Expensive Destinations & How to Cope

Some holidays are just expensive. When it comes to that once in a lifetime trip, travellers are always willing to spend big bucks to ensure that they have an experience to remember. We’ve already had a look at some of the world’s most luxurious hotels, especially in our hotel views blog last month, these are the kind of holidays tourist will shell out for and simply accept the cost, either because they’ve got the money not to baulk at the price, or because this isn’t something they’re planning to do more than once. There is of course another kind of expensive holiday altogether- the break to an expensive city.

There are a few of these that stand out, and they spread across every corner of the world. We thought we’d have a look into how to save money on these kinds of trips whilst still getting the most out of your visit. We also thought we’d take a look at some of the world’s most expensive cities that you’ve never heard of.

Swiss Savings

When expensive cities for tourists are discussed, there is one country that is often towards the top of the list – Switzerland. With three of the most expensive cities on the planet, Switzerland has one of the highest concentrations of expensive cities in the world for such a small area and population. Bern, Geneva and Zurich are the spots to look out for. Whilst incredibly picturesque, Switzerland is also immensely costly for visitors. As is the case with all expensive cities, to understand why they’re expensive, and how to save money, you’ll have to look at the economic reasons behind these steep prices.

Because of its tax policy, Switzerland is a big financial and political centre. With big banking and diplomatic centres, its no surprise that prices are high. These are inflated by the high wages of many of those employed in the city. This is also the case for other large financial centres, like London and New York. With a higher than average number of the city’s dwellers working in high earning positions, prices rise. With everyone from shop owners to taxi cab operators and restaurateurs knowing that they can raise prices and that their costumer base will still pay them, the high cost of living in these cities is quite explicable.

The answer to this problem for tourists is one which can be replicated across a whole host of different destinations. Whilst many in the city are on high wages, with the financial sector comes a lower earning service sector. In fact, with high levels disposable income, such as those within the financial sector in Switzerland, there is a greater creation of menial work with lower paid staff such as cleaners and maids contributing to the lifestyle of the city’s higher earners. These are still inhabitants who need provisions and services of their own within a close proximity to the higher earning areas of the cities. ‘Living like the locals do’ has often been a phrase that has reflected the desire for authenticity when travelling, but in this case, looking at where the inhabitants of the city who aren’t in expensive looking suits eat is a smart way to save money and avoid paying the same prices as the city’s top earners.

The effect of wealth on the cost of living

Tax policies like Switzerland’s attract many of the world’s top earners. The Seychelles as a region and Panama City are two good examples of destinations with peak prices being something of an oasis in their surrounding areas which aren’t nearly at the same level of economic prosperity. It only takes a small concentration of wealth to cause a spike to prices which will then trigger an upwards spiral of living cost. If the demand is there, prices will rise, business will grow from their provision of service to the higher earners and then prices rise again because there’s an increase in the spending power of smaller business owners. This is a process which in some cases has pushed many of the city’s traditional inhabitants out of the city to more affordable areas. If you have the time and freedom to follow then this is where you’ll find the better prices.

Property prices and hotel expense

In other cities, although there aren’t traditions of high earning positions in the financial sectors in the same way as Geneva for example, the cost of living is still high. Rome and Venice are two stunning Italian locations, but expensive also. One of the most significant causes of this expense is the cost of property. With building closely regulated in both, and the understandable restriction on space in Venice, property is very expensive. This cost is passed on the businesses which have to pay high rents or have high borrowing rates to pay off. This is then passed on to you- the customer. City centre hotels are notably expensive in both. But off the beaten track and a little out of the centre better prices can be found. We can personally recommend Rome’s Hotel Noto is ideal for younger travellers who are looking for cheap accommodation and is suited to large bookings for school or group visits.

Whilst staying a little out of the city centre might seem like an inconvenience, Rome and Venice in particular aren’t large cities in terms of their square footage and you’re not a long way from the sites of interest you’d be looking to visit. What’s more, walking or taking a bus into town are great ways to see the city. Rome, for example, has a comfortable climate for much of the year and so walking isn’t problematic. Eating street food rather than dining out at the top of the range restaurants is one sensible way of saving some money in this part of the world, with pizza, the ultimate form of street food being in no short supply! Here’s an interesting blog addressing avoiding overspending in Venice, which also addresses some other interesting perceptions of the city.

In Australia we can see both of these factors coming in to play to make for an especially high cost of living in Sydney. With the city being a commercial centre for its global region, along with Singapore and Hong Kong, the number of high earners has increased steadily over the last few decades. Whilst moving to Australia might be an ambition of many in Britain’s often dreary climate, Sydney and Melbourne are becoming less and less realistic prospects for a move, unless you can secure a top job upon your arrival or unless you’ve saved very well for your retirement.

Some of the biggest earners in Sydney are of course the land lords. This is reflected in hotel prices. Whilst Australia is a very popular backpacking destination, if you are looking for accommodation that’s a little more substantial than a tent or hostel then prices begin to rise quite quickly. This is again due to the scarcity of space in these locations. Whilst Australia as a country has a very favourable ratio of population to space, because of Sydney’s location on the coast, the reality of property is that it is either being built further and further away from the hub of the city, or it is built at a real premium at the centre of town. The cost of living is mirrored in the prices paid by tourists. With high demand from tourists raising prices, Sydney isn’t a cheap location for visitors. There is however, strong suggestion from those in the know that the Sydney property bubble might be due to burst. Whilst this would bottom out the housing and property market, how this would effect the prices tourists pay isn’t completely certain, but it ought to be favourable.

Luanda: A new breed of expensive destination

A surprising addition to the list of the most expensive cities in the world is one of Africa’s most recent success stories. Rather than being built on the financial sector, Luanda in Angola has enjoyed economic growth on the back of the mining industry. The city has grown in population very suddenly over recent years, and whilst very wealthy in some areas, is conspicuously overcrowded in others. Dirty water and cramped living conditions are a severe problem in the city. But this goes hand in hand with a newly developed opulence. This city has drawn the curiosity of tourists from around the world, looking to sample a city like no other. Despite going somewhat under the radar, the Angolan city was named the most expensive in the world in 2015, based on cost of living. However, as this article explains, this is priced up on the basis of cost of living for ex-pats. In a city of such stark contrast this isn’t necessarily the best reflection of the prices you’d end up paying in the city if you know where to look.
Again, explaining the expense of the city requires a combination of factors. Both a concentration of wealthy individuals who have made enormous profit on the back of the city’s mining success along with the cost of property in the city have combined to cause the high cost of living. Again, with property at sky high prices this is reflected in the cost of a hotel stay.

This property price spike is believed to have been caused by a supply and demand disparity brought about by the failure of housing and infrastructure to keep up with economic growth experienced by the city of Luanda over the last decades. With GDP and earning for many business owners growing at rapid rates, the material processes of developing housing has meant it hasn’t been able to match the demand created by this economic success. As such prices for property have risen dramatically. There isn’t really a way round the expense of accommodation in this case. The city’s social problems mean that looking for cheaper accommodation in poorer areas of town come with an element of risk. Whilst cheaper eating can be found in the city to try and off-set other elements of the cost of your trip, it remains a very costly all round trip. But with many predicting that the price of property will likely begin to fall to more stable levels as housing development begins to catch up to the demand. In turn, this might make Luanda a more affordable destination for tourists. So our tip for saving money here? Leave it a little while!