What is the business model of commercial free walking tours?

Question

For instance, Sandeman's runs free walking tours all over Europe. One or two every day of the year, good local guides, and the only payment is tips at the end. I'm sure the tip money is good since they get good crowds, but that seems like it would support one or two guides at a living wage, not a seemingly professional multi-national organization.

Does anyone have the inside scoop on these operators? Where are they making their money?

(I'm asking because I've found it's always good to know what is motivating people who are giving away things for free in order to avoid getting scammed.)

Answer 1

There are a number of different types of these "Free" walking tours, with the business models varying dramatically. In some countries you can expect to end up at the guides "cousins" carpet shop, where the guide will take a kick-back for any sales. Some tours are run by the local community and/or volunteers and truly are free (although with the potential for small tips which will often go to the organization rather than the guide).

And then there's organizations like Sandemans.

Sandeman's hit the press a few years ago when German TV station ZDF did an expose on how they operate. Google will give you all of the allegations and counter-claims (search for sandeman zdf), but in short Sandeman's were claimed to be charging their "freelance" tour guides ~3 Euro for every person who was on the tour. The tour guides would then push the guests for "tips", often including repeated comparisons to similar "commercial" tours, and the prices that the guests would be paying if they had taken one of those tours rather than their "free" tour.

If a guest tips 10 Euro, the guide would have made 7 Euro out of them. If another guest tips nothing, then the guide would be out of pocket 3 Euro. Either way the company has made 3 Euro per guest.

Whether this is a valid business model, and whether you should support such companies/guides is something that is probably best left up to each of us individually.

Answer 2

There are two types of free walking tours.

Free ones sponsored by companies. For example, in Berlin - Sandemans has one, where you're offered and told about their other tours while you go on the 'free' walking tour of the city. In addition, you'll have it suggested that you tip your guide. The same occurs in Krakow through another tour group there. This is fine, they're generally up front about it, and there's no actual pressure on you to sign up - at the end of the walking tour you optionally tip, and then walk away if you want.

There's another type - like that in Santiago, Chile, where an international group has formed in various cities, and students buy their own red t-shirts and run the tours for their cities. It's still very good, the students are generally very knowledgeable and our entire group thought the tour was excellent. Again, you tip at the end. (Note I found the website for that but it doesn't have info about how the group formed, but this is what we were told on the day).

Answer 3

An interesting article “The Pros and Cons of Free Walking Tours”.

• These tours are of course not entirely free. Most of the guides for these tours work on a tip only basis and ask that you tip them at the end for what you feel the tour was worth (you should also consider when tipping your guide for these “free” tours that often the guide pays a commission to the tour company for each person on the tour, so not all of what you give will go to them.)

These tours are not small group tours. Generally, there are 20-40 people on the tour with you.

the business model: 20 people x 10 EUR = 200 EUR - 3or4 EUR pp (i.e.60EUR) the obligatory commission for the tour operator so 140 EUR for the so called "begging guide" (not bad) or 10 people x 5 EUR = 50 EUR - 3or4 EUR pp (i.e. 30EUR) as above for the TO so 20 EUR for the begging guide (bad)

Answer 4

This is an interesting article, lots of people have views on this subject and preconceived idea of how things work or don't work. I have been a free walking tour guide for 3 years now and I am long way from being a Student, just passed the big 50 I have found myself in the current economic situation in Europe to for forced to change my profession. I do admit to having previous experience in this field, So when I found my business floundering I went back to this job.

I previously had done Paid walking tours and CHOSE to go the Free tour route after realising that there was not enough travellers willing to pay €12-15 for a tour but 1000's who would do it for free. I work for a company where guides have to pay a marketing fee, this I am more than happy to do, I'm self employed and always have been, I've always had business expenses and this 'Marketing Fee' is the only one I have now. Lots less than when I had my own shop.

We normally have about 30 guests per tour, averaging a €2 per person pay in to the company. I hope that the people enjoy my tour enough to tip me what they think it is worth. These tours demand a lot of high energy and besides knowing the history we also have to be entertaining enough to keep the people interested to stay for 3+ hours and listen to me chatting. I am a far better tour guide when working like this for my money than I was as a paid guide, regardless of the tour I did being a Paid guide I still got the same money, so if I was tired or maybe just lazy or feeling great, I'd go through the motions and as long as I told the info no one was going to complain to me.

Besides being a tour guide we need to be history teachers, comics, tourist information officers, Story tellers along with so many other skills expected of us from out guests.

Hey I make money, This is my full time job, I have a nice apartment in the centre of a major European city. pay my bills,and have some left over to travel and have a few pints of Guinness.

We do judge people and sometimes even some nationalities, We know who tips and who does not and to be honest sometimes the ones who ask the most questions are the ones to sneak away at the end and not tip....... Yeah we always know who you are.

I've done walking tours all over Europe and have never been disappointed with the free ones, something I can't say about the paid ones, yes there has been some bad ones.

Remember people, if you go on a tour, the guide will ALWAYS have to pay something, including the ones who say they are local volunteers, Who pays for the marketing, Flyers distribution, Admin, legal fees and licenses etc.

Please consider what a similar tour would cost you, your budget and just how much fun and info you got out of the tour, think about a €2-3 Marketing fee and tip the guide on these considerations.

Maybe I'll be your guide if you come to Dublin

Answer 5

What a great question! I have given 'free walking tours' in London for a long time. Also in England (e.g., Yorkshire). Also in France. And from time-to-time I guide a 'free tour' on the Route Napoléon which involves either cars or motorcycles and lasts several days. They are all heavily oriented to history and/or literature. I have also guided free tours from Tribschen to London via Bayreuth, Riga, and Kattegat tracing Richard Wagner's life and his flight to London.

In each case it's free. And when it finishes, the end users are invited to contribute to the sponsoring charity. Most of the time, they contribute before the tour even starts, but nobody checks up on them. The end users have to pay their own expenses. I never would accept a tip, but I do receive an honorarium from the charity (on the order of GBP 50 or thereabouts, the max is GBP 100). The group size is anywhere from one person up to about a dozen. My preference is a group of about 3, and it's too difficult when the group size is more than about 12. The average group size is about 6.

The rationale is that it's a great way to raise money for a worthy cause, and I like doing it so it's a win-win situation. The 'business model' in this case is people enjoy a narrative and simultaneously take advantage of a tax dodge; the charity enjoys more funds to continue their work.

There is a group on Facebook where similar guides congregate. It gives end-users the chance to see what's available and ask some questions. Most of them have to do with England and there are none (to my knowledge) outside of the UK.

The local ones run all year around, including people 'stuck' here for Christmas with nothing to do. I will do the Napoleon tour later this year if called upon (it's 3 days and arguably the most dangerous). I would not provide the names of the sponsors as it might be seen as spam, except to say they have to do with cancer and leukemia.

Answer 6

I am not sure if you guys did read well. If a Guide runs a tour with let's say 15 guests and they tip him an average of 4€ per person...
He must pay 2.20 to Sandeman and so earns 1.80€ x 15 = 27€ for a 3 hour tour.
That eans 9€ per hour.
I don't know if you have an idea how much energy it takes to talk 3 hours. To make a living by that is an impossible thing.
To make some extra money as a student might be ok. But the business model is definitely favoring the companies like Sandeman and not the Guide.

Answer 7

At least in Japan, the tours (which are often led by retired individuals) are run out of the local tourism office. The retirees are paid a nominal sum for their efforts. This is particularly relevant as you are not expected to tip in Japan.

The tourism board is sometimes city run and sometimes run by the local merchants association.