# How to tell if a travel location is "affordable"?

Disclaimer: The locations are just examples to set up the question and all prices are made up for the sake of the example and question.

Background: Let's say I want to visit London or Busan, and my currency is USD. While comparing the two locations I notice their exchange rates. 1 USD is 0.60 GBP, while 1 USD is 1,200 KRW.

Question: Are there traveler's tips and/or tools when it comes to currency exchanges where I know how much I can get for my "dollar" in a certain travel location? To use the exchange rate above as an example, consider the following. A bottle of water in London costs 0.40 GBP while a bottle of water in Busan costs 2,000 KRW. How would I know the relative value of goods I can get for my "dollar"?

I found a site that provides that information but I'm wondering if there are other travel tips or anything to answer my question.

Edit: I replaced Korea with Busan to give it a more precise location and to keep it on the same level as London.

• Numbeo and a similar site both told me to expect a one bedroom apartment in Monterrey, NL, Mexico, to be three to five thousand pesos a month. Looked in local newspapers and discovered that a decent place is about twelve hundred (and slummy places for much less). Jun 1, 2016 at 22:05
• Following the bottle of water example: you probably don't need to buy it in London because tap water is safe, This is different for other destinations. Moreover, you may find that in those destinations water is more expensive than tea. Therefore affordability depends on more things than just cost of living and exchange rate. Jun 2, 2016 at 7:20
• Bottle of water in Toronto costs maybe CAD \$1.79 for ~650ml Dansani (filtered city water) at a fast food restaurant and about CAD \$0.10 for 500mL Nestle or store brand spring water at Costco (35 at a time). Source: I used to buy water for baseball games. Pretty hard to compare. Jun 2, 2016 at 16:43
• @JoeBlow The "second world" doesn't exist any more. Note that it means the "USSR and its satellite states", not countries of an intermediate level of development between that of the richest and poorest nations. (And, while we're at it, "third world" doesn't mean "economically undeveloped"; it means "not aligned with the US or USSR".) Jun 2, 2016 at 18:02
• @DavidRicherby - sure, those terms have become slippery, and you're correct to point to the original, "more accurate" if you will usages. Perhaps "developing world" is the best phrase in that sentence. Many cities today have, simultaneously, a sector priced exactly like Tokyo, and a "developing world" priced sector. Jun 2, 2016 at 18:16

The US Department of State publishes recommended per diem ("per day") reimbursement rates for every major city. These are intended to enable fair reimbursement for travel expenses incurred by US federal employees transacting business on behalf of the US government. For instance an employee travelling to London will be entitled to claim 322 USD for lodging and 163 USD for food and other expenses he incurs, every day. If the same employee goes to Paramaribo, he can only claim 149 USD for his hotel and 111 USD for other costs.

They are updated monthly to reflect changes in the cost of travel (lodging, food, travel) as well as movements in exchange rates against the US dollar.

Many private businesses use these rates to determine a "fair" expenses policy for their own employees. (Although often a multiplier is applied, depending on seniority and the general travel budget of the company.)

If you think that 320 USD per day for a London hotel room is ridiculously high (or perhaps a bit on the cheap side), you can at least compare this rate against rates obtained in other cities to see how your cost of travel will vary. In my example, you already know that staying in Paramaribo is likely to be cheaper for you than staying in London—even if you don't know how well the Surinamese dollar is doing against the British pound today.

• @LampPost It's public information. You don't need to be a US federal employee to find it useful (and they probably know about it already). My point is that someone has already compiled estimated travel expenses for every major city in the world, so you can use it. Maybe the rates are too high or low for your purpose, but hopefully you can just adjust that by multiplying them by some fixed number. Jun 1, 2016 at 21:24
• This Index is rather silly and relates only to 5 stars locations. For instance the typical London’s budget hotels in the Earl’s Court area of central London are under \$50, and you can eat in most pubs for less than \$10 per meals. Also while in Europe and the US hotels are in a relatively narrow range from say \$30 to \$500 per night in some Asian countries the range is \$1-\$300 (yes \$1, or even less, I have stayed in several \$.50 (fifty cents) places in Asia). Jun 2, 2016 at 14:59
• @Reed I live in walking distance of Earl's Court ... if I can stay in a hotel for under \$50 a night, that's less than my rent! Jun 2, 2016 at 15:59
• @wedstrom: hotel/motel/hostel prices vary hugely around the world, and are not always proportionate to other aspects of the cost of living — I’ve stayed in decent cheap hotels in the middle of Manhattan, and expensive crummy ones in small-town Australia. Your experience in Carson City doesn’t contradict Reed’s in London at all.
– PLL
Jun 2, 2016 at 18:04
• @reed - It's not the number itself that you want to concern yourself with - it's their relative values. If they have London at \$300 and Berlin at \$200, then you can see roughly how expensive they are in comparison. And maybe you oly spent \$50 a day last time you were in Berlin - so London you might expect you to cost \$75/day. Jun 4, 2016 at 17:52

The Economist Magazine invented the so-called "Big Mac Index" as an attempt to measure the relative purchasing power between various currencies.

THE Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in January 2016 was \$4.93; in China it was only \$2.68 at market exchange rates. So the "raw" Big Mac index says that the yuan was undervalued by 46% at that time.

Source: Big Mac Index

For the case you mentioned, the UK vs Korea, the indices against the dollar are...

...which suggests that at the moment, the UK gives a bigger 'bang for your buck' because the index is undervalued more. But remember the caveat offered by the "Economist"...

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.

• Big Mac index was my first thought too. Jun 1, 2016 at 20:53
• a few milliseconds ahead of me, the draft was ready ;) Jun 1, 2016 at 20:54
• While the Big Mac Index is somewhat useful as a rule of thumb, the major costs for a traveler are usually transportation and accommodation, not the price of beef. Knowing how much a Big Mac costs you in central London doesn't tell you that you'll be spending a fortune on a hotel room, nor does it tell you that a major convention is in town and hotel rates are even higher. The only real way to find out is to price out the rough costs of the goods and services you want to buy. Jun 1, 2016 at 21:03
• How much the "adjusted index" is undervalued doesn't really count for a traveler, because their adjustments are intended to back out the lower labor costs in cheaper countries. Those lower labor costs are a big part of why a traveler (or multi-national corporation) can get things cheaper in, say, India than the UK. It seems that it would be the actual unadjusted cost that could be relevant to a visitor, not the adjusted index, which might be interesting to you if you're into currency speculation. Jun 1, 2016 at 22:11
• @Relaxed That would be more helpful if the adjusted value actually corresponded with the cost of living, though; it actually correlates the other way often. Look at the above. Seems like it's cheaper to go to South Korea than London, despite the opposite result from the adjusted value, no? \$3.50 vs \$4.20 for a Big Mac...
– Joe
Jun 2, 2016 at 15:39

Although Numbeo, a crowdsourced city comparison tool, is for cost of living and not travelling it is still an extremely useful resource even for short stays. For example Vancouver vs Jerusalem shows prices in restaurants, markets, rent per month (while you likely won't rent for a month the ratio between two cities will be similar for a daily rent).

• Numbeo is the only website listing truly useful information, broken down by category. I can testify the data is very much accurate, at least for European cities. Jun 2, 2016 at 7:45
• +1. I have updated them several times with my city's cost of living, and found the information to be very accurate. It doesn't show hotel pricing, and transport prices are somewhat off.
– AKS
Jun 2, 2016 at 10:31

The problem with many of the online comparison tools is that they don't necessarily reflect the kind of travel lifestyle you're going after. Here's what I normally do to get a good estimate:

1. Go to HostelWorld, find the highest rated hostel and check their daily rate for a 4-person room. In Prague that's around 30`EUR`, while in London it's closer to 50`EUR`.

2. Go on Numbeo and check out the local restaurant prices, in the Meal, Inexpensive Restaurant section.

3. Go on Uber and check out their rates for the city (or that country's capital). If the taxi is cheap enough I'll often completely skip on public transport.

4. If the taxi is too expensive or Uber is unavailable, go on Numbeo again to find the price of a single public transport ticket.

5. Go on Foursquare and check out the entry fee for the top rated museum. Surprisingly London is actually cheap in this regard, as most museums are free or almost free.

Since I don't spend much money outside these categories when I travel, this gives me a great idea of exactly how much I will end up spending.

• very sensible approach. Jun 2, 2016 at 16:11
• yes, this is reasonable +1. Replace Hostelworld with a hotel booking site if you're going for slightly higher end stuff, places like ctrip (China) cover lower end hotels as well as the high end hotels. I also check the price getting to and from airports, and if public transit is advisable for that. Sometimes it can be pricey with few options. Jun 2, 2016 at 19:33
• Yeah, this is what I do too - use the Internet to find sample costs of thing I myself am liable to want to buy/use while there, until I see enough to get an idea that satisfies me. Typically different types of costs are not all in proportion, and I mainly care about the big ones like lodging and transportation and maybe restaurant food. Jun 3, 2016 at 16:36

Numbeo is accurate for the cities I tried, but in many areas there are very cheap long term basic accommodation and only luxury travel accommodation for tourists.

I think that someone who asks this question has a finite budget, the option to go where he wants and desires to get the most "bangs for his bucks". Most of the answers I saw were for luxury business trip to a fixed location.

Also cost of traveling is relative to the way you travel, what you do, and for how long. I think it is best to separate things into various expense items.

• Cost of travel

Yes, the money for the plane ticket may already be spent, but the length of the trip gives you a daily budget. A \$1000 ticket for a 2 weeks trip is not accounted the same way as a ticket for a 2 month trip. This impacts your total spending and has to be integrated into the trip as a daily expense. This can lead to going to a more expensive country that has a cheaper travel cost.

• Hotel

There are some good sites for hotels but many of the hotels listed pay to be there and are desperate for customers because they are badly located and not- competitively priced. The main problem however is that they only tend to list hotels with 2-3 stars and above. In Europe that is fine but in most countries I travel to, budget hotels don’t want to pass the burden and expense of being rated by stars giving agencies. So, the bottom range in hotel sites are middle range in many countries and many under \$50 hotels with great values just do not exist on the internet.

• Food

This cost greatly varies; sites like Numbeo are good for that. Meal budgeting is very personal and is one of the great variation. To save money there are usually many cheap street foods and supermarkets.

• Transport

Either cost of inner-city transport or averaged daily inter-city transport.

• Social and drinking

One of the greatest relatives, from near zero to spending most of the budget in discos and pub crawling.

• Miscellaneous, Groceries, Fees

Variable, in some countries miscellaneous costs can be greater than hotel and food. Museum and sites fees can be a separate category if they are major daily expenses.

So, to answer the question you need to do some estimates based on several sites on the different components of the budget.

So these vary, while some people put over 60% of their budgets in hotel, for me I like cheap hotels but nice food, and a social life. So for me I would estimate based on 100 that travel=10, hotel=30, Food=25, transport=5, Social=20, Misc=10.

So, determine your budget priorities and get estimates on these areas.

Cost of living indexes don't fully apply to tourism as residents incur a different set of costs to visitors. Also, per-diems are used to provide an estimation of how much a business traveller might be expected to spend and be allowed to claim back from their employer. A business traveller is unlikely to be able to claim for the cost of renting a beach chair or a visit to a theme park.

A bit of research finds the term: "Tourism Price Competitiveness" and an index can be seen here for 2015: The Travel & Tourism Competitiveness Index Ranking 2015. The index is formed from many things that are related to the country's infrastructure, business costs, health costs, education costs (as they influence cost of the labour market), up to costs of hotels, airline tickets and fuel and others that inevitably influence the final price of your big mac.

Determinants of tourism price competitiveness

Tourism price competitiveness is essentially a matter of the prices of the goods and services that tourists buy, expressed in some common currency

Given the relative index of the UK at 5.12 and South Korea at 4.37, the cost of a big mac in the UK at \$4.22 divided by 5.12 and multiplied by 4.37 = \$3.60. Very very close to @GayotFow's price. :)

• That ranking has nothing takes a lot of things into account, not just tourist pricing, so it's harder to make any conclusions out of it. Countries such as Chad (at the bottom of their list) are actually very expensive to travel if one wishes to retain a Western level of comfort. Jun 1, 2016 at 23:21
• I think the idea is that it takes lots of things into account that would affect tourist prices, not just the prices themselves. Looking on Numbeo at the price of a few random items like a meal, a beer and a mac meal, it seems conceivable that the index is justifiable. Open to hearing dissenting opinions Jun 1, 2016 at 23:41