Dollar vs Rand: Impact on Trophy Prices and Daily Rates?

Question: The U.S. dollar has significantly strengthened versus the rand (13.3 : 1) over the last several years. Outfitters given the strength of the dollar vs the rand does this impact your trophy prices and daily rates? Hunters: Do you feel like you should get a better deal?

Would be interested in all thoughts. Thanks!

dt

This is a fantastic question. Guides have certain fixed annual costs, as well as variable operation costs. My experience shows a majority of outfits bill clients in USD..... That being said, there is negative economical impact on local SA communities.

To answer above. I do believe there should be consideration given to the hunter.

My question is, should you negotiate the price of trophies?

Mark19707 said:

This is a fantastic question. Guides have certain fixed annual costs, as well as variable operation costs. My experience shows a majority of outfits bill clients in USD..... That being said, there is negative economical impact on local SA communities.

To answer above. I do believe there should be consideration given to the hunter.

My question is, should you negotiate the price of trophies?

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My initial thought is that if trend continues you would see a drop in both trophies and daily rates. Could we see the dollar vs rand ratio move to 15/16:1... If we are paying in dollars that should be to the U.S. hunters advantage.

dt

Just got back and got some real deals on some items..Plane fairs are cheap right now..

I am sure their costs(not fixed) go up also. Much may depend on who you hunt with. I have seen a large difference in prices depending on who you hunt with.

I don't understand , fellas .
you book a hunt knowing what the trophy fees and dayrates, were/are, in American dollars .
you are prepared to pay whatever that may be ......
now you want to play stock exchange . if the USD plummeted down , before you get to your adventure , would you offer to make up the difference ?
or would you say this is what I was quoted ,and was/am happy to pay this when I laid down the deposit ?

I know when I book a hunt its what im happy to pay , and before I throw any money at it , I know what service im getting and are happy , otherwise I wouldn't commit .
once the deal is done , its done mate
if l turned up and outfit said look the price is now this , id be carrying on ,like a 2 bob whore.....

bluey said:

I don't understand , fellas .
you book a hunt knowing what the trophy fees were/are, in American dollars .
you are prepared to pay whatever that may be ......
now you want to play stock exchange . if the USD plummeted down , before you get to your adventure , would you offer to make up the difference ?
or would you say this is what I was quoted ,and was/am happy to pay this when I laid down the deposit ?

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Bluey: Thanks for you shared comments. I believe that the dollar vs rand does affect the price. If I agreed to pay a price my word is good as gold, but I know historically the conversion between the two has driven prices down or up in the past. This is a forward thinking conversation, ie will the current conversion rates drive down the price. The conversion has been consistently moving up in favour over the dollar the last several years.

dt

bluey said:

if l turned up and outfit said look the price is now this , id be carrying on ,like a 2 bob whore.....

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Or you might be hunting in a place like Tanzania! Or at least I've heard that can happen as the government will chage prices on a whim....

Bluey I agree with you on hunts booked. If both client and outfitter took a chance on the exchange rate and it changed, so be it... Both ways. On the other hand I was billed in Rand on the final settlement on one of my hunts... And the exchange rate wobbled around a bit from the time it was checked to the time it was charged to the credit card. Just the little daily fluctuation. But I was given such a good deal to begin with that there were no worries... However I could see how someone else could get upset over that... So I think when outfitters quote in USD, they ought to settle up that way to avoid any potential misunderstandings.

However, I did not take the OP to mean to re-negotiate agreed upon deals... But rather that if booking a hunt today based on prices perhaps set last January... There might be a bit of room to negotiate.

Another important point is that this has the potential to make Africa a better deal again. I've had outfitters tell me they expect 7% increases in prices per year... With Inflation in the US running closer 3 or 4%, Africa will eventually price itself out of business if that continues... But the changes in exchange rates are a natural way of balancing this out. When one country experiences higher inflation than the other, their money simply becomes worth less. Just look at Zimbabwe... out of control inflation lead to their money being worth less than the paper it was printed on.

So the answer to the OP is YES, outfitters should be expected to adjust pricing (when quoted in USD) on future contracts. And I think the other point made, if your already booked for a basic package, you might be able to expect some very good offers on extras, like additional animals.

ActionBob said:

Or you might be hunting in a place like Tanzania! Or at least I've heard that can happen as the government will chage prices on a whim....

Bluey I agree with you on hunts booked. If both client and outfitter took a chance on the exchange rate and it changed, so be it... Both ways. On the other hand I was billed in Rand on the final settlement on one of my hunts... And the exchange rate wobbled around a bit from the time it was checked to the time it was charged to the credit card. Just the little daily fluctuation. But I was given such a good deal to begin with that there were no worries... However I could see how someone else could get upset over that... So I think when outfitters quote in USD, they ought to settle up that way to avoid any potential misunderstandings.

However, I did not take the OP to mean to re-negotiate agreed upon deals... But rather that if booking a hunt today based on prices perhaps set last January... There might be a bit of room to negotiate.

Another important point is that this has the potential to make Africa a better deal again. I've had outfitters tell me they expect 7% increases in prices per year... With Inflation in the US running closer 3 or 4%, Africa will eventually price itself out of business if that continues... But the changes in exchange rates are a natural way of balancing this out. When one country experiences higher inflation than the other, their money simply becomes worth less. Just look at Zimbabwe... out of control inflation lead to their money being worth less than the paper it was printed on.

So the answer to the OP is YES, outfitters should be expected to adjust pricing (when quoted in USD) on future contracts. And I think the other point made, if your already booked for a basic package, you might be able to expect some very good offers on extras, like additional animals.

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Agree with your comments Action Bob - great insight on Tanzania. I had not thought of that.

dt

ive heard of that happening in Tanzania ,once since becoming a member here.

but I fail to see why anyone would change the trophy fee/dayrate ,to fluctuate on the dollar .
if you think you can haggle the price of a hunt , go for it , sometimes im sure it will work out .or if you are a repeat client , you more than likely would get some deal .

Negotiations will always be part of the game, but should the Rand strengthen and increase to R9/$, will it be reasonable for Outfitters to negotiate increased day fees and trophy fees with potential hunters?

Interesting subject. As most hunts are booked far in advance, the deal for the outfitter could sweeten or sour, depending on the exchange rate. I wouldn't try to negotiate from an agreed upon price I booked at, but if someone else does and they get a better rate, more power to them.

TravisB said:

Interesting subject. As most hunts are booked far in advance, the deal for the outfitter could sweeten or sour, depending on the exchange rate. I wouldn't try to negotiate from an agreed upon price I booked at, but if someone else does and they get a better rate, more power to them.

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Exactly Travis. In the same way that you expect the outfitter keep his side of the deal, right?

I agree if the deal is done and you agreed upon a price the price should stay the same despite what the exchange rate is

In the case of the exchange rate being in favor of the doller I do feel you can make a deal with the hunter on additional animals to be hunted

All comes down to communication between the outfitter and hunter there is always a deal to be made and outfitters will look after
the kleints needs

Keep well
Ryno

As others have said once the deal is done it is done and there will always be negotiation as part of pricing.

I think the conversion rate probably comes into play more on last second deals than it does way in advance. For example, if an outfitter is offering the same price now t in dollars that he did six months ago and the exchange has gone from 8:1 to 13:1 then I'm going to point that out and want a better price, especially if the hunt is last minute. Now if I'm booking two years in advance then who knows??? In that case I don't pay as much attention to the exchange rate and just look to lock in a solid deal.

Bob brings up a great point on the credit card too as a form of payment. This can end up costing you a lot of money if you aren't careful! I used to think a $45 wire transfer fee was expensive. But with many credit cards international fees are much more. And, since the transaction takes place in the foreign currency you run the risk of paying more, as Bob said he did, with currency fluctuation. This is why the hunts are agreed to in dollars to begin with, so you don't have to worry about this risk. Point being, don't give up the security that is baked in or it can cost you money.

As the old farmers said...when the sun shines make hay, be prepared for the dark days. I think people need to see, when the rand is weak all the other prices in Africa shoot up. Fuel , food etc prices. Exchange rate doesn't effect the clients pocket..

bluey said:

but I fail to see why anyone would change the trophy fee/dayrate ,to fluctuate on the dollar .

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Bluey much of the hunting in RSA is done by outfitters taking clients to various other peoples properties and then pay for the animals taken. And I am sure these are paid in Rand.

So for example; If a critter costs an outfitter 10,000R, and the outfitter sells it to a client for $1500. At a 10:1 exchange rate the outfitter made 5000R on it, or $500. If the exchange rate is 13:1, and the outfitter pays the landowner 10,000R, he makes 9500R on that animal. In order for the outfitter to make his same 5000R profit on the animal, he could sell it to the hunter for $1153.85. So if the Outfitter has a client and he has a package of 5 animals and a 7 day hunt, it goes well or even average and they have the 5 critters on the ground in 3 days..... The client is hesitant to spend more but the outfitter can give him 25% discount and still make the same percentage he originally planned to make when the exchange rate was 10:1.... However the outfitter already has all his fixed cost covered and really has most of his variable cost covered as well as his planned profit earned. So he could offer a 40% discount (in this example) if that is what it takes to get the hunter to take more animals... And the outfitter still makes extra profit, he keeps his staff busy and potentially earning more tips, the hunter gets a great deal, and the landowners sell more so they are happy.

That is why the outfitter might want to negotiate prices. So he can make more money.

Now again, I have seen no one suggesting anyone should re-negotiate an already booked hunt. "a deal is a deal".

The other big reason an outfitter would want to lower his price in response to the exchange rate is to sell last minute hunts that he has available... Again to make money!

There are lots more intricacies to consider... I can't see the RSA government doing anything to improve the value of the Rand. Land claims remove any incentive for landowners to re-invest in infrastructure. Social programs discouraging employment. Shortages of power with the primary idea to deal with it being to cut off primary manufacturing... These ideas and policies will continue to erode the economy of RSA and thus the value of the Rand.

TMS said:

As the old farmers said...when the sun shines make hay, be prepared for the dark days. I think people need to see, when the rand is weak all the other prices in Africa shoot up. Fuel , food etc prices. Exchange rate doesn't effect the clients pocket..

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In the short term, no. In the longer term it would as pricing will change based on international exchange rates over time.

But really I agree with you. If I pay $100 for a trophy I pay that same $100 regardless of what the exchange rate is. It is a matter of whether the outfitter makes more or less.

Now if a client is truly convinced that the exchange rate with the rand will continue to go up then the answer here is simple too. Make a deal with the outfitter, today, to pay in rand instead of dollars. The client just shouldn't whine when the rate goes back down!

I think the perhaps that is why all the hunts that I looked into were quoted in US Dollars and the trophy fees were also in US dollars. The only place that the rand came into play was tips to everyone except for my PH who I tipped in dollars.

I believe that if the hunts were quoted in rand then you just may see the hunt prices fluctuate all over the place in relation to the US dollar and they may even be a bit higher just so that the outfitter could protect himself in the long run.

JimP said:

I believe that if the hunts were quoted in rand then you just may see the hunt prices fluctuate all over the place in relation to the US dollar and they may even be a bit higher just so that the outfitter could protect himself in the long run.

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Definitely on the price fluctuation. And think of how irritated many clients would be when they had to pay "more." I don't know that using rand would really, in theory, cost the outfitter more, but it would sure cost the outfitter some client good will. And so we trade in dollar and the risk just flip flops, again in theory.