What things actually cost around the world

Rankings of expensive and cheap destinations circulate widely and are of limited use for planning a trip, for identifiable reasons.

Why the rankings mislead

They measure resident cost of living rather than visitor cost.

A visitor does not pay rent, does not commute daily, and does buy accommodation, restaurant meals and admissions at prices residents rarely pay.

They average across a country, concealing that the capital may cost several times what a provincial town does.

They are frequently based on a basket that does not match travel spending.

They date quickly, particularly where exchange rates have moved substantially.

The comparison that is useful

A small number of specific prices at the specific destination.

A night in the type of accommodation you would use.

A meal at the kind of place you would eat.

A local transport fare.

A coffee or a beer, which is the standard informal index.

Admission to a typical attraction.

These five figures give a more accurate picture than any index, and they take ten minutes to establish from actual listings and menus.

The exchange rate effect

Frequently the largest short-term factor.

A currency that has weakened substantially against yours makes a destination markedly cheaper, and the effect can exceed the difference between countries.

Which means destinations move in and out of affordability on a timescale much shorter than any published ranking updates.

Worth checking the rate against its recent range rather than in isolation.

Where costs are counterintuitive

Several patterns worth knowing.

Accommodation and restaurants track local wages; imported goods and international brands do not.

Which means electronics, branded clothing and imported alcohol can be more expensive in a low-cost country than in a high-cost one.

Transport within a country can be very cheap where it is publicly subsidised and very expensive where it is not, independent of the general price level.

Admission charges at major sites are frequently set for international visitors and do not track local prices at all.

Alcohol varies enormously through taxation, independent of everything else.

Fuel similarly, which affects driving costs disproportionately.

The spending style factor

Which matters more than the destination for most travellers.

The range between a frugal and a comfortable approach in the same place is generally wider than the range between countries.

Staying in guesthouses, eating where local people eat and using public transport produces a daily cost a fraction of the alternative in the same city.

Which means a destination described as expensive is frequently affordable with a different approach, and a destination described as cheap can be expensive if visited in a particular style.

The practical method

For estimating a trip.

Find actual accommodation listings for your dates and note the prices, rather than using an average.

Look at menus from restaurants in the area you will stay.

Check the transport operator's fares.

Check admission prices at the sites you intend to visit.

Add them up for a typical day and multiply.

This takes half an hour and produces an estimate that is accurate rather than indicative.

The comparison worth making

A final observation.

The relevant comparison is not between destinations but between the trip and staying at home.

Ongoing costs continue regardless, and a trip's marginal cost is the difference between spending abroad and spending at home.

For destinations with a lower cost of living, that difference can be small or negative for an extended stay, which is the arithmetic behind long-term travel and which is rarely made explicit.

The tourist premium

Worth accounting for separately.

Prices in areas where visitors concentrate are frequently several times those a few streets away, for the same product.

Which means a destination's cost depends substantially on whether you spend within the visitor zone or outside it.

Establishing the ordinary local price for a coffee, a meal and a taxi ride early in a visit provides the reference against which everything else can be judged.

General information about travel, not financial advice. Prices and exchange rates change — check current figures for your destination and dates.