Saturday, July 2, 2011

See how the Europeans make tourists like us subsidize their local population.....

We all want to holiday in Europe. That’s a truth no one can deny. The Europeans themselves know it better than anyone else. After all, so much of their economic activity – measured both in terms of contribution to GDP and employment – depends on international tourism. It’s no surprise then to see how the European savvy for business has made sure that tourists pay through their nose when they visit Europe. It’s not that the cost of living is too high for all people in’s mostly so for tourists! A few instances will prove how the costs are designed in such a way that tourists subsidize the local population.

Take the first thing that irks all Indians (and I am sure all tourists) when they visit Europe. Drinking water. In London or Barcelona, the ordinary half-liter bottle of water costs about 1 euro or 1 pound. That’s 70 rupees. A 1 liter bottle would cost a little more....say 1.25 Euros or so. That’s about Rs 85. But at the same time, I noticed that an 8 liter jerry can of water costs only 1.5 Euros. That’s about Rs 100 and a lot more reasonable. Now obviously, tourists cannot lug an 8 liter jerry can around and so make do with the usual 1 liter one. In contrast, most tap water in Europe is drinkable and local citizens use tap water for drinking purposes. While they pay for the water that comes home, that rate is much much lower.

Take beverages. A normal can of Coke or Pepsi or any other soft drink costs about 1 euro or 1 pound at the neighborhood retail outlet. That’s the place that tourists go to. In contrast, locals go to a supermarket and buy 2 liter bottles for around the same price. Ditto with beer in London. Friend of mine (thx Shirty!) told me that department stores are now selling a crate of beer (24 bottles) for the same price as the local pub sells one single pint! Tourists almost never buy a crate....locals do.

Take eating out. Now almost anyone who has lived in Europe will tell you that food is actually quite cheap. A family of 3 people can manage in less than 500 euros a month. Contrast this with what tourists pay at normal eateries. A minimum of 10 euros per person per meal. If this was to be extrapolated for a month (assuming 3 meals a day), that comes to nearly 2700 euros a month. See the difference? Again, while locals do eat out a fair bit, its tourists who bear the burden of high costs when they visit Europe.

Take transport costs. The entire transport system of London is designed to fleece the tourist. A tourist usually uses the standard “black cab” that one can hail on the street. Now admittedly, the London cab is the best in the world. The driver is extremely polite and cheerful (and unlike in NY, he is a local Brit) and best of all, he is extremely knowledgeable. One just needs to give him an address and relax....the driver will know the place! But for this, he makes you pay through the nose. For a normal 2-3 km ride (15 mins), you pay between 10-15 pounds – that’s about Rs 1000. In contrast, a savvy local would hire a radio cab which would charge around 20-25 pounds an hour or more. And in spite of the congestion tax and the like, and the high prices of petrol these days, the local who uses his own car gets it even cheaper. It’s the same with the London bus or the tube. Tourists buy tickets costing a minimum of 4 pounds a trip (even if its just one stop away)....while locals have the Oyster card and the cost is exactly half. Again, tourists pay to support the locals.

Take the usual tourist spots. Now frankly, many of them are highly overrated. I read on the net that the US in 2007 had about 2462 “National Historic Landmarks” recognized by the US government (source: Wikipedia). Err....did I just say “historic”??? History in the US??? Or is it just plan business savvy???! Europe of course is far richer in history and a visit to any site is prohibitively expensive. Each entry costs between 15-20 euros or pounds and honestly, while some like the main museums and palaces are truly remarkable and worth paying for, many are just a rip-off. Again, the way the tourist packages are designed, tourists end up paying for a lot of these spots....Locals obviously never visit these places!

So in many ways, it’s us tourists who pay for the lifestyle of the Europeans. Even the lowest paid worker in Europe gets 20-25 thousand Euros or pounds annually (Rs 15-20 lacs) and we, the tourists, are made to pay for that. The question is: why do we continue to pay so much if we feel it is a loot? After all, we can holiday in Hong Kong or Singapore and the costs will be far cheaper than going to Europe. Ahh....that’s where the rub is. Europe has built the capaability to price itself higher. The “pricing power” is with them. They have developed the tourist infrastructure in such a way that moving around and visiting various tourist places is easy and convenient to do. They have developed entire streets and markets where tourists can shop. They have developed “sit-outs” on the streets and the sea-fronts where we can eat and drink and see the locals make merry (wonder why Jairam Ramesh’s ministry never allows us to exploit our sea front for setting up restaurants and pubs). They have kept their environment spic and shifting low-end manufacturing to China and India. Why.....they don’t even need to produce more power since they don’t have much manufacturing left.....and so there is no pollution emerging from that sphere also. And finally of course, the “culture” of Europe....I enjoy just spending time in the midst of Europeans, trying to be like them for a few days a year! After all the honking and shouting and pushing and grabbing and spitting and much worse, Europe offers us a life of the exact opposite nature. And they charge for it!

What Europe and the US have done with consumer products (read: brands) and industrial products (read: technologies), they have repeated with services like tourism. They give us a certain quality and make us pay for it. The high pricing makes sure that they corner away a bulk of the tourism revenues globally.

And when it comes to exploiting the far richer history of India, we fail miserably. I once visited the Red Fort in Delhi (about 10 years back.....don’t know what the scene now is). The entrance ticket was Rs 2 and that too only for “adults”. As a result, a whole lot of local louts would enter the site everyday and create problems with their loud and uncouth behavior. The facilities inside were atrocious. The loos were obviously stinking. Even the Fort itself was in a shambles. The ceilings had murals which needed to be fixed urgently, but they had no funds. There was urgent need for air conditioning which would make the experience more enjoyable. But because we have this mixed up notion of socialism (every one in the country should be able to see the country’s history), we hesitate to ask people to pay. We find it acceptable that such a priceless historic monument as the Red Fort is shown so shoddily to the world, but we find it unacceptable to charge a much more logical fare....say Rs 50 or so.

The real truth is that it is the ability to charge high prices that determines what share of worldwide revenues we take away. But in order to price high, we must have the savvy to make our offering tempting and “compulsive” for tourists to pay. A foreign tourist would easily pay Rs 1000 for a visit to the Taj Mahal....but he/she expects a much more sanitized environment. If we don’t do that, we are not making our offering we cant charge what we should. It’s the same the Europeans and Americans have done with brands and technologies. We pay Rs 25 (am I terribly wrong here.....I haven’t bought one in 17 years!) for a Pampers diaper because the damned thing is so well designed! And we pay $ 1 billion for an American fighter aircraft because their technology is so damned good. Can we reverse the tables here and charge in the same manner at least for our world-class tourist spots?????


  1. FYI - Tourists (who visit India) pay a lot more than we Indians do. For example- 750 Rs. is the entrance fee for Taj Mahal. In Goa or any other tourist locations, they pay a lot more than we do. Also an important factor is the currency.

    It is now up to the private sector & public sector to develop the necessary infrastructure, so that we can charge even more :)

  2. well I am an Indian currently in Europe for a while ... so while what you say is partly true .. its more on how well informed the "tourists" are .. cause there are always the eateries at the railway stations (and they do make for comfortable and decent seating) as well as stalls / Imbiss everywhere where you can get a filling meal within 5 Euros..similar sorta scenario with the supermarkets ... further more smart tourists can also avail facilities like the day tickets / week tickets or even better most European cities have the "tourism" tickets which is a combination of both travel and subsidized entry fees to tourist attractions ...

    thus its more a matter of being better informed rather than just following the crowd :-)

    n overall we can't blame the Europeans for our shortcomings ... its kinda unfair...

  3. Incredible India needs to learn a lot, yet!!!!

  4. @anonymous....agree with you! One has to be smart when traveling in Europe. My point is that most tourists have a shortage of time and make do with whatever they get. Smartness is to be seen in a local takes time to learn what's possible in a given city/ post was intended not to blame the Europeans, but comment on what they practice....Prashant

  5. While I appreciate the research you've done, it's a bit rude to mock American History. It's true that it's a younger country than most, but why not just embrace the culture as a tourist and enjoy what there is to offer instead of making a joke of it? In fact, visit Washington D.C., the nation's capital, and you'll find that all of the historical & national landmarks are free - no admission cost for anyone. Even foreigners.