How Much To Spend On A Hotel While Traveling Abroad – Calculate NHER©

Gyeongbokgung Palace, Seoul, Korea
Gyeongbokgung Palace in Seoul

When the pandemic is finally over, you might be wondering how much to spend on a hotel. I've traveled to over 60 countries in my lifetime and have stayed at hundreds of hotels.

Let me provide a framework on how much to spend on a hotel to get the best bang for the buck.

How Much To Spend On A Hotel In Asia

Before leaving for Asia I told myself I’d live it up by staying at only the finest 5-star hotels. Compared to America, Asia ex-Japan is relatively cheap. I had just finished paying down $100,000 in mortgage debt seven months earlier than expected and felt like I deserved to be rewarded.

Billing 60 hours a week for three months in a row as a consultant in order to expedite my mortgage payoff was also the antithesis of being an “early retiree.” 

All excited to start booking my hotels, I clicked the 5-star only search option online for Seoul and Kuala Lumpur. But instead of booking four nights at the Shilla Hotel in Seoul for $350 a night, I decided to book the Centermark Hotel in Insadong for only $120 a night after taxes and fees.

The Centermark Hotel was rated four stars and had free wifi. It was walking distance to all the major palaces and the Buchchon village. A $1,320 savings could easily pay for all food, transportation, and attraction tickets while in South Korea!

Then it was Kuala Lumpur’s turn to book a hotel. Originally I was going to stay at Villa Samadhi, a 5-star resort in the heart of Ampang where I used to live as a kid. The hotel looks like an oasis, perfect for a honeymoon retreat. At $250 a night for a suite with a private pool, breakfast, and wifi, it’s pretty good value compared to the prices you'd find for a similar suite in San Francisco.

But here’s the thing. My personal finance brain took over. The GDP per capita in Malaysia is only about $24,500 vs. $35,400 for South Korea and $78,000 for San Francisco! What business do I have spending $250 a night for a 5-star hotel in Malaysia as that would be equivalent to spending around $850 a night in San Francisco, something I’d never do! Instead of booking Villa Samadhi for $250 a night, I decided to book the four-star Impiana Hotel in KLCC for $120 a night. It just felt right.

Deciding How Much To Spend On Hotels

Like many of you, I love getting a good deal. I also hate paying inflated prices just because I’m a foreigner. For example, paying 18 ringgit ($5) for a fresh young coconut drink at the hotel feels stupid when I can get one for 3 ringgit ($0.8) several blocks away at the famous hawker stalls of Jalan Alor. My other pet peeve is taxi drivers trying to rip me off by not putting on their meters.

After spraining my ankle one day, I decided to take a taxi back to the hotel for what I thought would be around 5 ringgit. After driving for a minute, I asked him about putting on the meter and he refused. So I adamantly refused to pay him. Luckily, the hotel was just a couple blocks away so I got out and walked. If you're getting ripped off, stand up for yourself!

Petronas Towers
Petronas Towers, Kuala Lumpur

After airfare, spending money on a hotel room is generally the number one expense incurred by all travelers. If you can find friends to stay with for free, then fantastic! But after a couple nights, I always feel bad and decide to go to a hotel. I’m also past the stage of sleeping in hostels, but if you’re not, more power to you as you can meet a lot of interesting people there.

Spending $120 a night for a hotel just “felt right” for some reason. And in my gut, spending over $200 a night just felt as wrong as spending a full year's salary on a car. I’m sure many of you have felt the same way about spending money on certain things. Well, after a bit of thinking, I've created a formula to calculate a financially responsible vacation hotel rate.

Calculating A Financially Responsible Hotel Spend With NHER©

To figure out how much to spend on a hotel, use my formula: NHER©.

1)  NHER©

The first step is to divide your total home living cost back home by 30.5 days. For example, if you own in San Francisco, your monthly home living costs might include a $4000 monthly mortgage, a $1300 monthly property tax, and a $200 monthly utilities cost. This totals $5500.

Divide this by 30.5 days and you get $180 a day. $180 is more or less your Natural Hotel Expenditure Rate (NHER)©. The less you spend, the greater the deal you feel you’re getting and vice versa.

If you rent, then simply take your rent plus all living expenses and divide by 30.5. If you've paid off your mortgage, then replace the mortgage with a market rate rent in your NHER© calculations.

2) Know The County's GDP Per Capita

The next step is to see what the current GDP per capita of the country you are visiting. In the above example, as Kuala Lumpur's per capita GDP is just 1/3rd San Francisco’s per capita GDP, it's not financially prudent to spend over $180 on a hotel room. At the same time, it may be also difficult to find a decent hotel for less than $60 ($180 X 30%) in a big international city where tourism is the #6 driver of GDP.

The GDP per capita is just a sanity check, because prices tend to “normalize” across larger international cities. So what is the personal finance geek going to do?!? Lucky for us, there’s no need to reinvent the wheel to figure out how much we should spend.

3) Big Mac Index

The final way to know how much to spend on a hotel is to use the Big Mac Index as a multiplier to calculate your adjusted NHER©. McDonald’s is everywhere in the world. As a result, economists have used the Big Mac index to track prices and purchasing powers across every country where McDonald’s operates.

All you’ve got to do is take your Natural Hotel Expenditure Rate™ and multiply it by the the destination country’s Big Mac price divided by your country’s Big Mac price.

For example, a Big Mac costs $2.5 in Kuala Lumpur and $3.8 in San Francisco. Divide $2.5 by $3.8 to get 66%. Now multiply $180 by 66% and you get $118.80. Well what do you know. No wonder why spending $120 a night in Kuala Lumpur felt just about right!

Here's a cheat sheet if you're too lazy to Google your destination country's Big Mac price.

The Big Mac Index - how much to spend on a hotel

Save Money On Hotels With Logic

The Taaras Resort & Spa, Pulau Redang, Malaysia
The Taaras Resort & Spa, Pulau Redang, Malaysia

There’s a fine line between being frugal and cheap. Now you don’t have to identify with being either. Instead, embrace your financial acumen by doing some logical calculations to figure out how much you should probably spend.

My recommendation is to stay within 130% of your adjusted NHER© if you live in a more expensive coastal city like NYC, LA, San Diego, San Francisco, Boston, Miami, and Seattle. If you so happen to live a low cost city in the MidWest, then go ahead and expand up to 200% of your adjusted NHER©.

Always try to ask yourself how much you’d be willing to spend before checking out the prices. This is the exercise I always do when looking at open houses.

Resist reading the brochure until after I've spent time checking out the entire house. I want to test my market acumen. If the asking price is way below (20% or more) what I think it should be, then it's a good buy indicator. The same thing goes for hotels after you read all the marketing material!

Hopefully this article has given you a good idea of how much to spend on a hotel the next time you travel!

Best Travel Rewards Credit Card

Here's a list of the best international travel rewards credit cards to travel for free. I've traveled to over 60 countries in my lifetime and always use travel rewards points to get free airfare. 

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76 thoughts on “How Much To Spend On A Hotel While Traveling Abroad – Calculate NHER©”

  1. This is a fun exercise, and my “math and logic” side definitely enjoyed it. But then I thought about the pleasures of traveling and was forced to go back a step.

    You ask what business do you have staying in a super-nice hotel on the cheap if you can get a “perfectly okay” place even cheaper, simply because it doesn’t square proportionately with what you’d pay in your home city? I guess because it’s presumably a vacation, the opportunity to do things you don’t ordinarily do. If you can get a posh luxury place in a city abroad for $200 to make your vacation that much more memorable, would you seriously forego that because it would be the mathematically derived GDP/Big Mac-equivalent of $800 in your home city, a rate you’d never be willing to pay?

    Alternately, if you’re traveling on business and you get $200 per night for accommodations when you travel, would you really stay in a standard $65-per-night three-star hotel (if that) with a less-than-ideal location in a foreign city when you could spend the per diem you’re allowed and stay in a 5-star business hotel right in the CBD with proper international standards all the conveniences and amenities to make your business travel more enjoyable and more productive?

    That said, I actually live in Kuala Lumpur, and admit that Impiana KLCC is a pretty good four-star option (by Asian standards, not international) to the more expensive five-star hotels in the area. However, I’ve actually stayed at many hotels in KL (as part of my job), and the experience you get at Impiana is not remotely on par with that at the InterContinental, Mandarin Oriental, Ritz-Carlton, or Shangri-La. And they don’t really cost a huge amount more.

    Obviously it pays to comparison shop — a quick check shows DoubleTree by Hilton for $92, Impiana for $117, InterContinental for $136, and Grand Hyatt for $259. All in the same area. Now, I’d never pay double for Hyatt over InterCon, but the DoubleTree over Impiana for less money is a no-brainer, and yes, I’d pay $19 a night more to stay at the InterCon rather than the Impiana. And you can stay at the Shangri-La or Ritz-Carlton, two of the finest hotels in KL, for around $170 a night, a song for such esteemed properties.

    I guess my thought is, if you can spend a little more and get a really great experience that you’d certainly not be likely to spring for traveling domestically, then why not avail yourself?

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  3. The other thing that NHER assumes is that you are paying the Maximum you are willing to for your home. I too live in the Midwest. My current NHER is $78. But I was pretty frugal when house shopping. Bankrate tells me I can afford a house 2x more then I do. But a $600,000 house where I live would be too big for what I need and it would be harder to sell then my $290,000 house.

    Oh also I wouldn’t have blinked spending $40,000-$50,000 on a car to put in the driveway either. But I’m considering taking said car off road so I’m sticking closer to about $30,000. $50,000 is a bit much for something I plan on taking out where there are rocks and roots in the road that could make dents or scrapes.

  4. I love this perspective! It is pretty crazy how 5 star some hotels are so much cheaper in poorer nations. The only time I’ve spent over $300 on a hotel room was when I was traveling for work. There were a couple business trips I had to go on that I was PO’d about b/c my clients were treating me like crap and my company was working me to the bone so I splurged on expensive hotels and chairman’s flights. I felt like I deserved it on those few trips. :) The rest of the time I just stayed at the regular budget places. Normally when I travel for vacation I try to stay between $100-200 a night but Asia definitely has places that are great for less than $80.

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  6. I just got back from 12 days on the South Island of New Zealand and didn’t pay more than $60 USD per night at pretty decent hotels. HotelTonight doesn’t work there, but there is a similar app in that region which I used. The best part is you can easily find $30 off promo codes “for new customers only” (read: new email address only).

    So I basically wouldn’t book until 8am the day of, every day.

  7. supernova72

    I’ve done an about face on this exact decision. For about 3 yrs I did what I call budget hotel traveling (SE Asia, Panama).

    In SE Asia you can get a nice budget room with breakfast for $35 ish. Panama $50-$75.

    I tried in in the Bahamas as well only to have my room broken into and poof my wallet and cell phone were gone. That budget beach hotel had no room safe and I paid dearly for it in the end. That was one stressful trip home with essentially a passport (I’d hidden it) and my laptop (also hidden). Bummed $50 from the hotel front desk basically promising I would not write a negative review in Trip Advisor—which I rely heavily on for trip planning.

    I’m now back to staying in more mid range hotels (room safe, gym, pool, SECURITY). Cheers.

    1. Oh man, sorry to hear about the theft! That is so annoying! I always think to myself what would happen if someone stole my passport and wallet. Only thing to do is go to the US Embassy? What would you do? I keep an old passport w/ me at all times AND have a xerox copy of my current one hidden somewhere else for precaution.

      1. Thanks Sam. I learned a lot from that trip and theft. You are smart to have a backup copy of your PP. I was actually at the tail end of a business trip that I extended to a personal weekend add-on (flew from Orlando to Bahammas). I called my employers travel desk via hotel desk phone and they immediately engaged out travel security support team (which I had no idea we had available to us–oops).

        I had an option to stay put and have them wire me $$ to the U.S. embassy but at that point I just wanted to get to the airport and get my rear end home (theft was morning I was flying home).

        They were so helpful that when I get to ATL in route to SEA they were trying to track me down to get me food vouchers through Delta. I was just 15 minutes ahead and didn’t realize they were trying to find me (I still have not phone).

        Ultimately I should have had some cash stashed and also a backup credit card active. Given airlines don’t accept cash yea I got pretty hungry. The flight attendant comped my meal. Thanks Delta!!

        I’m not a big fan of Nassau needless to say. Lots of local guys hanging aournd with not much to do except hustle tourists. But I was partially at fault by going cheap on the hotel yes.

  8. Jason @ Phroogal

    I hope everyone reading this post remembers to bookmark it! *adds to bookmarks* Great post!

  9. If I do it straight I get 38 bucks. If I divide my net monthly income by 30.5 I’m upwards to 700 dollars a night. This is interesting, but it won’t work for me in any fashion.

    I am in Kauai now on vacation with my family in a nice rent house for about 400 bucks a night. I didn’t do any math before I committed. It felt right and I had the money.

  10. My NHER is $31. I guess I just shouldn’t travel at all? The problem I see is for people who are spending much less than they can afford on housing, like me. Sure I could afford a much bigger, more expensive house, but I don’t want one.

    I don’t actually pay for hotels because I have enough points from churning credit cards, manufactured spending, etc. to pay for high end hotels whenever I travel. But if I were paying for hotels I would have no problem paying a little more than I spend at home since I value travel highly. I have no interest in hostels, airbnb, couch surfing, etc.

    1. Correct, you shouldn’t travel abroad. :)

      Obviously, that’s not what I’m saying. NHER is a guideline for spending that keeps your finances in check. You can just get your net monthly salary and divide by 30.5 to figure out a new guideline. Where does that get your NHER now?

      When was the last time you traveled abroad and where did you go?

      And even more curiously, does having a low NHER make you feel uncomfortable about the cost of hotels and travel? I’m working on a new post with everybody’s feedback about this situation.

      1. Well that gets me up to $221! Sorry, don’t mean to be too critical, I’ve enjoyed your posts and learn a lot from the site. I especially like your car buying rules!

        My last trip abroad (excluding a cruise) was to Ocho Rios, Jamaica. My wife and I spent 6 nights at an all-inclusive, Couples San Souci.

        1. That’s a nice $221 NHER©!

          I don’t mind you being critical AT ALL. In fact, you and others who pointed out their low cost of living has inspired me to write another post! Keep em coming.

          I’ve updated this current post with the feedback from commenters about how to adjust for those without a mortgage, who rent, and who live in low cost areas. The post has only gotten better with y’all’s feedback!

      2. Sam,
        Doesn’t this new calculation then assume that you spend your entire net income on housing? I think you would have to take the daily rate and multiply it by the recommended percentage to spend on housing. So, I think it would be net monthly salary * .35 (35% spent on housing) / 30.5. This gets me to $160. Otherwise, my number would be uncomfortably high–something I would never do.

        1. Not really, because working people are constrained by the number of days they can take off. The max is usually 6 weeks, then it’s back to the grind.

          If you’re retired, you probably only want to vacation for so long until you get tired as well. Maybe you’ll just vacation for a month or two in your vacation property instead!

          1. I was looking at it as more of a direct substitution for housing costs in the formula–what you *could* pay, vs. what you do pay. (for those living under their housing means)

            Without that modifier, I would get uncomfortable with anything more than 1/3 of my NHER, unless I am in a big city and splurging for location, or anywhere and splurging for amenities. (like diving in a private cove!)

  11. Regardless of the home’s value, is the mortgage payment a huge factor in the NHER?

    I live in Honolulu and my NHER is around $79/night, if I don’t have a mortgage payment, am I supposed to drop the drop to $26/night?

    Taking the $79/night to Hong Kong based on the Big Mac index gives me $40/night, I’m sure I’ll have a very hard time adjusting to the quality/location/possibly privacy of the accommodations that are available.

    For my trip later this year, I’ve also turned to airbnb for reasonable accommodation, definitely not a splurge, but still exceeds the NHER unfortunately.

    1. Great question! Simply replace your rent with a realistic market rent to calculate your NHER. I’ve added this to Step 1 in the post.

      What do you get now for your NHER and adjusted NHER?

          1. I think the $110/night in the US would be reasonable, the adjusted NHER for Hong Kong would be $55/night. I definitely feels comfortable with the rate, but you just can’t find simple/reasonable accommodations in HK for such price. I’m finding average starting rates in Hong Kong to be around $110-130/night.
            Still need to figure how to reconcile the difference when making travel plans.

            Maybe the Big Mac Index might not be the best converter, or maybe HK is just an exception regardless. (didn’t test any other countries!)

  12. I look for value and it has to have western toilet and AC if possible.

    In a given country the amount paid can vary by hundreds of percent.

    For example last year we went to India and the lowest cost hotel was about $20 a night, we paid around $50 many nights and paid around $100 for a few nights.

    Were do go big – upscale hotels for meals. 2 years ago we were in Kuala Lumpur and had a wonderful buffet dinner at The Oriental. Last year we ate at the Oberoi in Jaipur. Meals about $100 and we felt money well spent. Rooms at these hotels are $500 or so a night.

    We also love eating at the aman hotels but would never pay the $1,000 a night they charge for the rooms. Bali and Bourapdur in Indonesia and Galle in Sri Lanka are places we did this.

    1. $500/night in Jaipur… now that feels way off!

      Buffet at The Oriental in KL is fantastic. This time, I either ate at the cheap Hawker stalls which have the best food, or my friend so happened to own four restaurants where we always went. Manmaru, awesome Japanese food btw.

      1. I went and checked for December 15 of this year and the cheapest room at the Oberoi in jaipur is $642!

        I will be in KL at the end of December – I plan on going to the Oriental and eating at hawker stands/cheap restaurants. I also will try Manmura – my wife is from Japan so she would be happy to go there.

        We will be trying to get a feel for what it would feel like to retire in KL, we have hear heard we might be able to get a long term visa to live in Malaysia after we retire.

  13. Hi Sam,

    I enjoyed reading your post this morning. Very relevant to us since we are flying to KL next week and staying for 3 weeks. We’re staying with family 70% of the time and will be staying in hotels the rest of the time when we travel around Malaysia. Our NHER is $82 here in Silicon Valley (an outlier for this area), which means we should be prudently be spending $25/night for hotels or using your Big Mac Normalizing Theory, we should be spending $52/night. Coincidentally, we are staying at the Taaras Beach Resort on Pulau Redang and we’re paying about $250/night there for a 5-star exclusive (and supposedly luxury) hotel. This is very unlike us, since my husband and I are frugal but we’re taking my parents along and I want to check them into something nice and comfortable. If it were just my husband and I, we will probably look for something around the range of $50/night, or crash with a friend. Hope you’re enjoying your stay in KL. Btw, have you tried using Uber in KL to get around?

    1. Another tip for you – check out the MyTeksi app. This is a reliable way to get from Point A to Point B, according to friends.

    2. Did you check out the last picture in my post of the sea turtle with The Taaras Resort & Spa in the background?

      I stayed there with friends for four nights and it was AMAZING! Maybe the best secluded beach I’ve ever experienced since it’s your own private cove. Crystal turquoise water that’s 30 degrees C. I went scuba diving 7 times right off the peer, and should have went more. The cost was $220/night after all taxes and fees, but before all activities.

      Look for the GIANT monitor lizard roaming the hotels. I think it’s literally 10 feet long.

      The wifi is bad, so use their old desktop computer during check-in.

      Don’t pay 70 ringgit to go snorkeling. Just rent some gear and swim out to the jetty on the left.

      The buffet is excellent. I drank all the fresh juice as possible.

      Check out Turtle Bay around the corner by boat if you are diving. NOBODY there. Saw three black tip sharks while snorkeling and four turtles. If you dock int he middle of the bay in between dives, try swimming to shore from the boat. You’ll start at about 50 feet deep… kinda freaky, but calming to swim to shore. You’ll feel like you’r on a deserted island.

      Hope you enjoy! How is your NHER so low in Silicon Valley? I’ve amended my NHER to include a market rate rent in the calculation if you have no mortgage.

      1. Our NHER is low because our rent is below market value. We’re paying $2500 ($2200 + utilities etc). for a 3 bd, 1 ba duplex. We’re praying hard that our landlord will continue to be kind to us.

        I can’t believe you were just at Taaras. Thanks for all the tips, especially the snorkeling bits since that is what we will be doing most of. We just purchased a set of snorkeling gear, so no need to rent! How was the hotel food? I read that it’s no good with a handsome price tag but there are alternatives outside the hotel grounds. Did you go to the Marine Park and did you take the public ferry to Redang?

        1. My package included only the breakfast buffet.

          The Asian food in the buffet is pretty good eg nasi lemak, chicken curry, lamb curry, daal, and paratha. The juices are all freshly squeezed so drink up!

          Stay away from the Western food at the Brassierie. Not good.

          For dinner, just stick with the Asian food and have a big breakfast!

          I didn’t walk around the island bc I wanted to relax and dive.

          We took a private ferry. Took about 45 min.

          Have fun!

  14. I use miles and points for all my travel so always first class and five stars for free. I find the very slight effort worth it for the massive savings.
    My wife and I stayed at the Impiana earlier this year and loved the location and service. Being right on the elevated walkway was pretty convenient.

    1. If you can fly first class to Asia and stay 5 stars for free w/ points, that is impressive. What are some of the things you do to rack up that many points? First class to Asia alone is like $8,000 RT from SF!

      1. The usual, credit cards make up a bulk along with bonuses, promotions and a ton of other ways. While a slight step down, a one way flight in Cathay Pacific business class is only around 50k AA miles. A total steal with how easy the miles are to accumulate.

        1. 50K miles on AA for business class CP to Asia is pretty cheap indeed!

          So, an example is: Sign up for a CC with 30,000 bonus miles, and spend $20,000 to get that one way ticket? The thing is, what about the other 50K miles to return? :) I guess I could concentrate all my business expenses on that one card to get that round trip ticket in a year or two.

          I just have a couple normal rewards CC cards.

          Maybe you’d like to write a post here on how you do it!

          1. Anytime. I just got enough Alaska airlines miles in a week for no out of pocket to fly roundtrip in business class to New Zealand with a stop in Tahiti on the way there and Fiji on the way back. An almost ten thousand dollar itinerary.

  15. My wife and I are visiting Europe this summer. We are staying 12 nights in Paris + Italy and our cost will average around $115 per night with mostly AirBNB stays. It’s amazing how much more you can get for your money through AirBNB and other vacation stay websites. If we looked at traditional hotel seach engines, we could have easily spent double on lodging for similar or smaller accommodations. It’s easy to find places that have a solid history of good reviews so there is little to nothing to worry about it.

  16. I throw all logic out the window when it comes to vacations. Nothing worse than Vegas where they get your stupid friends to split a $40 bottle of Vodka for $1500, but you can’t get too cheap with a hotel.

    If a 4-star hotel is legimately a 4-star and it is significantly less expensive and in a good location, then why not?

  17. I use the wife factor to determine which hotel to stay in. When vacationing with my wife, we stay in very nice hotels, or rent a house. When traveling by myself any clean bed will do. It’s hard to put a price on the extra “benefits” I receive by making my wife happy

  18. Hope you’re having a good time. I like your NHER. It’s a great way to derive how much you should spend. I generally don’t like to spend over $100 per night. Our NHER is about $80 so that’s inline with our comfortable spot.
    We’re planning to visit Costa Rica later this year and it should be pretty affordable there. Haven’t started yet…

  19. ChopsBuster

    Hmm… I’m getting the impression that this “total home living cost / 30.5” isn’t realistic in most areas. I live in a 2 bedroom home in Seattle (5 minutes from downtown) and I’m looking at an allowance of $28.69 a night. If I were to add my girlfriend’s rent/living cost to this equation it would still only be $57.38…

    I have never found a hotel within this price range. Furthermore, I doubt I would feel comfortable staying in a place that charges less than $30. LOL.

    1. Hostels baby! Maybe this is the reason why something like 60% of Americans don’t have a passport and don’t travel internationally.

      With a NHER of $28.69 a night, what is your income and net worth? Curious to know!


      1. ChopsBuster

        My income is around $100k. My net worth is only $64k but, that’s mostly because I’m only 24 (less than 2 years into my career).

        I plan on doing ‘big’ vacations before I decide to become married and have kids :D

  20. Ha, apparently I’m your average Joe. I voted $150, and that seems to be the most picked answer :)

  21. Interesting topic as we’re just in the process of booking accommodations for our Japan vacation. We end up using hotel reward points and Airbnb. I was shocked that our hotel is close to $300 a night… totally scored for saving $1500 in total.

    My experience with hotel is that the higher the rating, you’re expected to pay for things like breakfast and wifi. A lower rating hotel may include these items as an incentive for you to stay with them. I like your idea of comparing GDP and price index.

    1. Nice job using both and having enough reward points for $1,500 worth of nights! How long did it take you?

      I feel I am either too lazy to use the points or a hoarder. I’ve got about 100,000 points on one card, but I use the points for things like a chrome book for travel etc.

    2. Tawcan,
      Maybe it’s just saying the same thing, but I think higher rated hotels charge separately for one of two reasons: either 1) because you are a business traveler on an expense account or b) you’re loaded, and not supposed to pay attention to such petty details as add-on charge. (said with less cheek, you aren’t price sensitive) Moderately-priced hotels are more likely to get tourists, and so while those amenities are desirable, charging separately for them would probably not generate a lot of revenue.

      The funny thing is that this is exactly the same customer segmentation, but opposite behavior, of the airlines. There, luxury comes all-in (except Wi-Fi, but you can use miles for that) while in the back of the bus, every costs has been split off in order to get the published price as low as possible.

  22. Another option for is to list your place on AirBnB and then book a hotel for whatever amount you are able to generate on your home. This will work well for me because I live 10 minutes from skiing!

  23. Fun in the Sun

    I struggle to spend a lot on hotels when travelling, as once I have clean, good location, hot shower, and wi-fi, I don’t see any incremental value above that. I do the 4/5 star hotel thing often for work trips, but it just feels like a waste of my own money. I much prefer to save my money to spend on food and entertainment. Just last week I was staying in a $35 room in Canada, and went out of for a terrific $80 meal. My mid-west cost is $2200 per month, so I probably should have spent about $80 on the hotel and $35 on the meal.

    There is nothing wrong with doing hostels in your 30’s, if you only stay at the nicer hostels, they are typically at least 20 to 30% people that age anyway (and you can get private rooms). The social side is unbeatable on a longer trip.

    I am jealous of your trip through Asia, I spent 5 months vacationing Asia 3 years ago. The whole trip cost about $12k, probably the best $12k I have ever invested.

    1. A $2,200 a month living cost in the Midwest must mean you’re living pretty large yeah? Pls share the specs of the mansion!

      Also, please share how you were able to travel for 5 months. That is an impressive long time. Flex work? Did you rent out your place while gone?

      1. fun in the sun

        No Mansion, $2k gets you a decent downtown apartment in the midwest (or I hear a parking space in California).

        I work in IT contracting/consulting. Easy to take breaks in between projects when you work by the hour . It also gives you a great competitive advantage when returning to work, relaxed unstressed and ready to deliver.

        I have investment property, but personally rent. Therefore on longer trips, I move my items into storage so I don’t have to pay rent.

  24. John C @ Action Economics

    Nice! I never thought about calculating out what to spend on a hotel using a Big Mac, very interesting! One concern about the first step, NHER. In the midwest where housing is quite a bit cheaper it throws down the hotel costs dramatically. For instance, my total house payment, taxes, insurance, and average utilities is $820 a month, divided by 30.5 equals $26.88, my guess is I would be hard pressed to find anything decent for that price. I suppose looking at what I think a reasonable hotel stay in my area costs, then using the Big Mac multiplier would be an alternative way to figure out a reasonable rate for a hotel room out of the country.

    1. Wow! That really is cheap living! What city do you live in? I might have to move.

      With a 30% allowance, you’re rocking $32/night. What do you think about just going the hostels route? Lots of fun!

      1. John C @ Action Economics

        Sodus, MI, right by St. Joseph/Benton Harbor, MI in the Southwest corner. If I were travelling by myself that would be a fun thing to do, but with Mrs. C. and the kids I think we would splurge for a nicer place.

      2. I live in Dallas, and my adjusted NHER would be $36/night; that doesn’t give me a whole lot to work with in the UK/IE. My income is in the six figures, and trying to find something in that range would mean a hostel in the UK, which I’m too old to do. I guess the problem that arises is that for home bases where the cost of living is lower, it doesn’t seem to work as well.

      3. I was just about to write the exact same thing as John C. I am in a west-side (read: cheaper) suburb of Cincinnati and my NHER works out to about $28.00/day. If I booked a hotel at that price, I’d have to bring my own sheets, mattress and can of Raid. That said, I very rarely ever pay full price for a hotel. I love using sites like Hotwire to find 4 star hotels for $80 or $90 a night, or even cheaper if we stay a few miles out of “town”. I think that is a perfectly reasonable price to pay for a very nice hotel room, though.

        1. Love RAID and OFF! I’ve been bitten 200X so far this trip.

          If spending 3X your NHER feels fine on a hotel, then that’s all that matters. Any idea how long you can last spending $80-$90 a night before it starts feeling like too much?

          I think I can spend $150 a night for about 30 days in a row until I start feeling I’m wasting money.

          1. That’s an interesting question. We’ve never had an opportunity to spend more than 9 nights away on any vacation (and even that is rare), so I haven’t given much thought to how long I’d be willing to spend an average of $90/night before it felt like it was too much. The last “big” trip we took was a road trip to Rapid City, SD, and lodging was around $790 total for 9 days (3 nights out, 4 nights at destination, 2 nights back). This was for 4 travelers.

  25. Funny you say ex-Japan, in my experience Japan is significantly cheaper than Singapore or Hong Kong (I only paid $75AUD per night average for everywhere I went, including Tokyo for 6 nights)

    1. Hmm, weird. I’m looking on now and The Peninsula Hotel is $450/night pre-tax and fees for a Wed night.

      The Mandarin Oriental is $468 a night for Wed night.

      Even the Westin Hotel is $238/night before taxes and fees.

      What were your 4-5 star hotels?

      HK and Singapore are definitely no longer inexpensive. Although Korea and Taiwan definitely are still good value.

      1. I agree that for luxury hotels its on the upper end of the spectrum, but I’m a cheap student, so I was staying in 3.5 star hotels and my NHER is infinitesimally small. But compare Tokyo to London or New York and it doesn’t seem too expensive. You have to remember that the yen has devalued a lot, and the lower end of the market has less capacity to jack up the prices, whereas the international 5 star chains sort of benchmark their prices on the USD.

        1. Ah, gotcha. Didn’t realize you were a student and comparing apples to oranges in terms of hotels. I was talking about 4-5 star hotels in this article. Why not compare the same?

          I can find an example at any price point to prove a point. By keeping things apples to apples, it’s more logical no?

          The Yen was super strong when I lived in Kobe in the 80s. Then the bubble burst. Are you studying Japanese in college?

          1. I agree with the logic! I just misinterpreted the comparison. Kobe is very nice, I went hiking behind the Shinkansen station and it was just incredible in late Autumn. I really want to start learning Japanese beyond the simple conversational stuff, but my course plan won’t let me take any more level one subjects (You get a maximum allotment), so I’ll have to learn some on my own and come in at level 2.

            I stayed at the Conrad in Tokyo when I was travelling with my parents, it was quite nice but not really ‘worth’ the premium over the cheaper hotels we stayed in elsewhere. Do you think 5 star hotels are really worth the marginal dollars when you could invest them? I tend to see the holiday itself as the reward, not where I stay necessarily…

    2. Japan is a great place to use your hotel rewards points, or any free nights that come with a credit card. You get a much better value per point than a lot of other places. We spent a week in Japan in 2013 and stayed the whole time on points, including two nights at the Park Hyatt Tokyo using the two free nights you get with the Hyatt credit card, which is $500-$600 per night. Other hotels were the Intercontinental Yokohama, the Hilton Osaka, and the Sheraton Osaka. All pretty nice hotels that would have been out of our price range otherwise.

      When we do pay for hotel rooms, we tend to keep it between $100-$150 per night US, regardless of the country. You can usually find something decent in that price range.

  26. Hello,

    I like the thinking about adjusting for GDP and price index. However, the “NHER” is a much tougher one. I think it works great if you live in San Francisco. I live in Columbus, OH, do great and have a great place downtown. My NHER would be closer to $60. When I finally take a vacation, I am looking for a real break and I don’t think it is inconsiderate to spend $150 on a great hotel to reward myself on a long year of hard work! I am not sure how to adjust for the low cost of living at home.

    But as always, thanks for the posting!


    1. No prob.

      So let me ask ya, if your NHER is $60, do you not feel bad spending 2.5x that on a hotel at all? And if not, how long do you think you can go spending $150/night?

      I wonder the same thing about people who spend $35,000 remodeling a kitchen in a $250,000 house or driving a $35,000 car owing a $250,000 house. Doesn’t everything seem relatively expensive as a result?

      My recommendation is to spend within 130% of NHER. So for you, how does $78/night sound?

      1. That’s a tough one. I live in a great condo downtown, and including condo fee, I pay $1800 a month. I make more than six figures and therefore going to a nice hotel would not be a drag on my budget (at least I don’t think so). It just happens that my housing cost is fairly low compared to my income so I am just wondering if the model proposed should also include income?

        1. Including income sounds like a fair proposal in calculating a hotel spend. Perhaps figure out your daily net income to calculate the absolute max spend while following NHER.

      2. Sam,
        I don’t think it’s the $35,000 car or the kitchen that sounds expensive, it’s the $1,000,000 house!

        I have lived in the Midwest all my life, and when you give details in your narratives, it’s not the relative amounts that stick out, but just what’s different from my experience. Car prices are relatively stable around the country, because the costs to get them to different destinations are a small part of the total cost. So, my idea of the right price for a car is anchored on car prices and my salary, not on my house.

        Besides this historical value, I wonder if your extensive real estate investments might color your definition of expensive vs. cheap? As a counter example, to someone who is mainly in the stock market, lots of things might seem affordable now, that were out of the question in 2008. (or, at the next market downturn) Affordability is a matter of supply (your resources) and demand (the price).

        1. Good point. $1 million for a house should sound expensive for non SF, LA, NYC, and Honolulu residents. But, I still feel that spending $35,000 for a car of you only own a $250,000 house is even more outrageous. $1 million houses cost that much due to the income and employment figures in the surrounding region.

          Time to calculate one’s FS-FR: Fiscal Responsibility Score!

          1. My house is $350k. If I take a broad view of “property” in your equation to include my liquid investments, I am well into the stealth wealth category with that car. It’s just a different way to get to the promised land. And if you are in an area expecting 2-3% price appreciation long-term, real estate is just a CD, but with more pain. It is your shelter, and not much more.

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