profit on RS tours?

Sent you a private message

Profit? Oh really, I figured the company was like Gillette, you know, give away the razor and profit forever by selling the blades and the shave cream. For RS, give away the tours, and profit forever by selling the toilet kits, day packs, books and videos. No?

I love trip planning and usually do FIT

"FIT" ??

You should be able to figure it out for yourself, roughly. Look at the cost of a specific RS tour. Then go ahead and price out exactly the same tour on your own : hotels, meals, intercity transportation by bus, intra city transportation, attraction admissions, and private guides. Of course, you won't have to worry about leasing buses and paying drivers, or paying to park those buses. And you won't have to cover taxes or licensing fees or advertising. Or pay people who schedule and book the tours.....

The leg work? What exactly would that be? I see where you are going (I think) so try this: find the RS tour you may want to take. Print the itinerary. Day by day do a faux booking of transportation, the meals, the hotels, the guide, the local guides you'll have at many stops, entrance fees to museums etc. If you feel you can duplicate all of this and it's cheaper, is that the number you are looking for? Of course you would not be taking into consideration that this company needs to do this for many dozens of tours to a myriad of locations and has a large staff to do that, a marketing budget, etc. I think by asking what the profit/mark up is you are really oversimplifying and maybe asking the wrong question. The question is can you do everything on a RS tour on your own for less money. I say no but you'll see that debated endlessly on this board.

Joe, FIT is travel industry lingo. It's short for Free and Independent Traveler.

I suppose some might be offended by your question, especially asking it in Rick's own kitchen, but I am not among them. I think it is a realistic ponder - one that, on some level, nearly every potential RS tour member considers. "Is this cost making the best use of my travel funds?"
Others have suggested that one could itemize expenses and come up with a "replica" figure. Adding up hotel costs, meals, admissions, included travel, etc. could be done in a vague determination of "value" vs "profit". The unknown "benefits" are in the expertise of the hosts and tour guides, the time management in an unknown location and the sensation of being a participant with (hopefully) compatible traveling companions who bring their own dynamic to the experience.
On occasion, I have posted remarks that may have appeared critical of RS tours, although that was not my intention. There are some European locations where "going it alone" seems to me to be a viable (and cost saving) alternative to a RS tour - especially when the tour itinerary is clearly stated and details of the itinerary are easily found in RS guidebooks. By contrast, the "Best of Bulgaria" tour, one that particularly interests me, seems like a bargain, and I have high hopes for that. In general, the value of any travel is not easily determined at the cost bottom line, although plenty of travelers live their lives as though it is.

I've never seen anyone do a breakdown here, but there are tons of threads on the forum I have yet to read.

I have seen this question come up on another travel forum for another tour company. Someone actually went in and did a break down on several tours of the cost per night for each hotel, admissions costs, approximate meal cost, estimated transportation cost, etc. I was quite impressed with the effort to nail down a $$ figure. Generally I look at a tour, ask myself if it fits my destination/experience needs and budget then go from there.

As others have said, there are backstage expenses that an independent traveler does not incur. So adding up individual e lenses will still not answer your question of what the markup is. Your question is better for comparing RS tour costs to other tour providers'.

The most helpful question for deciding to take a tour is, will I get what I want for this price?

Another thing to remember is that an independent traveler may not be easily able to access some of the experiences on a RS or other company tour, or it may require a rental car. Disclosure: we have never taken a RS tour, partly due to cost, but our travel costs are significantly less than the cost of a tour because we use hotel points for much of our lodging. Tours are definitely a more efficient use of time and we all know time is money!.

To me the main value of the RS tour I took, a Paris city tour in 2015, was the knowledgable local guides they arranged for us. I have toured independently many times, so finding a hotel, managing the public transportation, and obtaining various passes would not have been difficult although it was nice not having to do any of that for a change. Plus, I doubt I could have booked the hotel (Hotel Duquesne) for the same low rate a tour company gets.

As customers we are not and should not be privy to the company's profit margin. The only question for us is whether the tour at the price we paid was a good value. For me it definitely was.

We "vote" our dollars here in North America. Here's an interesting insight into how Rick Steves votes his dollars:
https://www.ricksteves.com/about-rick/social-activism-philanthropy/global-perspective

Rick believes travel becomes a political act only if you do something
with your broadened perspective. From hunger to arts funding, learn
how Rick has incorporated his travel discoveries into real action back
home.

Rick was recently matching donations to Bread for The World.

IMHO I think that you could probably put together the same tours at a cheaper price. With RS tour you are paying for the convenience of a tried and true schedule, a knowledgeable guide, convenient transportation, peace of mind not having to worry about modes of transportation, validating tickets, fitting into the bus/train schedule, finding your way to your hotel, travel companions of the same mentality as you, not having to think where all your meals will come from, being scammed after you reserve with your CC. Are all of these factors worth the price you will pay for the tour? One of the things you give up is independence to choose how long you want to stay in a certain place or venue and adding a new location if you feel like it. To me it's just a choice of convenience. Whatever way you choose, have fun and enjoy.

I think that is an impossible question. Too many variables. A big factor that no one can answer is how much discount at hotels and other group sites. Second the discount probably varies depending on time and local factors. And what difference does it make what you pay. It is the package. You either like the price of the package or you don't. For us the biggest factor of any organized tour is the convenience and service. In some locations I am willing to pay, and maybe a lot, for that convenience. The amount of profit on a tour never crosses my mind and never a part of the decision.

It is a little discussed topic because it is not terribly important - at least to most people. Are you not going to take a tour because they make too much profit - even if you were able to determine that?

It's like asking your HVAC repair person the actual profit of his/her repair visit. Yes, you can go buy the parts yourself and put them in, but it's knowledge and the convenience of having that knowledge right where you need it/when you need it that you are paying for.

Ditto for your medical doctor.

Ditto for the grill cheese sandwich you might order at your favorite neighborhood restaurant....It's not the two pieces of bread and a slice or two of cheese you are buying..........it's a bit more...........and on and on.

I tend to be the kind of person who when visiting a winery, hearing their production numbers, I instantly start doing the math in my head. I can't help myself, I just do it. On our first RS tour many years ago, I really could not figure out how they came away with much of a profit, as it would have been as costly for us to patch it together ourselves, but we would not have had the "guarantee" of such great guides and seamlessness of execution, etc. Ditto for the Heart of Italy. Worry-free travel has its advantages.

Sometimes it is not just about the dollars and cents. It's about the EXPERIENCE, the whole package, traveling with people who likely "get it," and having the "guarantee" of a certain type expectation being met. That can be priceless when getting on a plane and traveling so far for the experience.

It's like asking your HVAC repair person the actual profit of his/her repair visit... Ditto for your medical doctor.

Fair enough. But my HVAC repair man/woman and doctors don't have shows on PBS showing me the ropes of do-it-yourself HVAC repair and medicine. The Rick Steves that I love to watch doesn't come across as the astute businessman that he must be.

I doubt that I'll ever take one of his tours, but not because they might make money for Rick Steves.

IMHO I think that you could probably put together the same tours at a
cheaper price.

I'm not so sure. A tour company probably gets discounts on hotels, guides, and transportation impossible for solo people to obtain.

But my HVAC repair man/woman and doctors don't have shows on PBS
showing me the ropes of do-it-yourself HVAC repair

It's called This Old House one of PBS's longest running series.

You might be interested in seeing what Rick does with the money he makes. He posted this on his Facebook page yesterday:

"More money than many Americans make in their entire lifetime. That’s what Congressional Republicans are voting to give me as a tax break.

"That’s right: If Republicans in Congress get their way, I just saved a couple million dollars on the change in the inheritance tax alone. What about you?

"Our government already spends more than it takes in, and this tax giveaway will make it worse. But that plays right into Congressional Republicans' strategy to shrink the government: First, they cut taxes by $1.5 trillion (mostly benefiting the rich). Then, to balance the budget, they'll claim that the only solution is to gut programs (such as Social Security and Medicare) designed to protect America's poor and working class.

"I once asked my Swiss friend Olle, “How can you Swiss people be so docile about paying such high taxes?” Without missing a beat, he replied, “Well, what’s it worth to live in a country where there's no hunger, no homelessness, and where everyone — regardless of the wealth of their parents — has access to quality healthcare and education?”

"I believe a national budget is a moral document. It declares who we are as a nation. Decency requires compassion and help for our poor. Stability requires a healthy middle class. The Republican economic agenda both hurts the poor and further weakens our middle class — all to give wealthy people a windfall of cash they don’t need.

"So what am I going to do with all of the tax revenue Congressional Republicans want to save me? I'm choosing to provide, as an individual, what European societies would provide collectively: housing for otherwise homeless single mothers and their kids (www.ricksteves.com/about-rick/trinity-place), helping to build senior centers (http://myedmondsnews.com/2016/12/rick-steves-announces-2-million-gift-to-support-new-edmonds-waterfront-center), and paying the rent of our local symphony orchestra (https://blog.ricksteves.com/blog/arts-center-donation). These are basic services — not extravagances.

"While Republicans might argue that I’m proving their point — that charity from the wealthy will come to the rescue — I believe that such services should be paid for not by the odd millionaire who doesn’t have a taste for golf clubs and yachts, but collectively, through progressive taxation. While lowering my marginal tax rate from 39.6% to 37% will have no impact on my privileged standard of living, it will ultimately have a huge impact on millions of struggling people.

"As a proud American and a student of Europe, I care deeply about the cost to the fabric of our society that this windfall for the wealthy will bring. If you believe you’re being represented by a Republican Congressperson who votes for this plan, you are mistaken. It costs them a lot of money to convince you to vote for them, and this tax bill is their way of paying off their major donors. And if I lived in your district, I’d raise bloody hell.

"(By the way, our Christmas fundraiser for Bread for the World was a huge success this year, raising more money than ever. Thank you to the 2,376 who contributed, collectively raising $311,700. With my $250,000 match, together we raised $561,700 to empower Bread in its work — to speak up for those who don’t have private lobbyists driving our government to re-write laws in their favor.)"

We don't take RS tours ( we prefer independent travel and hiking trips) but if we did, I would be happy to know where the money is going.

Thanks everyone and Lola! It is great that if I do take a RS tour in the future the money goes to a good guy! I wish there was a way to follow certain posters on this forum, like FB where you can follow someone. There are certain posters I really like and who travel similarly and I would like to follow them!

As someone who has led, created and booked tours, you will never be able to figure out what the profit margin is on tours.

Yes, tour companies get discounts on hotels, group admissions, food, etc. (And in most places where a group eats, the guide and driver eat for free.) Every tour has a break even point. That will be a minimum number of people to run a tour. Less than that number and they lose money. And in most cases cancel the tour. More than the minimum and they start to see a profit. (it's not all profit as there are additional costs with more people--hotel rooms, included meals, included admissions, etc.)

It also depends on the tour company. Rick Steves makes his money from the cost of the tour. Other tour companies charge less and make extra from optionals.

The only way to compare which is a better deal is to figure out out how much everything would cost you on tour if you were doing it by yourself and then compare to the cost of a tour.

By the way, RS has said that their main business is tours. If you notice their TV shows, books, articles, etc are geared towards where their tours go.

Now, guidebook sales are also high so that is a big profit margin.

BTW, Rick gives his TV shows to PBS stations. It's how he always did it. And it was a brilliant move. PBS loves free programming that would interest its viewers.

Notice that this site is FREE and devoid of advertising. Think about how much advertising revenue could be generated if allowed on this site. What I have never understood is why some people (posters) seem to enjoy ripping on Steves and his operation. Does being critical make you feel superior?

I think it is a completely fair question but not sure why you are asking I guess.... to me, you are either a person looking for a tour or you are not. They are completely different types of travel in my opinion. My mother in law is a tour person through and through.. she could never plan a trip, plan the transportation, book the hotels, book the transportation, figure out the restaurants, read up on excursions etc She is the type who wants to sit back, be taken somewhere and have someone else run the show. I am pretty much the complete opposite. I can see her shopping the different tours but not pricing each individual piece out as she would never want to travel that way.
We have been to the exact same destinations and have had completely different experiences.

Notice that this site is FREE and devoid of advertising. Think about
how much advertising revenue could be generated if allowed on this
site.

That is a great point, Frank.

Notice that this site is FREE and devoid of advertising.

Even if there were advertising of this forum, readers can block all of them using ad blockers. I do this with Flyertalk. So readers can experience ad-free environments.

diveloonie, IMHO I don't think you should take an RS tour. Here's why. Based on your question and that you "usually do FIT", there's a good chance that you'd be second guessing certain activities, questioning others, wondering why the company chose Hotel X versus a more inexpensive Hotel Y, and all the while knowing that you could have done it better/cheaper if not for the profit. RS tours have a "no grumps" policy and you may not be able to handle that. Just a thought.

I think it is a fair question and other people have surely wondered the same thing. I didn't expect to get an exact amount, just an idea. If I signed up for a tour, yes I might wonder about some aspects of it, but would know going in that its a go with the flow. I'm nothing if not adaptable. The positive aspect of tours that appeal to me is the camraderie with the other tour folks.

Shhhh! Rick might think you are planning to enter the business and compete with him.

As no one has answered your question in a monetary fashion, I thought I'd chime in and try to estimate

We have taken two trips to Portugal in the last 3 years, both about 2 weeks in length. The RS 12 days of Portugal tour is running at 3100 to 3300 US dollars. We estimated we spent under 2000 Canadian dollars on our last trip ( each, not including airfare), so about 15-1600 US.

But, when I look at the itinerary, they pack a lot more in than we do. This is partly because we enjoy travelling a bit slower, but also because of the logistics of getting from A to B.

I think the cost factor also comes into play if you have minimal time to travel. I know someone who did one of the Italian tours. She really wanted to do Venice, Florence and Rome, but only had 9 days off. To plan on her own was a nightmare, but she said was great with the tour.

Lisa, but the problem with that is the comparison of apples to oranges. If you travel slower, do fewer things, I would assume you spend less money. We are just back from a 16 day tour that was nearly $600/day. Could we have done it cheaper - maybe ?? but it would have been a lot of work. And we have been on cruses for about $100/day. Totally different situations. So didn't know how this question enlightens anything.

Our budget is @ $300-400 per day for two including air for 14-20 nights. Two trips per years. In my late 20's, I spent approximately less than $1000 for 30 days exploring several countries (1989). I have explored potential tour groups and cruises. At this time neither meets my expectations for travel or costs. Our trips do not even compare to RS tours. I enjoy the travels tales of a friend who does two Viking cruises a year, their budget exceeds $800 per day for two. RS's cost for tours are in line with other tours I have looked into. The apples are about the same and the oranges are a bit more. RS does provide free information on the web and at the library.

When Rick Steves Europe becomes a publicly held company, you can have access to gross revenues, gross profits, net profits, expenses, and monies spent on Rick Steves' favorite political nonprofit groups. Until then, all you can do is guess.

How can you Swiss people be so docile about paying such high taxes?

In Europe they pay high taxes to the government but get effective public transportation and good health care for their money. In the U.S., instead of paying for it as taxes to the government, we have to buy health care from business and provide our own transportation, and it actually cost us more for what we get, and what we get is less effective and doesn't cover everyone.

Switzerland is actually a tax haven for European tennis players (more so for Monaco) to circumvent their own country's punitive taxation. Some current and former athletes who have picked Switzerland in order to avoid residing officially in their own countries include Jo-Wilfried Tsonga, Benoit Paire, Garbiñe Muguruza, Boris Becker, and Manuela Maleeva.

If high taxes promotes general happiness, bring it on. Switzerland ranked 5th happiest, the highest ranked non-Nordic country (Norway, Denmark, Iceland), edging out Finland. Canada ranked 7th and the USA ranked 14th. http://worldhappiness.report/ed/2017/

Increase our taxes and make America happy again.

Don't necessarily increase taxes, just spend it on things that make people happy, things we actually need.

I see the planning and logistics as part of the cultural experience, and taking a tour is necessarily less exposure to the local culture— although a bit sick at the thought of having to plan another trip.

Several observations (for what they are worth).
1. Profit is not a four letter word.
2. His company is privately owned and what he does with the profits is his business and his business alone.
3. He has every right to express whatever "political" views he wants on his Facebook page, blog, and web site.
4. If one disagrees with what he does with his profits, or his political outlook, one always has the option of not viewing those things on HIS Facebook page, blog, web site, and not taking one of his tours.
5. To paraphrase Rodney King (I don't think it's an exact quote) "Why can't we all just get along?"

I guess I don't see the point of all this. Are you planning on going into business in competition to Rick? Or are you planning a trip for 20 of your friends and want to travel by charter bus and stay in similar accommodations?

Other than the above options, there is no to compare a RS tour to what you can do by yourself. I agree with Frank, it's the package. How does it compare with other comparable packages. Take it or leave it.

I think RS tours are better than most in that he doesn't try to fill every seat on the bus, or make money off of extra side trips, and tips are not an extra expense of the trip.

That said,I will probably never go on a RS tour. It's not that I don't think his tours are a good price for what he offers, it's just that what he offers is not how I want to go. My preferred style of travel is different from his tours.

1. I like to go by rail. It's an experience you just can't get living in the US. It might take longer than going by direct bus, and you might have to walk a little farther to your domicile, but I enjoy the trip, meeting locals or other tourists from around the world on the train, and it's far less expensive.

2. My interests are mostly not in cities, which seems to be the primary focus of his trips. Over half the towns I've stayed in in Europe are under 10,000 people.

3. I like to stay in small local places - private rooms, vacation apartments, and small guest houses - places that don't have room for a bus load of people. And, although I've never had a room I didn't like in Germany, if something would be less than perfect, I, alone, "suffer". I can stay in the least expensive of places. If I don't love it, I make do. Rick has to make sure everyone is completely happy.

Finally, it's the price. I do have to do the research myself and make all the arrangements, but I love the planning process. I realize not everyone does. Maybe they should take tours, but tours are not for me. RS tours cost $600 and up for two people, double occupancy, and don't include all meals. We just completed a 20 day trip (21 days in tour language) for $160 per day for two. Broken down, we spent $73/nt on accommodation, $14,50 on change of venue travel, and $73 on all meals and miscellaneous, including a KD cruise, a boat trip across Bodensee to Switzerland and train back to Lindau with a side trip up the Pfänderbahn in Bregenz, and side trips from the Spessart to Würzburg and Iphofen.