – I spend 90% of the year travelling all over the world.
Therefore, I am arguably amongst the best qualified in Aus to make these judgements and comments.
It saddens me to see the decline of Australia’s tourism industry based on the business principles of high prices, poor service, average accommodation and worse of all, gouging clients in peak seasons and school holidays.
I disagree that the income from the peak seasons needs to stretch for quiet times and that prices need to reflect that, and cheaper prices are offered during the off peak to encourage people to buy in those times – does that mean you are losing money by charging less than it costs to provide the product during the quieter times and that you are happy to gouge your customers during busy times?
Why not be fair to your customers and have the same rate all year and provide added value for the quieter times?
I would suggest that your business model is highly flawed – oh, by the way I am also a leading international tourism management consultalnt, so I do know what i am talking about!!
Keep the comments coming!
J
John I find it quite common to see peak period pricing not just in WA, I was looking for accommodation in Sydney recently & the cost of the same room was a lot higher for Friday & Saturday.
As for regional WA, say the southwest I think you need to appreciate just how much demand fluctuates between peak & non peak periods, especially Xmas & Easter, these period are often booked well in advance & you would struggle to find accommodation at short notice at those time.
Non peak periods, particularly during the winter months these places would be ghost towns if not for the local residents. Even over the summer months weekends are all but booked out but during the week it is quite, Some years ago I was in a job that had me working weekends, I would head down south on the Monday for a couple of nights which was great as there was a lot less traffic but many cafés ext would not be open. Not sure if that has changed
I think you can look at the pricing model another way, peak period pricing being the stand price & non peak period a discounted rate to attract people when it’s quite. Keep in mind there is a lot of surplus accomadation during those times
Nick said, Not one location in the south cater for the low income, low budget traveller, not one.
I don’t know what Nick regards as low budget but there is plenty of accommodation in the south west in the $120-$180 range, nothing flash but not that shabby either & for two people it works out quite reasonable. Eating out is another story, that’s probably where the biggest expense is.
I highly recommend the south west for any one coming to WA, avoid the City just hire a car & head straight down. Depending just where you go you are looking at about a 3 hour drive, from any one location in the SW there are plenty of places & attraction to explore in the surrounding areas so you don’t need to book accommodation in multiple places.
As I said before, people need to do research before coming to WA. Unfortunately if you don’t plan ahead you may encounter difficulties.
John, I have no doubt about your qualifications to do your job, but I doubt that you stay in the bleachers in many of your travels. I also wonder whether you have ever risked your dollar by actually investing in a business (tourist or otherwise) to understand how the real world operates. People don’t drop their prices to loss levels to obtain business, but more through experience have increased their prices where they can make a living that will sustain them throughout the year. Keep in mind that all of these business’ have to be competitive in a cut throat market place. So maybe their prices aren’t that bad in themselves.
Compared to elsewhere in Australia, the Western Australian population of 2.5 million people is concentrated in the South West area of the state. Australia’s Population is just 22.7 million. Compare that to USA with a population of 314 million in a similar landmass, and it becomes obvious that we are going to struggle to be competitive price wise. Similarly, the Eastern States population is closely knit, and cost of transport and services will naturally be more economical. WA has a third of the land mass, and just 10% of the population.
As to my business model, I am a traveller, I tow and live in a caravan, and am probably more qualified to comment on where the average on road tourist travels, and I would suggest that WA is generally not too far away from Eastern States pricing when all things are considered. Mind you, we are touring looking at our natural wonders and discovering this great country of ours, not swanning around a pool deck sipping Lattes and the like. And so we expect to pay a little more for fuel, food, and caravan parks, but we do have the option of finding somewhere on the side of the road to pull up for the night and freecamp (in most areas).
I have been in business, and feel that I am qualified to understand the other side of the fence, where I had to pay wages, and not necessarily receive them for doing my job.
My point is, don’t discourage people from travelling this great land of ours, and suggesting that they can get more for their buck by travelling overseas. Encourage them to travel within their own country, discover where we actually live, and contribute back to the land that allows them to live the lives that they do, and with more tourist dollars invested back into their own country, pricing will look after itself as it becomes more viable.
Just saying ………..
Laurie, I quite agree with you in many aspects but I think the article related more to interstate & overseas tourists that come here. Back packers come over here for extended periods & do simular to you in camper vans or camp in tents & generally rough it. Don’t mind that mode of travel myself but as I often travel to the regions on business I look for more conventional accommodation which is relatively expensive for the quality, I like to eat out but find quality hard to come by and that too is expensive.
The average tourists come over for a few weeks at best, that they expect would be simular to what they have experienced else where and that is where WA fall well short in both accommodation & dining out.
The food scene is getting better in WA quality wise but service is often poor & it is expensive. I think us in WA have learnt to accept travel with our great state for what it is but for some coming from interstate or overseas it is disappointing.
Tourism WA has a lot to answer for in raising expectations too high, remember that taxi ride promotion? How stupid was that making out that you could visit the likes of Monkey Mia, Coral bay & Broome in a taxi.
Some honesty would go a long way in promoting WA, letting people know what options they have & exactly what to expect. Lets face in flights with in the state are expensive, accommodation is expensive as is eating out but there is ways of keeping the costs down, it’s just that people coming over here are not in the position to work that out once they get here for a short trip.
“Tourism WA has a lot to answer for in raising expectations too high, remember that taxi ride promotion? How stupid was that making out that you could visit the likes of Monkey Mia, Coral bay & Broome in a taxi.”
Spot on Joe!
Obviously no one here has booked a camper site in Kalgoorlie or Broome. It costs twice that of anywhere else all because, in this case the lack of living quaters for the regions at resonable prices. The south west are better but it seems Tourism WA and the Tourism Minister have not understood how tourism works….. well they do when they go on their junkets to overseas holiday destinations. If you seriously want to make WA a tourist destination you would develop a cheap shuttle flight service to the south and north coast. If WA north of Geraldton was a state in it’s own right I would have absolutely no doubt it would be far more developed for tourism than what it is now. Admittedly many go to the north because it is “unspoilt” but the cost to get there just makes it an unjustifiable proposition for many tourists. Imagine what 2 billion dollars would do if the state government invested in tourism instead of a “funds management account”, the returns would be a lot more by developing a tourists mecca to give people going to Bali or overseas destinations a closer alternative. As I said, what is the incentive for me to tour WA when it’s half the price to Asia?
By the way John, if you need an off-sider let me know
As long as I don’t have to eat fried grasshoppers and the likes 
Joe, I agree with much of what you have to say. However, there are thousands of Grey Nomads on the road, who see the headline “Perth and Western Australia’s incredibly high costs dilemma”. It doesn’t tell them that the article is not about them. Back packers make a up a proportion of the camping traffic on the road, but they are in the minority when packaged with the grey nomads, and increasing numbers of young families who have chosen to get their travelling started early. Come winter time, there is a general exodus from southern states north, usually up the Stuart Hwy to the Northern Territory, or to Queensland. These people should not be discouraged from travelling to the North West, or in the summertime, to our southern half of the state.
WA is largely ignored in the ES media, and it seems that much of their readership seem to think that the country ceases to exist at the border.
Yes, maybe we are not as good at promoting what we have to offer as we should be, but we certainly don’t need negative publicity either. Does the writer just stay, and then write about his experiences, which in this case are negative, or does he, as a a claimed leading international tourism management consultalnt, actually sit down with the people he is criticizing, and suggest where they can improve their attitude and business, and try and create a little positivity, if indeed it does sadden him “to see the decline of Australia’s tourism industry based on the business principles of high prices, poor service, average accommodation and worse of all, gouging clients in peak seasons and school holidays.”
Again, just my thoughts and observations ……….
Laurie, I don’t think it’s an issue for the grey nomads, the issue for them from over east is the distance getting here.
I think the article is related to the fly in interstate & overseas tourist that come here & those that don’t venture out of the metro area, to that effect I think it is quite right but maybe the article could have been more positive about how to get the most of travelling in WA.
Sad but true for the fly in tourists perth it’s self has little going for it and while traveling south is a good option it’s not that simple for a short stay. As for going North the options are limited unless you have time on your hand & dollar in your pocket.
Well, well Laurie you have let this get under your skin!
I am not really going to comment any longer or further, as you do not know me or what I do, so making aspirations about me, my ethics, my business, my integrity as journalist and/or my position, status or what I do as a management consultant is not really that cool [suggest you search my name in Google or check out http://www.team-tourism.com .
Not to worry, the fact I am right is simply evidenced by the overwhelming agreement with what I said and the swathe of TV radio and news interviews I have undertaken this week, with the feedback from those also massively in agreement.
Strange that!
J
I am a Perth local and have to agree with you John. Perth is incredibly expensive and catered to the miners. The quality of what you will get in the Eastern States, New Zealand or Asia for a fraction of the price is mind-boggling. Aside from the onerous expense, Perth night-life is awful, with thousands of young men periodically hitting the town with their pockets full of cash. Many Perth locals don’t really bother going out much, decreasing competition further. I can’t even start on the level of hospitality service without feeling ill. The South West is pretty but really nothing special. I would characterise the accommodation as exceedingly poor value for money, especially in Margaret River and Busselton/Dunsborough. There are a few good wineries but there are many more pretty crappy ones and several tourist traps selling supposedly wonderful produce and “artisan” products. In my experience it is mostly crap. There are of course other natural features worth a look in WA but you can get as good or better elsewhere. I’m from here and I think you have captured it pretty well. Why else are we all going overseas for our holidays? WA: too expensive, not that great. Avoid.
“as you do not know me or what I do, so making aspirations about me, my ethics, my business, my integrity as journalist and/or my position, status or what I do as a management consultant”
It seems to me that neither of us really know what the other does ………
“Why not be fair to your customers and have the same rate all year and provide added value for the quieter times?
I would suggest that your business model is highly flawed”
Nothing personal John, just a fiercely loyal West Australian who is working uncompensated to try and keep our tourists in Australia and in particular, Western Australia……. and I am not in the tourist industry, I am a retired grey nomad who produces documentaries which I make available for interested travellers.