To Get Those Cheap Travel Prices, Skip the Big Tour Companies

travel prices

If a travel destination is cheaper, will an organized tour to that destination cost proportionally less?

Probably not.

A couple months back I got an e-mail from an older woman saying, “I understand what you are saying about the destination making the biggest difference out of anything in your travel budget, but why does that not show up in tour prices? It seems like booking a tour to India or Peru is going to cost me just as much as booking one to Greece or Spain.”

In many cases, she’s right. I was reminded of this when I got a glossy catalog in the mail the other day from Geographic Expeditions. They’re a fine company and are definitely going to take care of your every waking need during a tour and will ensure that you’re staying in top-notch hotels. Still, this catalog was on their family adventures and my eyes popped out when I saw some of the prices. A 13-day Vietnam tour listed prices starting at a level that would cost a family of four 25 thousand U.S. dollars. And no, that’s not counting airfare. From $7,330 for adults, from $5,775 for children. Divide that $26,210 by 13 days and it’s a cost of more than $2,000 per day.

How does that compare to what you will spend in Vietnam on your own? Well, we spent $150 per day for a family of three and that didn’t require much sacrificing. We stayed in decent hotels, ate at good restaurants all meals, took a first-class overnight train, and hired a lot of taxis. Even if we had traveled to a wider area and taken organized tours of Sapa and Ha Long Bay, it would have required some serious effort to spend more than $500 a day. After all, the best hotel in Hanoi is often less than $250 and then it drops down fast after that. (See the earlier post on travel prices in Vietnam.)

I honestly don’t think I could spend $2,000 a day in Vietnam without buying a motorbike each day or two and mixing gold leaf into my spring rolls.

tour companies

Where the Travel Tour Price Money Goes

Any upscale tour company will tell you that what you pay goes toward the best vehicles, the best guides, special access tours, yada yada yada, and that’s all true. But half of it is also going to the tour company. Think of it as a consulting fee, paying for their expertise and time. They often then outsource to the local inbound operator that does the real work on the ground. So if you follow that logic further, yes you can usually hire the very best local tour company for half what you would pay the one at home. Pay your own way and arrange a guide yourself and you can cut it in half again. Much of what you spend with a big brand name tour company is going toward marketing and administration.

There’s nothing wrong with any of this and it’s a smart business model that has worked well for a very long time. People with loads of money and not much time will gladly pay a premium price for a luxury adventure tour to get all the details taken care of for them by someone in their home country and to be assured of a flawless (or close to it) experience after they arrive. Someone will be seeing to their every need and there’s a voice to complain to back home if something goes wrong.

That kind of hand-holding evens out the price, which brings us back to the original question. If you book an organized tour in a cheap country, will it cost less than one in an expensive country? It should, and with a cheaper company like Adventure Life, G Adventures, or Intrepid it will make some difference because they are staying at simpler hotels and pass on more of the savings. Usually though, there’s little correlation between actual ground costs and tour costs with a major adventure outfitter or luxury tour company. Even with Intrepid, a two-week tour in India starts at $128 per day. One two-week tour in Australia starts at $239 per day. This despite the fact that India is one of The World’s Cheapest Destinations and Australia is currently one of the world’s most expensive. If you look at a big company like Abercrombie & Kent, Spain costs the same ($500 to $600 a day per person) as mainland Ecuador. Book it all yourself and Ecuador can cost 1/4 or less what Spain does.

To get the real savings, you have to be paying the bills yourself, no middleman. So get a copy of The World’s Cheapest Destinations and start planning!

Comments
  1. rubin pham

    after 10 years of traveling the world 2 weeks at a time, i realize it’s cheaper to travel on my own rather relying on tour guide company.

  2. GH

    Tim, you are absolutely spot on as usual. In addition to the cost, there is the feeling of being “held hostage” when on a group itinerary for freedom-loving people like myself. I have only been on one group tour in my life, just for one day to Delphi in Greece, when it was a bit of pain to get there by car with a friend coming from chaotic Athens. I was showing the friend around Greece and had been to Delphi many times. The tour not only rushed us through Delphi, charged a huge fee, but did not allow time to enjoy one of the most sacred and beautiful sites on earth. I later rented a cheap car and drove around Greece for little, staying at cheap places (pre-Euro), and explored much of Greece again for far less than a tour would have. Likewise with the Greek islands, where the only package you might consider are the ferry rides from island to island. Stay away from group tours unless you are absolutely new to travel and perhaps need a bit of security, as some young people do who go on initiating trips after never having left home. Even then, you will likely pay much more, and hostels or couchsurfing along with eurail passes are far more enjoyable.

  3. Jerry B.

    I think it’s a matter of fixed cost plus variable cost for the tours, variable cost only for the independent traveler. A tour company is spending a certain amount to acquire and serve each customer, whether that person is going to expensive Norway or bargain priced Bolivia. You’re paying them a certain inflexible amount no matter what, so be sure you want what that fee is getting you. If you do, well spent. If not, money wasted.

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