Thursday, March 13, 2008

The Government must be Concerned with Basic Necessities of Life

By Kufara Gwenzi

Published on December 7, 2007

On December 5th, 2007, The Herald Business led with a story on hotels defying the prices body on accommodation rates. The concern expressed by the National Income and Prices Commission (NIPC) and the Zimbabwe Tourism Authority (ZTA) reflects a sad economic development in our economy.

The news article was followed up by an opinion piece by the Herald Business Editor, hesitantly criticising hotels.

The role of NIPC is to generally deal with basic necessities as affected by income and prices; while the ZTA must be promoting tourism and enforcing standards.

As we deal with this matter, let us revisit economic basics.

An expense for a basic need is one which is essential, indispensable, fundamental or necessary. It is an expense that makes it possible for a human being to claim or enhance dignity. It provides for the necessities to be human being. It is indispensable and absolutely necessary!

Using the Maslow Hierarchy of Needs, such needs are the "biological and physiological needs", which are the basic animal needs for such things as food, warmth, sex, water, and other body needs. If a person is hungry or thirsty or his body is chemically unbalanced, all of his energies turn toward remedying these deficiencies, and other needs remain inactive.

Basic needs/necessities of life, such as food, clothing, shelter, fuel, transportation, education, lighting and medical services are what a person requires to survive. The cost of living is then the average monetary cost of the basic necessities of life. This is the area in which the Reserve Bank of Zimbabwe (RBZ) Governor is intervening through the Basic Commodities Supply Side Intervention Facility (BACOSSI).

The opposite of a basic expense is discretionary or luxury, which are the "esteem needs" using the Maslow Hierarchy of Needs. Such needs are self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

A discretionary expense is one left to or regulated by one's own discretion or judgment. It is elective, optional or left to one’s desire or choice. Discretionary money is available for use as needed or desired.

Discretionary expenses are NOT used to measure the cost of living. They reflect a ‘standard of living’. A standard of living is a level of material comfort as measured by the goods, services, access to health care, standard of education, house ownership, car ownership, disposable income, employment rates, access to social amenities and other luxuries available to an individual, group or nation. Thus, it is a quality assessment of the living standard.

According to the Barron’s financial and investment dictionary, standard of living is the “degree of prosperity in a nation, as measured by income levels, quality of housing and food, medical care, educational opportunities, transportation, communications, and other measures. The standard of living in different countries is frequently compared based on annual per capita income. On an individual level, the standard of living is a measure of the quality of life in such areas as housing, food, education, clothing, transportation, and employment opportunities.”

There is currently a frustrating duplication of roles by regulatory authorities in various sectors. For example, telecommunication companies require the approval to increase tariffs by the Posts and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) and then the NIPC, without even mentioning the time taken for the background consultation with the parent ministries.

It is the same thing in the hospitality industry - ZTA and then NIPC and back to ZTA.

How do those who are financially well endowed live within their means when their discretionary expenses are curtailed or controlled?

Hotels are rated through a star classification system. Stars are often used as symbols for classification purposes. They are a common means for ranking things such as movies, TV shows, restaurants, and hotels. The Michelin Red Guide system remains the most famous star system. The Michelin Red Guide has been use in the business of evaluating and recommending restaurants and hotels for over a century.

Full-time professional inspectors are employed and they anonymously visit restaurants and hotels, and evaluate them on a range of criteria. The evaluation process has been honed over time to identify consistently high-quality establishments to suit a range of budgets and across a range of styles and cuisines.

For restaurants, Michelin Red Guide stars are based on five criteria:
· The quality of the products
· The mastery of flavour and cooking
· The "personality" of the cuisine
· The value for the money
· The consistency between visits

A single star denotes "a very good restaurant in its category", two stars "excellent cooking, worth a detour", and three stars, "exceptional cuisine, worth a special journey". Higher hotel star ratings often indicate hotels with higher levels of luxury available. The term five star hotel is always associated with the ultimate finesse and luxury (and, by implication, expense) and reflects the best in hospitality excellence.

There is a risk of undermining and destroying the meaning of hotel rating in Zimbabwe . It will be a sad thing that our top hotels are made to operate like South African lodges.

Town and city lodges in South Africa charge between R500-R530 and R550-R800, respectively. If we convert what NIPC has pegged to be room rates for our 5 star hotels, it is less than these lodges' charges. It is ironic that the same people who are forcing our highly rated hotels to charge sub-economic rates, stay in 3-5 star rated hotels that charge between R900-R7,000 whenever they visit South Africa .

One time soon after the June 18, 2007 price controls were introduced, I had a customer to take for lunch. I had pre-booked at one of the 5-star hotels. We did not enjoy our lunch because the hotel restaurant was so overcrowded. We were in queue for almost 10 minutes before we collected our food and then we were seated at a table that had to be cleaned to accommodate us. Service was highly compromised because the kitchen and waiters were overwhelmed by the number of people who were coming because the meals had become.

On another occasion, I took my supplier for a drink at a bar at one of the five star hotels. The bar was also too busy, overcrowded and noisy compromising personalised service and standards. There were few glasses available and beer was warm. It took long to be served. I saw some patrons were sneaking away before settling bills.

I also saw one who was putting on shorts, a T-shirt, hat and sandals arguing with the security detail over the bar's dress code. He told the security that it was his money that should make him get into the bar, not dress code or standards.

Why should we have the likes of Zuze and Mbudziyadhura be lowering hotel standards? They have Matererini Bars somewhere to enjoy their beer.

If the NIPC and ZTA insist on their price pegging for the discretionary-based products/services and economic sectors, those with money will simply spend it somewhere and our economy will suffer at the end of the day. ZTA will have very little to collect through the tourism levy. ZIMRA will have little to collect through VAT. Employees will suffer because the business will be operating at sub-economic and below capacity.

Enjoying the services of a hotel is like buying jewellery or chocolate – it is a leisure or luxury. A luxury is anything that gives one comfort or pleasure, usually something one does not need for life or health. It is usually an exlusive delicacy, elegance or refinement of living rather than a necessity.

Why should the government, through ZTA and NIPC, be concerned about how much those with money spend it if earned honestly? The more spent the better for the economy! Highly rated hotels and other service providers must continue to offer what is expected of the extravagant lifestyles of the wealthy and financially endowed.

Why should one enjoy what luxurious life can offer when he cannot afford it? Why should we frame our mindsets to see luxury as a moral or mortal sin? We are destroying what should be inspiring those who are upwardly mobile.

And, why should one not enjoy what luxurious life offers if he can afford it? It seems there are some people wishing to continue to enjoy what luxurious life offers when they cannot afford it.

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