I watched the SA ABC’s Stateline programme on Friday night. There was a segment about KI Sealink and some of Kangaroo Island’s accommodation services.
The accommodation providers said it was unfair that they weren’t benefitting from a Sealink partnership programme they hadn’t joined and didn’t want to pay for.
They had complained to Sealink, then to the ACCC. The ACCC found their complaint was without foundation, so they enlisted a self-promoting politician and academic, and complained to the media.
I didn’t know whether to be amused or appalled.
Sealink is a commercial venture. Its future reliability depends on its continuing to make a profit.
Without strong profits it could not employ the staff it does on Kangaroo Island and elsewhere. It could not maintain and service its vessels and other infrastructure. It could not make provision to purchase replacement vessels and buildings when necessary. It could not pay $10,000 per week in wharfage fees (essentially a state government toll on the only road in and out of our community, the only community in the state that has to pay such an impost), and it could not pay taxes which contribute to roads, hospitals and schools.
Sealink is under no obligation to offer lower fares to residents, or any reduced fares at all, even as part of a campaign to bring more visitors to the island.
When it does offer below cost fares, that loss needs to be recovered from somewhere else.
One way to do this is to invite accommodation services to partner with it. Those who choose to be partners share in meeting the cost of the reduced fares. In return, they get more prominent publicity, and priority in accommodation bookings made through Sealink.
There is nothing remotely anti-competitive about this. It is not, for example, like service providers agreeing to fix prices.
But some providers who have chosen not to participate are complaining it is unfair.
This is a bit like complaining it is unfair that people who pay for advertising in The Islander get more customers than people who don’t. Fairfax has plenty of money. They should offer free advertising space to people who don’t want to pay, so those people are not disadvantaged.
That would be ridiculous. It is no less ridiculous for people who have chosen not to participate in a partnership programme to complain it is unfair when they get fewer bookings than people who have.
It is a simple commercial decision. If you think your business would be more profitable paying the partnership fee and commissions, then join. If you don’t, don’t join.
But whatever you decide, don’t whine about it.
Sealink charge exhorbitant annual fees to join their register of holiday homes – fair enough if you are prepared to pay to get the extra bookings but as you say Peter, Sealink must recover their costs from somewhere else. This cost is recouped from the owners of the holiday homes who may already be paying an agent 12% commission to take bookings and organise cleaners. Sealink charge 30% commission to take the booking and forward it to the agent.
Roughly this works out on a $100 night booking for a minimum of two nights as $30 to Sealink, $12 to the agent, $80 to the cleaner. The balance is the owners share. On top of this Sealink charge $1600 a year for a business to register with them. As bookings are few and far between for winter months, this fee comes out of profits made over summer months, and there is very little left for repairs or new furnishings. Summer tourists wear out furnishings very quickly.
Sealink may be running a business but they have holiday home owners over a barrel. You can either join them or not….but if you do register, expect to work hard and get very little for your investment – nobody else is going to bring the tourists over, so you may as well grin and bear it and expect to be ground down bit by bit by the big monopoly. It is no wonder the quality of KI accommodation is not up to scratch, except in places where they charge high nightly rates. That won’t encourage most South Australians to visit KI.
Just a couple of questions Annabel.
Isn’t the partnership fee at the level needed to get your guests the $10 fares $500 per year?
If Sealink is taking the booking for you, why would you need to pay another agent as well?
If you are a small operator struggling to get bookings in Winter, why would you be paying a cleaner $80 to clean a room for a two night stay? Why not do it yourself?
The only thing I object to in this arrangement with Sealink is that there is no choice in the matter – you have to join the partnership if you want bookings. The fee is more than $500 as there is also advertising with Sealink – another $600. Then on top of the partnership fee you pay 30% commission if they do get you a booking. So you pay twice.
Sealink pass on the booking to the agent who organises the cleaner or follows up if the keys are lost/ broken or the hot water service breaks down or there is no wood or power. That’s the function of the agent to organise. They also send a monthly and annual statement of income and costs. Agents earn their 12-15% commission, Sealink does not.
I used to do the cleaning and gardening myself but because we now work in Canberra I can’t be in two places at once. We were forced to leave KI to get paying work as the business does not make a profit and I have been unable to sell it. I travel back 3-4 times a year to do maintenance and gardening. Another factor is that an owner may live several hours from the holiday home while the cleaner may live nearby, and because fuel costs are high it is often just as efficient to hire a cleaner.