Tag Archives: analysis

Cost of a holiday to Patagonia: macroeconomic influences

 

With all the excitement of the Eurozone crisis and the extraordinary economic climate currently I decided it was time to dust off my old undergraduate textbooks on International Economics. I had intended to re-build a deep understanding of the influences on exchange rate movements, and critique the different theories on the competitive advantage of nations. In the end I decide to settle on 3 more down to earth questions:

  1. Will Argentinian inflation mean more expensive trips in the future?
  2. Why do Chilean opertors sometimes charge for their trips in Chilean Pesos when US dollars are the norm?
  3. Should we expect the dollar to pound exchange rate to impact the cost of Patagonian holidays for UK travellers?

First of some high level data points:

Some people ask me why trips to Patagonia are more expensive than, say the Himalayas. Some of the answer lies above!

So, question number one: with Argentinian inflation running at 10% (and twice that of the UK) can we expect the cost of holidays in Argentina to increase?

Answer: NO. Exchange rate movements (the devaluation of the Argentine Peso (ARS)) have meant that much of the inflation effect is kept in check. I think i may have referred to this effect as Purchasing Power Parity when I was at university.

 

Question number two: Is the Chilean Peso following the same trend as the Argentinian Peso? And why are Chilean trips often charged in local currency while others are charged in US dollars?

Answer: NO. The exchange rate of the Chilean Peso is far more volatile and, if anything, the trend is going in the other direction.


Question number three: Given that the majority of trips to Patagonia are priced in US dollars are exchange rates relative to the Pound going to have a meaningful impact on prices for UK travellers?

Answer: I don’t know! The dollar:pound exchange rate has been stable for the last couple of years, but in the current climate who know what might happen next.

Overall, what can we expect? I suspect more volatility and lots of unknowns, but the good news is that there’s no obvious underlying trend towards an increase in the real price of Patagonian holidays for UK travellers.

Cost of a Patagonia Holiday

We’re often asked to help people with the budgets for their trips, and help them understand whether (with all the different factors and variables) a trip is at the ‘cheap’ or ‘expensive’ end of the spectrum. So I thought it was time to try and answer the all important question: how much will my Adenture Holiday in Patagonia cost me?

We’ve looked at a variety of trips and options and worked out the average cost per night, to give you an idea how much you might budget for an Adventure Travel holiday in Patagonia. This obviously excludes flights (more on Flights to Patagonia).

Generally speaking you can expect to pay around $220 to $400 per day for a Trekking Holiday in Patagonia. For a luxury holiday, tailor-made trip, cruise or horse-riding/Estancia trip you can expect to pay $400 to $800 per day.

The price of a trip will obviously depend on a whole range of different factors…

- Client:guide ratios. Knowledgeable, professional, english speaking, qualified mountain guides command high day rates, and quite rightly so. In large groups this cost can be spread out across many people, but most of us prefer to be part of smaller groups, especially when we’re in the mountains. There’s always the self-guided option as well, if you’re an experienced hiker and ready to miss out on local knowledge into the flora, fauna, geography and culture.

- Local Operator/Guide or Bonded Global Company. The big global companies gain efficiencies through their purchasing power, larger groups sizes, and itineraries on which there’s often zero flexibility, but they have more costs to cover as well. Smaller local players can often offer a trip for 4 people at the same rate a global company can offer it for group sizes of 12.

- Quality of the accommodation. For example a double room in and around Bariloche could cost anything between $40 and $400 per night. In some of Patagonia’s most iconic location there are hotels charging $1000 per night for their fully inclusive packages. In Torres del Paine National Park the strategically located Refugios cost $70 per night (or $130 including all meals), whilst camping costs only $9.

- Transport. Private transfers can be far more convenient and make much more efficient use of your time, but the public transport option can save a lot of money, and in Patagonia this is a safe, secure and comfortable alternative. Some trips will include all transport from the moment you land in Patagonia, on others you may need to pay more to get to the start point.

- Time of year. Christmas is a holiday for everyone; so guides cost more and demand for hotel rooms shoots up. For example the cost of a night in a Torres del Paine Refugio goes up by over 30%. Likewise in the ‘shoulder’ season of October and March/April it’s possible to get cheaper rates, especially on cruises.

- Porters in Patagonia don’t come cheap and there are limits on the amount they can carry. If you’re able to carry all your own gear on a multi-day trek that could save around $40 per hiking day.

- Meals included. Trips vary enormously in terms of the meals they provide, but if breakfast, lunch and dinner are included each day that could save a further $20-$40 each day.

- Equipment rental. whether it be tents and cooking equipment, or kayaks, ropes, crampons or mountain bikes (and even horses) all of that gear needs to be purchased, stored and most importantly maintained.