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Comparing Destination Costs Around the World

With the dollar circling the drain, lots of you still interested in overseas travel want to find destinations where costs remain reasonable. One reader recently asked, specifically:

“I know traveling in Europe is really expensive now with the weak dollar, but how does Spain compare? Is it a relatively cheap or relatively expensive place to visit compared to other parts of Europe?”

My short answer to this reader was, “Spain is generally less expensive than the other big tourist countries in Western Europe but more than most of Eastern Europe.” This question, however, raises the broader issue of how you can compare destination costs, generally, around the world.

Unfortunately, that’s not as easy as it sounds: I know of no foolproof method. I can, however, provide some guidance.

Just in case you haven’t noticed, our own website regularly publishes reports on budget travel around the world. Today, as I’m preparing this response for submission, the Features section highlights two separate reports on low-cost European travel. By all means keep checking for current reports and older stories in the archives.

Magazines, papers, and guides

The travel press&#8212magazines, Sunday travel sections, and guidebooks&#8212is full of destination reports that include at least some references to relative costs. Many of those firsthand reports are quite current and are probably an excellent approach&#8212with the caveat that they’re heavily influenced by the personal opinions of the writers and they depend heavily on the writers’ points of view. If you’re interested in budget travel, for example, you aren’t likely to find much useful information in the slick upscale travel magazines that feature hotels in London at $500 a night as great bargains.

You can, however, easily find reliable publications that provide guidance at the lower-priced end of the spectrum. I have two favorite monthlies, both of which also post extensive online information:

  • Budget Travel is the only slick travel magazine devoted to cost-conscious travelers. Although it has lost some of its editorial bite since Arthur Frommer retired, it’s still a top source of information.
  • International Travel News consists mainly of reports written by ordinary travelers, most of whom strive mightily to keep costs to a minimum.

Lots of guidebooks specialize in&#8212or at least include&#8212all sorts of data and suggestions on low-cost traveling. Among the best, all of which issue individual volumes for many different countries and regions, are the series by Frommer’s, Fodor’s, Let’s Go, Lonely Planet, Rick Steves (for Europe), and Rough Guides. Most of these publications also post extensive information on their websites.

State and Defense Departments

The U.S. State Department regularly updates its list of overseas daily living per diem allowances for government employees on postings abroad. Also, the Department of Defense publishes similar per diem rates for employees’ overseas assignments.

The problem in these data sets is that the general scales of rates are geared to government and business travel rather than tourists, and the daily costs are much higher than those the typical budget traveler would encounter. They’re also focused on important cities rather than the less expensive countryside. Still, they’re probably a good indication of relative cost levels. If the State Department per diem for Madrid is $489 and the rate for Paris is $550, for example, you can figure that Madrid is roughly 10 to 11 percent less expensive even at the budget end of the scale.

European economic statistics

European governments develop and publish extensive data on living costs in individual countries. I know of two useful sources:

  • Eurostat, the official statistical unit of the European Union, publishes comparative national cost of living data. Published data include not only total costs but also a breakout of “Restaurants and Hotels” cost levels data. According to this source, the index for Spain is 91, compared with 110 for France, 94 for Germany, 100 for Italy, and 117 for the U.K. Incidentally, the lowest index values for Europe are in the Czech Republic (46) and Slovakia (49). The main problems are (1) the most recent data in the latest publication (January 2008) date from 2006 and (2) coverage is limited to Europe.
  • Finfacts Ireland publishes similar data for major cities around the world. Currently posted data, developed by a private research service, cover 2007 and 2006. The index for Madrid is 92.1, compared with 101.4 for Paris and 126.3 for London. Data are indexed with New York equaling 100; Los Angeles scores 87.1.

    Big Mac Index

    The Economist, Britain’s respected world affairs journal, developed and publishes a unique cost and currency value index based on the local price of a Big Mac. The theory&#8212not just a gimmick; it’s endorsed by many serious professional economists&#8212is that (1) the Big Mac is a uniform consumer product sold in just about any country in the world and (2) the price of a Big Mac is therefore a good guide to relative costs and currency buying power. Although the Economist charges a hefty fee for access to its data, the online currency exchange site Oanda publishes recent Big Mac Index data. Unfortunately, the site reports a single index for the entire euro area, so it isn’t useful for comparing costs among individual European countries. It is, however, handy for much of the rest of the world.

    Private sources

    Quite a few private research and consulting organizations regularly publish comparative living and travel cost information for use by businesses in managing travel expenses. Unfortunately, most of them cost thousands of dollars a year and are not available to ordinary tourists. If you work for a major corporation, however, its travel office may well have access to Runzheimer or similar data: Ask your travel manager.

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