Do you want to pay tourist price or regular price? Do you want to pay the maximum or the minimum when you travel?
Those sound like dead easy question when they’re put that way, but travelers often take the high-priced option without realizing they’re doing. it. There are usually at least two tiers of pricing in a given destination and some are more apparent than others.
Tourist Price Versus Local Price
When travelers hear about two-tiered pricing, this is usually the most obvious one to understand. We’ve all faced it at some point. The taxi driver charges a local one price, but charges the “rich foreigner” another. The lady selling fruit in Old Hanoi has a real price and a “non-communist” price. (And she firmly believes it is better to lose a sale than to let the foreigner get away with paying less than double.) That boat trip on Lake Atitlan is going to cost you more than it costs the hunched over Mayan woman next to you. You can argue, but you’ll probably be left on the dock if you don’t cooperate.
Some countries even bake this into the admission price, letting locals in for 1/10 what visitors pay. In Peru it’s codified into the domestic airfare cost: you can’t get the local price without a local ID number.
What you can do about it: Not much, apart from haggling when you’re dealing with a person instead of a government. If you’re buying something substantial, however, like real estate or a carpet, perhaps employ a local friend to do the negotiating. For the small purchases, consider it a charitable donation that’s more efficiently administered than that from an NGO. Your power to change what’s culturally accepted is very limited. Don’t let it ruin your trip.
Foreign Places Versus Local Places
Every destination that gets more than a smattering of visitors has tourist restaurants, tourist shops, and hotels mostly frequented by foreigners. You will nearly always pay far more in these spots than you would a mile away. Think St. Mark’s Square in Venice, Times Square in New York City, or Gamlastan in Stockholm. Sometimes the entire town is one big tourist zone, like Santa Fe in New Mexico or the Cancun hotel zone.
Often in these places you’ll see a doubling of identical menu items or even easier items to compare like a Coke or a local beer. These are the places you think of when you hear the word “tourist trap” and they really will trap the currency in your wallet with nasty teeth. You’ll pay more for almost everything in these spots, from food to hotel rooms to parking to coffee. The big exception is when it’s a local tourist trap in a poorer country. Then prices are just slightly higher.
What you can do about it: See where all the gawking tourists are hanging out and where the tourist buses are parked. Then walk in any direction and keep going.
Urban Versus Mid-size City and Rural Prices
India is a very inexpensive country to travel around…unless you’re in Mumbai. Hotel prices don’t seem all that outrageous in the USA…unless you’re in New York or San Francisco. You can eat and drink for cheap around the Czech Republic…unless you’re in central Prague.
This isn’t a hard and fast rule, because sometimes the increased competition in a city offsets higher real estate prices and it’s a wash. Witness the cheap hotel prices in Saigon or Bangkok, for instance. The more developed the country though, the bigger the disparity usually is. Compare London to some small town in the Midlands or prices in Paris to those in the Dordogne in France.
The other thing that can throw this off too is you have to disregard popular resort areas. Supply and demand do apply still, so a beach town with 40,000 residents might cost as much as the capital city for lodging and restaurants. Then you have to go to the second tier of beach towns that aren’t so popular or come back during shoulder season.
What you can do about it: See the sights and get your business done in the capital city or commercial hub, then head to a mid-sized city or the countryside to let your daily budget decline by half.
High Season Versus Other Seasons
If you go to a popular place during high season, you are paying the maximum price. Period. Unless you are doing a home exchange or have friends to crash with, this is when you will pay the highest prices of the year for lodging. It’s not an urban myth that restaurants will have two different menus with different prices, or that car rental companies and train services raise their rates—just like the airlines do.
Vendors, taxi drivers, touts, and hustlers all know which way the wind is blowing and they will do what they can to get that wind to blow a few more dollars into their pockets, courtesy of you.
What to do about it: Avoid high season or go somewhere it’s not high season instead. Remember, the earth has two hemispheres with different holiday times and school schedules, plus the tropics have very different weather patterns than the north.
Expensive Destinations Versus Cheap Destinations
For what I spent on a round of drinks for myself and three friends last summer in Stockholm, I could have bought a round for 12 friends in Bulgaria. For what my wife and I typically spend for dinner and a movie in the USA, we could do that three nights in a row in Mexico. The hotel prices I’m looking at in Montenegro for an upcoming trip are literally 25% of what similar hotel rooms go for in Italy.
It doesn’t matter how careful you are on what you eat or how often you stay in hostels if you’re going to travel around Japan. You’re going to blow through money like crazy. If you took the same daily budget and went to Cambodia, however, you could get private rooms, take taxis everywhere, and eat three nice meals in a restaurant every day. I’ve said it before and I’ll keep saying it again: where you go when you travel is far more important than how you travel once you get there if you want to travel well on a budget.
What to do about it: Pick up a copy of The World’s Cheapest Destinations and pick a place that sounds fun. It will probably be a place you can easily afford.