Overtourism surcharges – Venice doubles prices
Danilo Zatta, PhD, MBA
Helping companies grow revenues and profits I TopLine, Pricing & Revenue Models Advisor
Dear Friends,
A couple of newsletters ago we dealt with the topic of pricing as means to stop overtourism reviewing the case of Venice, namely a complete failure.
However, since we discussed this topic last time something happened: Venice doubled prices! Did you share the last newsletter on this with the mayor of Venice or why did they do this price move?
Find a deep dive below.
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Overtourism surcharges – Venice doubles prices
A couple of newsletters ago we indicated that Venice has?never been more full - or more empty. In 2024 the population of the island city?dropped to 49,000, down from 175,000 in 1951. But as residents leave, tourists flow in. Around 30m people visit every year, most for day trips, and crowd the historic city’s eight square kilometers..
Venice thus took action charging an “access fee”, i.e. a price of 5€ to day-trippers, becoming the first city in the world to do so since April 2024. A host of other places, including Berlin, Lisbon and Vienna, have a “tourism tax” on overnight guests; this is the first for flying visits.
So what were the effects of this fee?
This surcharge generated an income of more than 2 million €. Much more than expected. However there was no impact on the number of day-trippers visiting. Recently on a Saturday 74.000 visitors came to Venice: around 9.000 more compared to the same period last year. The surcharge introduced to stop day-trippers was thus a clear failure. Overtourism is still there and increasing.
Taxes and surcharges are in the case of Venice a blunt instrument based on the premise tourists are price-sensitive. This is however problematic when it comes to destinations like Venice that are once in a lifetime places to visit.
Who shared all the above with the mayor of Venice?
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Venice namely took actions: they decided to double prices. Tickets will cost up to 10€ from 2025. This is double the price of what was taken so far. Will this reduce overtourism? My expectation is that this will NOT lead to the desired limitation of overtourism.
It is still too low!
What should be done differently and which alternatives exist?
Here what I already mentioned in the past:
1)?Charge a higher price
Clearly 5€ is not seen as a hurdle to visit the city by day-trippers. For a once-in-a-lifetime destination for many travelers from around the world, the cost is unlikely to deter anyone from visiting the city. 5€ is simply too low. So are 10€.
The city managers should conduct an elasticity study identifying the price point that would have reduced access. The most likely outcome will be a much higher price point.
2)?Introduce dynamic pricing
Why not introducing dynamic pricing to regulate demand in Venice? Dynamic pricing is more and more mainstream and you find it everywhere. It became popular in the airline industry and is spreading over industries to travel and entertainment to retail and food and even to manufacturing where revenue management is applied in process industries. Latest examples are the introduction of dynamic pricing at the amusement parks of LEGOLAND, Madame Tussauds and Sealife. So why not also Venice?
3)?Propose more articulated pricing
A third way could be to propose different fee structures — from higher fees, to sliding scales, to fees charged on more days — and the possibility of raising funds to help offset the cost of spikes in visitors, rather than charge a low fee only to cover the administrative costs of the program.
10€ are not the solution – I hope the mayor of Venice will also get this Price Point newsletter in his hands and change mind. Don't you think 10€ is too low?
Interested in learning more about price increases and surcharges and to succeed with them? You will find a deep dive on all this in the book The 10 Rules of Highly Effective Pricing, released by Wiley with deep dives on:
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You are most welcome to share your views, feedbacks and own pricing experiences. Thanks a lot for your interest and support!
Strategy | People Leadership | Problem-Solving | Results Driving | Innovative | Curious | Adaptable
4 个月It would probably be painful for residents of Venice to hear this. After all they are basically innocent bystanders in all of this (presumably many/most were born there). But 49K residents versus 30M visitors? This is practically speaking an attraction like a Disney park (or Universal Studios if you prefer). How much do parks like that charge - and still see millions of guests. If Venice really wants to curb visitor traffic, it might pay to think about their guests the way theme parks do. One very big caution though. At 50 euros (or 100?), they are in for a huge windfall. Plan ahead for how to manage that and make sure it doesn't become something the city is dependent on.
AI Founder & CEO @ FutureUP | Building the Future of Price Optimization | Top 50 Thought Leader in AI | Raised $9m in VC funding in AI
4 个月I love this one, Danilo Zatta, PhD, MBA! It seems that Venice officials "overheard" the discussion here and decided to double prices! This won't work either. First, even at this price, the revenue is not a game changer for Venice. Also, for a tourist visiting Venice, a life's dream for many, the price is not an issue unless it is sky-high. Anything up to €20 is a bargain, and visitors would even go up to $50. The bottom line is that the existing pricing scheme/level is of limited importance for the supply & demand sides. The only thing they can accomplish is for people to talk about this - as we do - and possibly irritate some. If they are serious about decreasing the number of daily visitors (after carefully considering the consequences), then they need to introduce e.g. dynamic pricing based on availability vs a target number of daily visitors. For instance, up to 50% of the target, it's free, then it gradually increases, and then when it's close to or after the target, it goes sky high. Or something similar. By combining pricing research with Dynamic AI, they could both achieve their goal and earn more money if they are really up to it.
Guiding startups, scale-ups and corporations to realize their pricing ambitions, particularly around innovation pricing
4 个月Interesting piece. On the question of dynamic pricing, in fact it only seems as though it applied on about 30 days in the first half of the year, and I think was positioned as an experiment. I don't think the fee needs to be 'dynamic', but varying it on particularly busy days does make sense (to spread out demand), as they very crudely did this year. Also, it seems that the checking process was very manual. To make this scale is going to require a different approach. And as the fee goes up, the incentives to avoid it will increase. This kind of fee is super interesting...unintended consequences can happen all over the place here. And this feels like a good approach for Venice (isolated, easy to control access) that would not work in other places. https://cda.veneziaunica.it/en/access-fee
Head of Pricing & Commercial Management bei BSH Home Appliances Group | Business Management
4 个月Hi Danilo, Many thanks for these snipits - enriching my day! At the risk of being criticised for the example used and knowing that a 1:1 comparison may be tricky: Disneyland Paris Day tickets for Disneyland Paris vary depending on the season, age of the visitor, and the type of ticket. As of the latest update, here are the approximate prices: 1 Day Ticket: - adults (ages 12+): €62 - €105 - Children (ages 3-11): €57 - €98 Obviously dynamic pricing is also applied eg peak times, holidays, and special promotions. According to own experience it is crowded at peak times and peak season, but still not overcrowded. Very pricy, but still accepted.
At Smart VCO Consulting I help companies in reducing costs and improving business performance
4 个月They are just cashing cows, by gradually testing the tourists' sensitivity to this tax. Whit this tax they raise money to fund campaigns to attract tourists to the town they diclare to protect from excessive flows of tourists