Tour Packages a Better Deal -- Really?

By Ed Perkins

Is a tour package a "Better Deal" than buying travel on your own?

Tour packagers sometimes say so -- and they sometimes even "prove" their claim with a comparison of costs. Unfortunately, when I check, most of those comparisons tend to over-inflate the costs of traveling on your own. My take is that tour packages are occasionally cheaper than putting your own trip together, but usually they aren't. Even so, however, they may be better deals, but for the service they provide rather than cost.

Here's a case in point. A tour operator's recent press release touted four-night packages from New York to Rome, priced at $1,252 per person through mid-May, claiming that the package cost $584 less than independent travel. The cost for individual purchase, said the release, would be $815 for the airfare, $420 for a fuel surcharge, $99 for airport transfers, $316 for hotel, $72 for breakfasts, $49 for sightseeing, $62 for service charges and taxes, and $3 for a gelato cone. The total cost for independent travel came to $1,836 per person, a difference of $584.

Sadly, that comparison doesn't withstand a reality check. The big discrepancy is in the airfare quote of $815, plus a fuel surcharge of $420. That's flat-out wrong. I found fares for mid-May at $858, on several lines, including all fees and taxes. In effect, the comparison double-counted the "fuel surcharge." The airlines' actual fare breakdown was $376 for the fare plus $483 in fees and charges. Of course, that base fare of $376 was completely phony, as was the separation of the true fare into a base plus an equally phony fuel surcharge. For some reason, the airlines like to maintain that fiction. No matter how the airlines count it, however, most of that "difference" disappears with honest accounting of the fuel surcharge.

As to the rest of it, the tour operator's release also overstates two other key costs of independent travel:

-- The "from" price on most packages includes accommodations in "first class" or 3-star hotels. I found quite a few Rome hotels in that class -- among them the operator's low-end choice -- for $150 to $180 per night, centrally located, including "free" breakfast and taxes, including the tour operator's low-end hotel. The tour operator's cost figure for independent travel -- room plus breakfast -- at $194 per night probably overstates the cost by around $50.

-- You can book a private car from Fiumicino airport to a central hotel for about $70, total; at $140 per round-trip, that's less than the tour operator's estimate of $198 -- another $50 overstatement, especially given that the tour operator probably puts you on a tour bus rather than a private car. And you can certainly do it for much less if you take the train from/to the airport.

All in all, most of the difference disappears: The tour package price and the cost of independent travel are about a wash. And, of course, by going a bit down market, you can cut your costs well below the best package price.

That's about what I've found in similar comparisons. Sure, as the promo blurbs claim, tour operators can get airfares and hotel accommodations at "wholesale" rates. But operators have to cover their own expenses and make a profit. Overall, the operators' markups pretty much offset their buying advantage.

That doesn't mean that the tour package isn't a good deal. Packages offer several important advantages: Beyond selecting dates and your hotel option, you don't have to do anything more in the way of arrangements. And once you arrive, the tour covers the local details that can be a hassle to arrange on your own. About all you have to pay extra is for services you'd have to pay for in either case: meals that aren't included in the tour price, tips, sightseeing beyond what's included, souvenirs, and such.

My conclusion is straightforward.

Buy a package if you like to have someone else make the local arrangements and take care of most details. Package operators are good at that. But buy for those benefits, not because you expect to pay a lot less.

Travel | Tour Packages a Better Deal -- Really?