Ladies and Gentleman,

Some feedback will be appreciated regarding the following:

I have spoken to a lot of my colleagues now that the hunting season in South Africa is winding down, asking them how the year went. After I realised everyone moaned about the same thing, I also contacted some of my friends in the “business” in Namibia and Zim, although those boys are still hunting hard, and I could not reach all of them.

All the guys I spoke to, about 10 all told, said that the season was good, but about 30-40% down from previous years. Good news is that all off us made it through so that we can hunt again next year. The problem apparently was not the bookings so much, but the volatile exchange rates.

In Zim it does not seem to be such a problem as the boys live and let live in dollars, but that is soon to change as the Rand has been adopted now as the countries’ currency, unofficially of course.

Infinito changed our prices to Rand in the beginning of the year, but still made some deals (all here on AR) in Dollars. As we tied most of these hunts down when it was still ok, we were not that much affected, but some outfitters took a bloody nose.

Let me paint the sorry picture for you. A 10 day PG Hunt with 8 species is roughly a $10,000.00 hunt.

In March that $10,000.00 was R100,000.00. That same $10k is only R75,000.00 today. That is a loss of $3,000.00 to the outfitter! I know this is a bit of an extreme example as the Rand was at it’s weakest it was for years back then.

The problem we encountered is that people want to know what their hunt is going to cost them in their own money, and to be honest, tying a hunt down to a very low exchange rate might also not benefit the client.

We live in Rands, and although some greenbacks can be put away for your trip to the US for marketing, as an Outfitter everything still have to get paid in Rands.

The suggestion I want to put on the table is the following.

Outfitter prices the hunt in Rands, and tells the prospective client what the dollar value of that hunt is, on the exchange rate on that day. You also insert a clause into your agreement stating that the exchange rate will be fixed for the hunt, two weeks before client’s departure. Deposit is send in Rand. Most banks I used abroad ask you in what currency you want to send the money in any case.

The balance of the hunt is then paid, in your own currency, as per the agreed exchange rate two weeks prior to your departure.

Guys and girls, we are hunters, not hedge fund managers. Please advice. I know there are a couple of wannabe clever people on AR, but I also know there are a couple of hardcore African hunters on the forum, that know how the world goes around. My invite for input are aimed at the last category of hunters.

I look forward to your replies and thank you for the same.

Charl,

Foreign exchange risk has affected everyone who is effectively exporting a product over the last 18 months, and tourism is no different.

I think that as a Tourist/Hunter I want to know what the holiday is going to cost me in terms of my earnings at home. The currency exchange risk has always been the problem of the outfitter, and as a bigger organisation they should be able to protect themselves against big moves in the currency markets.

Your problem is exacerbated by the inherrant volatility in the Rand and more so given the recent markets, However to be fair, the currency markets did the oppposite between Jan-08 and Sept-08 when the market was 6.7 Zar/USD$ and went upto 11.56. I don't know how many outfitters gave back 40% of their profits.

Over all I think it is easy to over complicate the issue, and if someone starts trying to pass on currency risk to me for the product they are trying to sell then I'm tempted to walk away. You will likely also get the same response from people that don't understand what you are trying to do and so take a simpler offer from your competitors. Everyone needs to make a living but the oporational risks in business should stay fully with the business and not the customer.

Rgds,
FB

If I book a hunt for "X" amount of US dollars 8 months or 8 days in advance, I fully expect that hunt to be the price I was expected to pay WHEN i pay.. Not "maybe more, maybe less" depending on the market...

In september -08 a 50K USD safari cost ~295 000 swedish kronor, in March -09 that same safari would have cost 470 000 Swedish kronor, with the todays USD rate i would pay around 350 000 SEK.

From September-08 - March-09 the same safari would have cost a Swedish guy ~25 000 USD more.

Thats crazy..

This is great, my first hunt was booked when the rand was about 7.5 and when I did the hunt it was about 12. They didn't say well we booked this at 7.5 but will adjust for the change. They took my bucks and went on their merry way. The flux works both ways. If you switch to rands I will watch the exchange rate and pay when the rate is the best. Oh yea you can also pay the bank fees your banks charge for the wire transfers.

I also whish I could collect from my clients 50% of the billing before I turn a finger. Yea, Yea, I know overhead etc, but you need to be properly capitalized. I have overhead and investments to be made for my business before I collect dollar one.

Then there is tipping, where the operator is relying on the client to underwrite a portion of their labor costs.

Charl
I think it is like trading for a new car. I don't care what my old car is worth, and I don't care what the new car cost. All I want to know is how much do I have to pay to drive away now. If the price of the new car goes up the next day, it is the dealers problem. I think you will find across the board that no matter what country the client is from they will want the price to be in their money.

Charl,
I understand your point, but I also understand the point of some of the other replies as well (not Die so much). I will say that the way you want to do it goes against everything I have ever done in international business. When I buy products/services directly from another country, a price is agreed upon, a contract is written and signed and a deposit is given with a letter of credit from a bank for the balance. It does not matter what the exchange rate is when the products/services are delivered. I agree that outfitters are challenged from the standpoint that services contracted are typically not delivered for (sometimes) over a year. However, what's next? will the hunters next be expected to absorb changes in your cost due to economic volatility in the region, etc.? I would think that if the dollar has become so volatile, your best bet would be to base your prices on a currency that is more stable (good luck finding that), the euro maybe? In todays age your clients surely can easily find an exchange calculator online and any bank (worth doing business with) can handle any major currency exchange. I see many areas that ph's should clean up and strengthen their businesses before they start trying to remove the risk of currency exchange in international contracts. Such as, getting a contract to start with, strengthening and more clearly defining the terms in your contracts, tightening deposit and cancellation policies, etc.. Most outfitters that I have ever hunted with (almost all great guys and friends), do not do a very good job of running their operations like a "business". It is hard to justify eliminating large risks at the expense of your clients when you are not working to mitigate day to day risks in the running of your business (no fingers are being pointed at you, as we do not know each other). On this subject, I would encourage you to make a decision that is right for YOUR company and then just be very clear and straight forward in implementing your decision. The rules of the free market will take it from there, this may all be a moot point as I feel everyone will be scrambling just to cover their ass in 2010 (not just the hunting business). Good luck in what ever you decide.

I think most hunters would like to see hunts priced in the currency they are most familiar with. Since you are an outfitter with a product to sell, I think it shows good customer service on the front end if you are willing to do a quote for a potential customer in their native currency, be it dollars, rands, euros, or whatever. As a customer, that how I want it.

For someone who is window shopping by looking at day rates, trophy fees and what not on the net, I think it would be a good idea to list those fees in 3 or 4 of the most popular currency.

Not claiming dishonesty on anyone's part by any means, but if the customer requests a quote and it does not seem to jive with his calculations, he has an obligation then to verify current exchange rates from his quoted price.

Just my thoughts

Adam

there are a couple more factors involved. since we are talking money volatility, it goes 2 ways. it can mean a gain in your bottom line also. #2 when the values drop, so do the costs involved. for example i bought a machine that was made in europe. when i ordered it it was a bit over 100,000. it took about 9 months to be made. with the dollar changes it cost a bit over 80,00 when i got it. now that wounds like a 20,000 loss to the manufacturer, but since many parts had dropped in price due to the valuations, his actual loss was just about nothing

Charl,

Most customers like to pay in the currency of the country they reside in. That way they can lock in their cost. They are after all only paying for ( in this case) one safari. You being the business are booking many. Most consumers rely on the business to take the currency risk. You do not need to be a hedge fund manager to "hedge" money. I am sure your banker, broker or accounts manager can do it for you.

Of course it is your perogative to price your product as you see fit. In my experience folks in the USA prefer to book things at a fixed price and in US dollars.

BigB

One other thing to consider, you have the use of the deposit paid long before the hunt. There is a time value on these funds that can be used or invested that you are receiving. Then too, you have the potential of an increase rather than a loss from exchange rate fluctuations so both sides are taking a risk.

quote:

Originally posted by BigB:
Charl,

Most customers like to pay in the currency of the country they reside in.

BigB

Good point - now imagine the frustration of living in South Africa and being charged US$ to shoot a buff in your own country - Go figure

just make your deals in US dollars. Despite numerous attempts to topple it, some well planned by banks, some not so well planned by various governments (EEC/EU or whatever their anacronym is this month and China) the dollar reigns supreme for paper currency.

Set up an account here in the US and take cash deposits at the shows; transfers otherwise.

Rich

I have probably done my last Safari so I really shouldn't have a say is this discussion. But I think I am like most and have had to save for almost anything I have ever wanted other than normal living expenses.I can only do that in the monetary units that I earn. So I don't think I would ever contract a hunt in anything but US dollars. If the US economy continues as it has and the Dollar ceases to be the standard of exchange then everything will again change and not for the better as far as the US is concerned. I don't know what the answer is but do not feel it can be put on the hunters back with a floating exchange rate. You stand to reap benefits if the rand goes the other direction. I really don't think MOST hunters would deny you this benefit,I know I certainly wouldn't. I wish you luck and good fortune in your dilemma.

Pick a price and set it. Booking a hunt for ????? price is BS!!!!! I don't mind if the price goes up to accomidate uncertainty of future prices. I do mind a price being in limbo. Prices in dollars are convienient to me, but I don't really care. I would assume the prices should either be in dollars (with the outfitter having a US bank account) or the currency of the country where the hunt takes place and everyone sets a price at the hunt booking in their currency.

Brett

Most guys are going to want to book a set price in their home currency. I know I do. I did a conversion hunt in NZ a long time ago. I am still not sure if I came out OK or not. I know it is a rough deal for the African companies, but I think it is a fact of life. Many folks just close a website if they can't see the currency they are accustomed to - and you will book more hunters in US$ or Euros, than a given price as of now in Rand.

I haven to save up for my safaris; therefore I prefer to know up front what the prices are. I try to add in a little bit to my budget for extra trophies and all those hidden costs that come up.

Trying to plan on costs based on what the exchange rates might be a year or two in advance just wouldn't work for me. I'd much rather have a set price and stick to it. I'm not going to fuss if the exchange rates don't work in my favor; I'm paying what I agreed to pay. By the same token, I'm not going to weep too much if I'm ending up getting a good deal because the rates changed.

What can make it really tough is when the government starts raising fees(like Tanzania did a couple of years back), then the question can get really tough about who should shoulder the load of the increased costs.

Plain and simple for me: Book the hunt and pay the price that was agreed to at the time of the booking, not a price two weeks before the hunt starts. I am also in agreement with those who have booked hunts at an agreed upon price, only to see the Rand plummet, but we never saw a rebate or reduction in the price of our hunt. A one way financial street never works for me and in fact I haven't booked again and will not book with those that pull that one on me.

I can deal with a different money than US$, but prefer not to do so. However, when the deal is "cut" that is the price, PERIOD

quote:

Originally posted by Die Ou Jagter:

I also whish I could collect from my clients 50% of the billing before I turn a finger. Yea, Yea, I know overhead etc, but you need to be properly capitalized. I have overhead and investments to be made for my business before I collect dollar one.

In my experience the main idea of up-front payments is to hedge against cancellation. Clients have a habit of changing their minds for a lot of different reasons...

Charyl.. This has nothing to do with your question, but I just saw the video shot for Larry S. Incredible job! To tell you the truth I have never seen Larry miss that many shots....2.. I think I saw. The running Eland at 300 yds. off hand, is more normal. He is one of the best shots I have ever known. Great Video........Tom

If I offered a hunt and said the price today is X but it could be X+Y or minus Y in two years when you make your final payment people would just walk away. Most folks understand that government prices can fluctuate and safari operators have no control over that but if you offer a daily rate today you better be standing by it when the safari is taken regardless of monetary exchange rates.

Mark

I could never commit to a hunt that is months or years away

without the cost being established at the onset. If you are

afraid of the U.S. dollar's instability why not invest all the

money paid to you in U.S. dollars within the U.S.A., and wait

to convert it till such time as it is most favorable to you.

If you can't afford to be without the money while conditions

are unfavorable for you and you must immediately convert to

RSA money then I think to remain a competitor for U.S. currency

user's business you'll have to ride the ups and downs of the

exchange rate. {Unless the the vast majority of safari operators

form a union ala OPEC, if you all do THAT you'll either have

it your way or put yourselves collectively out of business

because of customers being unwilling to take the risk of being

priced out of a planned hunt due to an unfavorable change in

the exchange rate} Let's say I send you 10 Thou U.S today, for

a hunt that's priced at 20 Thou U.S. today. 10 months from now

the exchange rate is such that I need to send you 20 Thou U.S.

to be be in sync with the RAND instead of 10 Thou U.S. BUT all

I have is 10 Thou U.S.! I'm dead, unless there was some sort

of insurance policy that I could have bought to protect me from

the ever changing and unpredictable exchange rate.

I think the biggest reason to keep it in $US is for comparison sake. How else would we compare or balance the value of a hunt in Zim with a hunt in NZ?
Hunts, like gold and drugs, trade in $US.

Charl, You are not the first and will be far from the last to contemplate this and raise the subject on AR, when the Rand is strengthening against the Dollar (as was pointed out, few if any SA outfitters will broach this subject when things are moving the other direction).

I paid for a hunt in Cameroon in Euros. Why? – Because I wanted to book with this particular outfitter and hunt this particular area, the hunt being sold to Europeans was cheaper then the companies selling to the US market, and he wanted Euros. However, after an initial modest deposit, I had the option to “buy in” whenever I wanted, and chose to wait to just prior to the safari. Of course, as I always do, I lost in this as the Dollar tanked and my cost went up about $3000, but at least I had control of my money and is was still less then what the outfitters who were pricing the hunt in Dollars (and thus assuming the risk) for the US market were charging.

However, there are far too many options in South Africa, and unless I was also paying South African “LOCAL” prices, I’d go somewhere else where I didn’t have to worry/think about the usual fluctuations. Not to mention the hassle of doing a bank transfer in Rands as you also suggest – my bank looked at me cross-eyed when I wanted to transfer in Euros - I can only imagine the reaction if I told them I wanted to send Rands. And there is a cost incurred for this too.

There are some inherent pitfalls associated with doing business in my industry that I am not too fond of, but I consider them a cost/risk that I must assume. I think if you want to deal with the US market – especially the first/second-time African hunters, you are going to need to come up with a figure for the season that you think you can live with. Since 2001, when doing conversions I always think of it at/about 8-1…but of course your competitors are largely going to dictate what you can charge here.

The German operators in Namibia used to do this using the Euro, but I think many found out that they needed to have a separate “US Price List”, much to their chagrin. SA is not alone, a few years ago the operators in Zambia were crying as their Dollar strengthened and their purchasing power declined, and recently in Zim when the system officially went to USD’s their real costs skyrocketed.

Geez, next you guys will be wanting tips in Rand! (except of course when the Rand is 10-1, then the old Greenback will be just fine thank you very much!)

Charl-

Thanks for asking the question. I think it's an entirely valid one. When I worked for an international company in the Far East, the company paid me in US dollars but when there were significant changes in the exchange rate, they made monthly adjustments in an attempt to ensure I got what I was told in the beginning. The whole reason for doing this was to make sure that I got paid what I expected when I accepted the assignment. How did I fare after a 2 1/2 year assignment? I always felt I was slightly behind but within my tolerance limits.

I believe this applies perfectly to this situation. You need to set the price of your hunts in US dollars to attract US clients, and you need to make it sufficient to cover your risks, including currency exchanges. If you put in too much cushion, you won't be competitive and will lose business. However, for those of us shopping for hunts, we have to have a common basis to compare. If you were my outfitter of choice for numerous hunts, then I might be willing to work with you to address your concerns after I trusted you to give me a superior experience. Until that point, I would never book with someone who proposes the arrangement that you suggested.

Thank you very much for the replies. I wanted this to be an open debate, and some of you (like stated in my initial post) saw it as such, and others not.

People that know me on this forum know that I'm a straight shooter, and I will NEVER EVER tell a client to pay more because of exchange rates. Price "shaken hands on", is the price you will pay. I have allways said that my clients will NEVER get any surprises, and there are folks here that will vouch for that. The questions was never about that. It was more to get a sort of a golden middle way to HELP hunters and to HELP outfitters. Clearly that will never happen.

If the Rand hops up and down like it has done over the last 5 months, hunts would be more expensive or outfitters will lose A LOT of money. We managed to work through this, how I still do not know, but as stated above, some people took HUGE knocks.

I will also never expect someone to travel to SA with Rands in his pockets for his hunt....geez, you will need extra hand luggage for that....

Bill, I was one of the few outfitters in SA to drop our prices when the Rand was so weak at the start of the year, passing that benefit onto the folks here on AR. 5 People booked those hunts, and we all had a great time. And please, always tip in $'s...

There was some possitive feedback here, and I know what to do now. As we have a strong client base in the UK and Europe, we will price our hunts in Rand, Dollar, Sterling and Euro, with a "safe" avg. exchange rate given. We will update those prices on a quaterly basis, BUT the price contracted on will be the price you hunt on, even if you book a year in advance.

I have two clients, both from England that hunt with us three times per year. They book their hunts a year in advance, every year. They do not seem to be fussed about the prices that much. They trust me to give them a good deal, and enjoy what we do for them.

It helped a lot to get info from guys thats been around. One of the reasons I love AR. Sounds if I will be in the States in January, and would love to meet y'all at the AR
meetings.....

Tom, Larry is def. the best shot I have hunted with. That shot on the Eland...well...it speaks for itself. My dad asked me the other night when I showed him the DVD, "why did you let him take the shot?" I said to him that to this day I do not know why I told Larry to shoot....

Infinito will again offer SMASHING great priced hunts early next year after the shows, as we have a bit of a different approach from other outfitters when it comes to trophy fees

Look out for the new bow hunting section on our web-site!!!!

Thank you folks!

Why not share the risk with the client? Set a rand value for the hunt, require a 50% deposit and fix the dollar/rand exchange rate at the time of deposit for the entire hunt. For the outfitter the price in dollars at the prevailing rate has already been paid for half of the hunt and your risk is only on the balance. In your example of losing 25,000 Rand it would only be 12,500 Rand lost. In fact, isn't this the way it is already in the majority of cases?

I seem to be in a minority here because I don't care what currency the hunt is priced in so long as the price doesn't change once the deal is signed. I don't care if the price the outfitter charges changes once I've signed a contract either. If the deal I signed on to wasn't reasonable to me, I wouldn't have signed it in the first place and see no point in second guessing after the fact. Except under special circumstances, nobody with a pulse or an incredible amount of wealth, will simply trust an outfitter to give tham a fair deal. How would you even know what you consider to be a good deal without doing a bit or research?

For the consumer, I don't see exchange rates as that big of a deal. Exchange rate conversion is simple enough that anyone who has earned enough money to pay for a hunt with their own cash can do it without fuss. Price comparison is just a matter of punching a couple of numbers into a calculator and writing down the reusults. I often book my trips well in advance and attempt to buy the currency the hunt is to be paid in when the exchange rates are favourable. Maybe, having grown up with the Northern Peso, I've just learned to deal with it, which until recently, people who deal in $US haven't had to. Maybe the Loonie has been more stable compared the the rest of the world than I realise and what works here isn't so easy elsewhere.

I realise that international businesses have to contend with exhchange rate volatilty. That is just a fact of life. If some one tries to tie the price of my trip to exchange rates, I'll simply look somewhere else. The only other option for the operator is to build a volatility premium into their prices. If they go too far, they'll price themselves out of the market. Those are simply some of the riskes of doing international business.

At the end of the day, the money involved makes a trip to Africa business, both for me and the operator and I can't afford to prop up any one's business other than my own. I never have and never will, book a trip with some one I don't think I'd like at some level. This means I end up wanting the people I hunt and fish with to do well. But outfitters are non-unique service providers and that makes them replaceable. If the people I've met and liked in the business fail, I'll feel bad for them and move on the the next group of good, honest people who see the opportunity and fill the void.

Dean

I don't wish to do currency conversions, I want my hunts priced in US Dollars. I will pay in dollars and do not expect any 'surprises' anywhere down the line. I do not have a problem paying 50% down or whatever is agreed on. But, my feeling is an agreement is an agreement and if the outfitter wants to renegotiate it later for whatever reason, then a full refund is appropriate and we can go our own way.

Tom, Larry is def. the best shot I have hunted with. That shot on the Eland...well...it speaks for itself. My dad asked me the other night when I showed him the DVD, "why did you let him take the shot?" I said to him that to this day I do not know why I told Larry to shoot....

QUOTE]

Charyl,
What you may not have not have known is that Larry was a world class skeet shot. Both he and I find a moving shot easier off hand. Still....300 yds. is a bit much. As I told Larry "no amount of skill and daring ever bets BLIND ASS LUCK"......Tom

Hope to see you in Dallas!

Personally, I'd love to see the standard charges for the hunt listed, and the trophy fee(s) added on after the hunt. I would have been good to go for Leopard and Kudu my last trip if I could have done it that way. I wonder how many thousands and thousands of yankee dollars are lost to the Safari companies and the various governments by making you buy up front?

Rich

Not being a "hedge fund manager" is no excuse for not having and using the basic knowledge of how to protect oneself against fluctuations in currency valuations. Rand futures are actively traded daily and it would be easy to lock in a "price" in rands that you have priced in dollars. Many farmers in the US do the same thing every year with their production. The reasons some farmers don't and most safari operators don't is sometimes ignorance, but more often they want to roll the dice on their product being more valuable, that is have a higher selling price IN THE LOCAL CURRENCY when it is ready or when the hunt takes place.

Without going into the exact decimal places, right now rand/dollar is about 7.3 or so, you can lock in those rates with some minor slippage up until the end of 2010 easily, and in 2011, the rand is, again, very roughly, priced at about 8.5/$US. In short, it is a nearly child's play to lock in a reasonable exchange rate and price your hunts accordingly. If you price your hunts in dollars, and set and accept that price with a client (a contract) then you are in effect long dollars and need to short (sell) the rough equivalent in dollars to cover currency fluctuations. If you do so, and the dollar goes up, you will have to have enough money, either in the form of a hunter's deposit or personal funds to cover your interim losses on the dollar shorts. This is not rocket science, and isn't something an outfitter would likely want to do for a single hunt, but say someone in SA is selling 6 hunts per month that average $10,000/hunt or $60,000 per month, currently that would be about, and I'm using 7.5R/$US for ease in computation R450,000 in 2010........so you plan on shorting $60,000 per month at a set rate of exchange and price your hunts accordingly in the hunter's currency. There is some risks involved regarding cancellations, etc but it is a helluva lot less than being nakedly exposed to currency value fluctuations.

Let's just take that example of R450,000 or $60,000 US......you sell 6 hunts @ $US10,000, and get some degree of deposits, and short US$60,000 for May 2010 (this would be repeated monthly during the season, of course). Come May of 2010, you take the hunters hunting and have received the rest of the monies due in dollars. Assuming the currency market moves, let's take a relatively extreme example both ways, dollar goes up, rand goes down to 10R/$ and the other way, dollar goes down, rand goes up to 5R/$. In the first case you receive the same $60,000 which is now priced at R600,000.....you have gained R150,000 on your sale of the hunts but you were short the same amount of dollars on the currency exchange so you lost R150,000 there, result you are flat and still have the R450,000 you wanted for the hunts. In the second case, the dollar goes down and the $60,000 you would receive is now valued at 300,000 rand.....you have "lost" R150,000 on the sales of your hunt, but you would have made it back on the shorts of the dollar/rand futures.

Just as a guess, and that is all it is, I'd rather be long rand than dollars right now, until at least the middle of next year. In other words, I think the dollar/rand ratio will likely stay flat or go down, rand go up between now and mid 2010. I repeat this is a guess and I wouldn't bet my ranch or hunting company (if I had one) on a guess.

Beeing European, actually I would like to have it priced in US dollars with the posibility to pay in Euro.
At the actual exchange is convenient.