# Are You Paying Way Too Much for Hotels Abroad? Here’s How to Tell

July 23, 2015

When you’re traveling abroad and dealing in foreign currency, it can be tough to determine how much you should spend on a hotel. The relative prices may be much higher or lower than you’re used to — so how do you know what’s a good deal?

Sam Dogen, better known as Financial Samurai, recently traveled to South Korea and Malaysia. He was about to drop \$250 on a room at a five-star resort in Kuala Lumpur when his “personal finance brain” took over.

“Like many of you, I love getting a good deal,” he writes on his blog. “I also hate paying inflated prices just because I’m a foreigner.”

After taking into account Malaysia’s GDP per capita, he realized spending \$250 a night in Malaysia would be equivalent to spending \$850 a night at a hotel in his home city of San Francisco — a price he would never pay.

So, how did he determine a reasonable price? He let his financial geek fly and created a formula.

### Financial Samurai’s Hotel Price Formula

Though you should read Dogen’s post for all the details, we’ve stripped the formula down to its bare bones here:

1. Divide your total home living cost (rent or mortgage plus utilities) by 30.5 days. This is your basic Natural Hotel Expenditure Rate (NHER). “The less you spend, the greater the deal you feel you’re getting and vice versa,” explains Dogen.

2. As a “sanity check,” compare the GDP per capita of your destination to the GDP per capita of your home country. If it’s significantly higher or lower, you should adjust your rate accordingly. See the next step for an easy way to do this.

3. Use the Big Mac index to calculate your “adjusted NHER.” Divide your destination’s Big Mac price by your home country’s Big Mac price, then multiply the result by your original NHER. This figure is how much Dogen recommends you spend on a hotel.

Though we like Dogen’s ideas, the NHER formula won’t work for everybody.

It didn’t for me: Since I spend \$725 a month on rent and utilities, my NHER is \$23.77 per day. If I were to adjust that according to Dogen’s instructions, I would be priced out of the majority of hostels — not to mention hotels — in developing countries.

Still, Dogen’s point is a good one.

Before you drop a bunch of money on accommodation just because it’s affordable to you, check out your destination’s GDP and Big Mac prices. Those numbers will help you determine if the price you’re paying is reasonable — or if you’re actually spending an extraordinary amount just because it’s cheaper than it would be in your home country.

Your Turn: How do you determine how much to spend on hotels while abroad? Would you use this formula?

Susan Shain (@Susan_Shain) is a freelance writer and travel blogger who is always seeking adventure on a budget.

# Top Articles

### The Ultimate Guide to Buying a Stunning Engagement Ring (Without Going Broke)

Once you’ve found The One, it’s time to find The Ring. Here’s what you need to know about how to buy an engagement ring before getting down on one knee.

### 14 Must-Have Browser Extensions for Scoring Big Deals on Cyber Monday

We’ve got a list of 12 browser extensions to help you stay on track this Cyber Monday! From making secure payments to staying organized to finding deals, here are the must-have extensions.

### 6 Easy Ways to Make Halloween Costumes — Even If You’re Bad at DIY

If you don’t have the skill, time or desire to craft the Halloween costume ideas you see on Pinterest, don’t despair -- they can wind up being more expensive than just buying a costume! Try these easy Halloween costumes that won’t break your budget.

### These 15 Tasty Dorm Room Recipes Cost Less Than \$5 — No Kitchen Necessary

Wondering how to save money in college when you’re living in the dorm and don’t have a kitchen? These 15 simple recipes cost less than \$5.

### Can You Survive on Half — or a Quarter — of a Typical American Budget?

This challenge will put your frugal living skills to the test. Think you can handle it? There’s only one way to find out...

### This Site Actually Got Cheaper as We Added More Things to Our Cart

We recently discovered online retailer Jet.com -- and it just saved us 38% on our groceries.

Want to raise money-confident kids, but don’t know where to start? Here are seven unexpected opportunities for teaching kids about money.

### 7 Smart Tips to Keep You From Going Broke Your First Year of College

Trying to figure out how to save money in college? We’ve rounded up seven totally clutch tips every freshman needs to know.

### Here’s a Super Easy Way to Send a FREE Care Package to Your Favorite Soldier

Say “Thank you for your service” to someone special, completely FREE. Here’s how to send a care package to a deployed service member through Operation Gratitude.