the Safari Business? I would assume that the majority of Safari hunters are Americans and if the dollar continues to weaken how will that impact the business.

Any thoughts, is this even a concern for Sarari operators?

Educate me

PD,

Actually, even the though dollar is weakening here in the states, it's a GREAT time to go hunting in Africa.

The Rand (with is also linked to the Namibian dollar, the Botswana currency and a few other southern africa currency) is at a 5 year high with the dollar. The current exchange rate is about 1USD to 7.8ZAR.

Of course the economy is worrisome to many. I have heard from several that bookings are much slower for this year than last and people are interested in booking for the following year (2009).

All in all though, you get more for your money right now in Africa. I think people should definitely take that into consideration.

Just my

Msichanna

I am actually headed to Namibia in June an am greatly looking forward to it. I was looking at it more from a "future" perspective.

Phoenix,

Well from an Aussie perspective, it's great for us as $1.00US is now only 93-94 cents OZ, whereas a few years ago it was 50 cents!

I think what you might find is SOME operators, particuarly the ones with a lot of European customers might just cost everything in Euros........that would hurt!

Our Canadian dollar trades at par with the Greenback now. That basically translates to safaris being half price compared to a few years ago. While others are talking about the rising price of hunting Africa, we're enjoying a price drop.

I would be willing to bet that for most taking an african hunting trip (wish I was) the dollars rise or fall has little effect.

I agree with Dogleg. African safaris have come down significantly in price for those paying in Canadian dollars. However, we have been through a decade where paying for a hunt in $US resulted in a 50% premium when paying in Canadian dollars.

Did that slow me down? Not in the slightest! I do not intend to lay on my deathbed trying to convince myself that it was a good thing I never went on an African safari because of unfavourable exchange rates.

quote:

I would be willing to bet that for most taking an african hunting trip (wish I was) the dollars rise or fall has little effect.

Spot on buckeyeshooter. As for American hunters, we make up only a portion of the worldwide hunting pie. Our measly safaris are only crumbs to some that hunt Africa (try 90 day safaris!). Not to make little of our contributions to the Dark Continent, but we make up only a small group of the hoards that hunt abroad. Chinese, Japanese, Spanish, Russian, German....all in all, our dollar won't affect next years fees. Fortunately for we American's, most African Outfitters and PH's are fond of us....most of us anyways
LDK

RULES OF THE SAFARI BUSINESS:

1. Dollar goes down and safari prices increase.

2. Dollar goes up and safari prices increase.

3. Dollar stays level and safari prices increase.

I think there is a trend here...

Looks like our friend Ozzamma on the left? Is he running for Prezidense in Zim?

quote:

RULES OF THE SAFARI BUSINESS:

1. Dollar goes down and safari prices increase.

2. Dollar goes up and safari prices increase.

3. Dollar stays level and safari prices increase.

I think there is a trend here...

LOL!!! Amen to that Brother Dan!

" woulda-coulda-shoulda". GO NOW!!!! Africa will never be cheaper than it is today. i s there any leisure activity that costs less now than 2 years ago?

Most outfitters in Africa maintain price lists based on the US Dollar - so in the short term you pay the same amount in dollars regardless.

The volatility and changes in the amount of local currency he gets per USD, essentially is the outfitters problem. The risk is his, unless there is a clause in his hunting agreement with you to the contrary.

If the local currency gets stronger against the dollar (the USD becomes weaker) the outfitter makes less local money for the same dollars. If it goes the other way, he obviously makes more local money and the food in camp may improve some. For the outfitter, over the short term, it is often a swings & roundabouts business - you win some here and lose some there. You pay the same dollars as wasagreed to.

The really difficult part is to try and predict what the exchange rates will do over the longer term (2 years +) as we have to adapt prices that far ahead. This used to be easier than it is now and the economists used to have it fairly on the numbers. Nowadays, it's a little like rolling the dice. The value of the SA Rand specifically is influenced by the oil price, the gold price, the local political scene, the US presidential election, events like 9/11, the weather in Europe, and the list continues ...

Have a look at http://finance.yahoo.com/currency/convert?from=USD&to=ZAR&amt=1&t=5y to see what I mean. Look at the 2007 range specifically and you can see that the downward trend of SAR per USD cost us a little. So we may make up on the roundabouts soon ...

It'd be interesting to hear an economists take on all this. As I get older, I'm beginning to believe that it's a lot more complicated than everything simply hinges on the dollar value.. Here's my take on it:

What I think pushes (hunt) prices up isn't simply the dollar rising or falling at all, it's the oil price and because oil is a limited and diminishing rescource, that ain't ever gonna go down in the longer term, it'll only ever go up. - That's nothing more than the simple rule of supply and demand. When oil prices rise, so do the costs of everything else and it's that, that forces safari prices to rise just like everything else.

What I think the dollar fluctuations do affect dramatically, is what might be called the overall client profile. Weak dollar obviously means considerably fewer American clients and considerably more Australian, Brit & Europeans etc who are all taking advantage of the strength of their currency. When the dollar strengthens, the Americans can obviously better afford to hunt Africa and the opposite is true of the other nationals I mentioned.

Fluctuations in the world markets such as national or world wide recession is another matter entirely, and these mean that many who would buy say a 21 day hunt, either shorten that to maybe a 10 or 16 day hunt and those that could 'just afford' a hunt, put it off to a later date. At the other end of the scale of spenders are the seriously affluent who aren't really affected by the markets and they just come hunting when they want to come hunting.

Which I guess logically, brings us to the question of when is the best time to come on an African safari, and on that I'd say, come as soon as you can, because no matter what happens, it ain't ever gonna get any cheaper.

Whether I'm right or not, I don't know, but that's how it appears to me. - Any economists out there who could give us a more informed view?

It is more complicated than that. As a US exporter I'm loving it. My European competitors are taking it in the neck and I'm loving that too. High oil prices are an opportunity as well as a price increase.

Basically, the southern African countries' currencies are tied to the exchange rate between the Euro and the U.S.D., as is most other traded currencies. When hunting in Africa, we are purchasing services there with U.S.D. Thus, it will cost us more as the dollar weakens.

There are other factors that may reduce the cost of hunting like current discounts offered by outfitters operating in Zimbabwe due to cancellations and deferred bookings based on the apprehensions of the unstable political implications. This situation also fuels price increases due to increased demand of other outfitters who operate in more stable southern African countries.

Geoff

Shakari is dead on about the cost of oil driving up the cost of goods in general and the profile of safari clients. Supply of oil is an issue, but the bigger issue is the marked increase in demand for oil from developing countries like China and India. So the real issue with the US dollar is how the safari prices are set.

If prices are quoted in US dollars and marked up in US dollars then it’s a non point for US hunters, but a deal for hunters whose currency is becoming stronger against the US dollar. If prices are marked up in Euros and then quoted in US dollars then US hunters are paying more, but hunters from other countries would depend on their currency's valuation compared to the Euro.

It depends on weather the safari industry makes allowance for the value of the dollar when they set their fees every year. Inflation of goods would dictate that yearly increases are necessary to cover costs which in theory should be offset by wage increases for safari clients (i.e. they make more money), but weather the safari industry also considers the value change in foreign currency is another matter.

Perhaps Shakari or some of the other industry men and women could comment on this.

Brett

I'll do my best, but bear in mind I only speak for my own company and not for the industry as a whole - but I would think that most companies do it in a similar way as we do.

We're not particularly technical. We'll first look at what we have to pay by way of government fees etc and then look at the other costs of outfitting the safari. fuel, food, drink, - including bottled water etc, add on all the odds and sods for things like depreciation of equipment etc add in staff wages, food, uniforms, care etc then add on a standard profit margin and that's the price we charge. We don't add on what we think the market will bear. We add on the set profit margin - which I might tell you is very modest compared to most services!

Strength or weakness of the dollar doesn't come into it for us. We work on the principle of it costs what it costs. If we didn't we might get more clients, but we couldn't give them the same service and the service is more important to us than the number of clients..... however, it could be that some safari companies don't think quite the same way.

A couple of observations are that we don't attend the conventions and those that do will also factor in those costs....... we're not cheaper than they are, we just direct that money to a different level of customer service than many/most companies. Sadly, it's not additional profit!

We have considered changing our prices from USD to UKP or Euros, but the reason we didn't is that everyone, both hunters and safari companies are so used to dealing in USD, it would make it very difficult to change.

Shakari

If that is the case then the cost for US hunters is a non issue assuming that US wages increase proportionately to inflation of goods and services. Clients from countries with currency increasing in valuation to the US dollar will have a discounted safari price.

To me this would mean that all else being equal the same amount of US hunters will be financially able to take a safari, but more international hunters will now be able to take the same safari that would not have before. If that's the case then the real issue with safari costs is not the US dollar but increasing demand. More hunters especially non US hunters are financially able to go on safari.

This increase in demand will have varying affects on different safaris. Plains game hunts in Namibia should stay relatively stable due to a growing safari industry meeting an increase in demand. Plains game hunts in SA should increase in price due to a relatively well established plains game industry having a stable (not increasing) number of hunts. Hunts for elephant should be dependant on elephant population trends as to weather elephant prices increase or decrease in a given country/market (I would guess getting relatively cheaper although I’m sure the best areas will still command top dollar). Hunts like lion should continue to skyrocket due to finite quotas and trends towards more strict harvest requirements (6yr, black nose, furry balls, ECT). To guess where a hunt price is going in a given country I would look at the animal population trends, government trends (liberalizing or restricting), and hunter demand for that hunt in that country.

In short the US dollar devaluation increases foreign demand which drives up prices all else being equal.

Just some economics with a fair amount of opinion and common sense thrown in the mix.

Brett

quote:

Originally posted by Brett Adam
Just some economics with a fair amount of opinion and common sense thrown in the mix.

Brett

Yes, but you cannot forget the power of TIA! That trumps all other factors.

I must be in a writing mood.

Fair enugh Yukon.

TIA ?

This Is Africa...TIA. Anything is possible for reasons that need not follow logic, common sense, etc. It's something you commonly hear people say to explain the absurdity of a situation.

We can predict lots of things about Africa. Some of them will come to pass and some of it will just happen for no good reason. TIA.

The French have their version of "TIA" as well: "C'est l'Afrique." - which when spoken is generally accompanied by a Gallic shrug.

Some reactions are truly international.

I wonder what the Portuguese version is? Must be one. Or the Afrikaans version - although I am almost afraid to ask about the latter.

As for the weak dollar, I am just glad that the Tanzanian government still collects its exorbitant concession, trophy and other fees in US dollars.

Can you imagine the increased costs we'd have to pay if they denominated these fees in euros?

Having hunted Africa annually since 2000 I have been able to observe the changes. In 2000 the $ would buy 10 or 11 rand and dropped rather sharply over the next couple of years to the low of $1 to 6.8 rand and even though the dollar has dropped against most currencies lately the $ will still get you 7.8 Rand. It seems to me that consolidation within the industry has been a major factor in the escalation. HHK and Chifuti alone control most of the hunting in Zim. Moz is experiencing the same thing to some extent with many of the pioneers in modern hunting either sub leasing or selling outright to larger outfits. I'm not attacking anyone as most of these folks enjoy a good reputation they just tend to set the market price. But in the end supply and demand sets the price. I would like to know how rapidly the number of US hunters has grown over the last 15 yrs or so.

WAWA

West Africa Wins Again.

For anyone working in the Nigerian oil patch.

One factor that Shakari sort of brushes on is how much the exchange rate affects the outfitters mood.

The Rand/US$ exchange rate today has reached a high point, best since maybe 2003?

In South Africa, and probably Namibia, [and any others that are tied in with those] I would expect the outfitters to be very happy today. They will get more rand today for the dollars that we pay them.

And, while it is not realistic for them to shuffle their prices up and down with the exchange rate - I am sure they will get somewhat more flexible with the quality of the hunts they provide. Maybe they'll "throw in" another Impala or Springbok if the one you shot isn't quite good enough to suit them, or maybe they'll point out some management or cull animals that should be taken out of the herds.

I will not expect anything extra when I get to RSA at the end of this month, but if the rates stay like todays', I know I will be dealing with a very happy outfitter.

[Plus, it makes other stuff we buy there much more reasonable!]

Les

Brett,

I think you're assuming that firstly all American hunters are wage earners (many are not and instead own companies ang paid dividends etc) and that American wages increase on a pro rata basis with hunting and oil prices. - If their wages don't increase on a pro rata basis, then their hunting becomes more expensive. - Remember also that not everyone has the same amount of disposable income and won't feel the pinch as much as others. - In other words, you're assuming, 'all things being equal'..... they're not. However, you've hit the nail on the head, when you say that 'clients from countries with currency increasing in valuation to the US dollar will have a discounted safari price'.


Moving onto your example of Namibia. I'm not really qualified to comment on that country. (perhaps Karl S might be better qualified) but just because more people are in the business, it doesn't mean their running costs are less and prices go down or don't rise. It just means more competition. Sure, some may offer something for nothing in the short term.... but in the longer term, will they stay in business if they're doing that?

Regarding SA prices not increasing. According to a recent Carte Blanche programme, food prices in SA have increased by over 25% over the last year or so and fuel prices have have also skyrocketed as have staff wages etc to compensate. - That has to equate to higher hunt prices.

I'm sorry to tell you that Elephant hunt prices are not dependant on Elephant populations. I wish they were. Elephant hunt prices are dependant on things like permit prices, other Government fees and all the other things we've mentioned, but they not are not dictated by the number of Elephants. Nor is it always true that the best hunting areas necessarily command the best prices. An example of this might be Mozambique. Some areas there have magnificent Elephant hunting, but factors such as difficulty of access and no US F&WS import permits for ivory mean a reluctance of American hunters to visit.

Les

Not all outfitters etc live in SA, and even for those that do, it's not the amount of rands we get to the dollar that's important. It's what those Rands will buy. If cost of living in SA doubles for example, and the dollar has weakened by say 25% against the Rand, we're still effectively making less than we were a year ago.

Regarding your comment that maybe someone will tell you to shoot an impala or springbuck etc fOC..... maybe they will, but when was the last time you went into a filling station and paid for X gallons and when you went to pay, he said, Oh, why don't you just take another couple of gallons on me....... nope, it's never happened to me either. I reckon that even if I asked for that, the guy would tell me, 'you knew the price before you came in here, it's posted on the pump........ if I gave it to you, I'd have to give it to everyone and then I'd go out of business and you'd have no where to buy your petrol'.

Sadly life is never as simple as it first appears.

Shakari,

I absolutely agree with almost everything you say here.

I know that not everyone there is subject to fluctuations in the rand/dollar, but most of the currencies in the region have moved together this year. And obviously if the cost of living goes up then any forex increase is used up as well. However, the outfitters that exchange money today will have 10-15% more than the thought they would have last year when they set their prices, and they will be happier and more relaxed, I think.

This money, I think, like the money that you do not spend marketing at the hunting shows, allows you to provide a better quality hunt.

I do not EXPECT that, but when I have a really good hunt, I tell people about it. It may not be a free Impala, but maybe better wine, or another beer each night. Most will not even observe the difference. But I have, and I appreciate it.

I don't EXPECT anything extra, I have always paid the price requested [ like the filling station ] and I have always gotten what I paid for. And, have often gotten more than I expected.

Plus, as I said earlier, the exchange rate is working in our favor outside the safari prices, hotels, restaurants, tours, rental cars, priced in local currency are today cheaper for us!So if anyone does any touring or shopping they get more for ther dollar today.

I am very happy to be going to the Eastern Cape, RSA in ten days, I was going there anyway, but know now that I will spend less, or probably just buy more!

Les

Les,

As you say, I guess you'll probably just buy more.......

Don't know when you were here last, but prices have been going up considerably in the last year.

Have a good hunt!

Shakari: we own a small construction company, pretty much concentrating on government work and what we find is that the more uncertanity with the economy the fewer projects are started both in the public and private sectors. This means that the same number of contractors tender bids for a smaller number of projects lowering the cost of these projects, to the owners, as a result of revisiting profit margins since labor, equipment and material remain the same, or, as a result of foreign purchases of raw material increase.

Now, as a business owner I can assure you that I am a wage earner: I get paid after everything else is paid, if there is anything left over.

Not certain how this contributes to the thread, but, the comment seperating wage earners from business owners went down wrong.

Hey Bryan,

I'm in exactly the same boat as you are and I fully understand and agree with your point........I guess that you and I might both fall under the classification of running 'small buisnesses)

my point was that not everyone is (financially) equal and there are some people who might perhaps own/run larger businesses etc and are paid dividends etc which gives them considerably more disposable income than the average salaried worker - or indeed like you and I.

Taking it a step further, there are others, who might for example, not own companies etc or work at all, and instead have considerable family or invested money etc...... and they have even more dosposable income. Like I said, not everyone is (financially) equal. - Our entire society is based on that concept.

I didn't mean to imply any criticism of anyone.

Shakari

Those are good points. My economic theorizing was just that with assumption run rampant. Obviously not all Americans work a wage paying job, nor do those that do always receive wage increases in proportion to inflation (some like me are students and don't make anything wage or otherwise we just accrue debt). It just makes it easier to evaluate the situation on the whole if you take those liberties.

In regard to elephant hunting I may disagree with you in a small way. In Botswana and Zimbabwe the exploding elephant population has allowed the government to increase opportunities for sport hunted elephants at a discounted rate (PAC hunts). I guess where I went into conjecture was that if the elephant populations in places like Tanzania had a surge similar to that of Zimbabwe or Botswana then discount elephant hunts for non trophy elephants may be offered there. Obviously that's assuming a lot.

With regard to top areas commanding top dollar the Mozambique elephant issue is a different animal. The fact that US hunters can't import Mozambique ivory decreases demand for those hunts. This lowers the profit margin that can be charged in addition to the cost of the hunt by those safari companies. Calitz and Rann are producing similar ivory in Botswana (I realize their government imposed safari costs are higher) for double the price because the demand is there.

So as I stated earlier: "To guess where a hunt price is going in a given country I would look at....hunter demand for that hunt in that country."

Brett

Brett,

I think you're right in some ways, but not in others. For example, you talk about Botswana & Zim PAC Elephant permits...... Just because they have more Elephants, there are still Government and other fees to be paid and the camp costs will rise in line with oil price induced increases. Also just because there are more Elephants, it doesn't necessarily mean there are more Elephant permits. - For Example the BW Governemnt withdrew all non exportable Elephant permits in the tribal lands (for 2009) in what seems to me to be not much more than a fit of pique......

As for where hunt prices are going, I think we'll have to disagree on that one. To me, the main deciding factor isn't demand at all, it's whether the government concerned will raise its prices on a whim or not and also other factors such as political situation in the country concerned and world economies etc......

Like I said at the start, a safari costs what it costs.

Brett

Wrong! We sell all the Mozambique elephant we can get to hunters from Spain, Finland, Russia, Mexico, Saudi Arabia, Germany and the rest of them. And we export whatever they want - including the ivory - legally to them too.

Johan is dead right, I meant, and forgot to mention in my previous post that not all hunters are from the USA by a looong chalk.

Shakari & Johan

I'm never one to be dogmatic. Thanks for the straightening out.

Johan

Do you think you could charge more for the hunts if US hunters were also competing with foreign hunters for elephant hunts in Mozambique?

Why are elephant hunts in Mozambique so much cheaper than in Botswana or Tanzania when they're shooting 60-90#ers in Mozambique? (Not the right color ivory?)

Don't read anything into these questions I'm just curious.

Steve

You’re absolutely right about the government thing. There's no telling what they'll do on a whim. I'll be glad to pay the costs whatever they are because it’s always better than not going.

Brett

Brett

To be honest, we probably could charge "more" but I doubdt that we would. We are granted very few elephant permits each year anyway.

I don't think the elephant hunts are necessarily cheaper in Mozambique, but it is good if you think so. Mozambique does not have the same overpopulation problem some of their neighbours have and if things fall badly for you, you can work really hard to get a nice bull as these things can really move if they feel like it!

The ivory is the same stuff, but is said to typically have a more slender shape compared to tusks from elephants from some the other regions. And then there is elephants from the south, the central and northern Mozambique and they are all different and fairly isolated gene pools at this time. But then this is another debate altogether!

Now, where were we? Oh yes, the value of the dollar ...