Namibia’s hospitality industry’s shift from traditional fixed rates to fluctuating pricing has raised concerns about the future of domestic tourism, which is already grappling with economic pressures.
A recent survey by The Brief revealed that some of the country’s major hotels have moved away from fixed pricing in favor of dynamic rates, driven by international standards and escalating operational costs.
According to Gitta Paetzold, CEO of the Hospitality Association of Namibia (HAN), the price adjustments are a necessary response to rising operational expenses, including taxes, salaries, and utilities.
“Tourism is a luxury, and financial means largely determine how much people can spend. Given the high unemployment rate and rising cost of living, companies are forced to adjust rates to cover costs,” Paetzold explained.
Internationally, fluctuating rates—also known as Best Available Rates (BAR)—are common, allowing establishments to lower prices during off-peak periods, potentially benefiting local tourists with last-minute deals.
However, the shift to dynamic pricing has raised concerns that it may alienate domestic tourists, who are already dealing with increasing costs and declining disposable incomes.
Simonis Storm’s junior economist, Almandro Jansen, however, warned that unpredictable pricing could further deter domestic travelers.
“Aggressive dynamic pricing could exclude lower-income groups, reinforcing the idea that Namibia’s hospitality industry caters mainly to international tourists,” Jansen said.
He added that such pricing strategies could ultimately harm local businesses and increase Namibia’s reliance on high-spending foreign visitors.
The introduction of fluctuating rates also undermines the ability of domestic tourists to budget for their holidays. Prices change frequently, making it difficult for locals to plan and save for trips.
“Dynamic pricing makes it hard for domestic travelers to predict costs and plan their vacations,” Jansen said.
In addition to the volatility in hotel pricing, domestic tourists are increasingly turning to more affordable alternatives like Airbnb, as the cost pressures from traditional hotels push them toward informal options. The rise of Airbnb has provided locals with more budget-friendly choices, as traditional hotels become less accessible due to high pricing.
Jansen further noted that fluctuating rates could destabilize hotel occupancy, especially during low seasons, leading to revenue volatility.
“With business travel making up less than 10% of Namibia’s hospitality sector in 2024, fluctuating rates could push companies to seek alternative accommodations, leaving major hotels without long-term clients,” he explained.
The impact on domestic tourism is already evident. In 2024, Namibians accounted for less than 20% of the country’s tourism arrivals, a sharp drop from 26% in the previous year. In contrast, international tourism, particularly from South Africa, has remained resilient, with South African visitors comprising 32.49% of total arrivals.
Flora Quest, Corporate Communications Practitioner at the Namibian Tourism Board (NTB), warned that fluctuating rates during peak periods could exacerbate the financial strain on locals.
“For locals already struggling with affordability, increased costs during weekends, holidays, or peak vacation periods could push them to look for more affordable options, such as guesthouses or self-catering facilities,” she explained.
While some industry players, such as the Namibian Wildlife Resort (NWR), are addressing the issue by offering discounted rates to locals, the shift toward fluctuating pricing may make such initiatives even more crucial to maintaining domestic demand.
Jansen emphasized that local tourism promotions, such as NWR’s Nam Leisure Card and seasonal deals, will be vital in keeping domestic travel viable.
Despite these challenges, Namibia’s tourism sector showed signs of recovery in 2024, with room occupancy rates reaching 54.48%, surpassing pre-pandemic levels.
