Entrance and Activity Fees (Tourism)

2.   Methodology

2.3.2      Pricing structure

The management authority should establish a pricing structure that: a) reflects visitor ability to pay, b) is in proportion to benefits received, and c) covers the costs of management and administration. While higher fees can maximize revenues for conservation (assuming all, or a fixed proportion, of revenues are reinvested) and are often used in ecologically unique or pristine areas where the user receives high benefits, they can also affect overall visitor numbers and visitor profile – for instance, by preventing local people from accessing PAs (Lindberg 2001). Lower fees, or preferably pricing systems differentiated by factors such as residency, may therefore be necessary to achieve social objectives such as local visitation (see 2.3.3).  Fees can also be used to deliberately reduce visitor numbers when they have exceeded carrying capacity and start to threaten the ecological integrity of the site. This was part of the rationale for New Zealand’s introduction of high fees for foreigners on certain world famous hiking trails inside national parks.

The degree to which price influences demand is measured by the price elasticity of demand (Lindberg 2001). In inelastic markets (e.g. areas where unique wildlife or landscapes are found, such as the Serengeti National Park, and marine parks in South East Asia; Spenceley, Rylance & Laiser 2017; Pascoe et al. 2014) an increase in price may not have major impacts on visitation. In highly elastic markets where price has a powerful influence on visitor numbers (e.g. when close substitutes are available at lower cost; Schneider & Budruk 1999), an increase in price may significantly reduce the number of visitors. At the level of whole PAs, demand is more commonly inelastic (Lindberg 2001).

A good understanding of market demand is essential to understanding how fees might influence visitor numbers and profile (Lindberg 2001). Countries across LAC tend to establish similar fees for all PAs, without conducting market analysis, but those that do use market analysis tend to generate greater revenues (Bovarnick et al. 2010). Willingness-to-Pay (WTP) studies often find that tourists are willing to pay more than the established fee, indicating underexploited potential for tourism revenues to contribute to conservation (Leung et al. 2018). For instance, WTP to access Komodo National Park, Indonesia, was found to be over ten times the actual entrance fee (Walpole et al. 2008). However, the results of a WTP study do not necessarily provide a realistic benchmark for fee prices. WTP studies estimate economic value and are largely based on hypothetical scenarios, but in reality, tourists tend to pay much less.  Practitioners should also be aware that setting fees at maximum WTP can have adverse economic impacts in some cases for the local economy be reducing visitation levels (Thur 2010). On the other hand, unique sites such as the Galapagos, Mount Kilimanjaro, and the Serengeti or unique experiences, including mountain gorilla visits, can allow managers to charge very high fees as few or no alternatives are available.  There are two effective and lower cost approaches to setting user fees. The best is a comparative study, which compares the PA or activity of interest with similar sites within the country or region and maps the price and quality of the experience. The second approach, which can be used in combination, is to gradually increase the price (e.g. on a yearly basis for three years) to reach the desired level of visitors and revenues per month. Factors like relative affordability to both domestic and international visitors are especially important to consider in setting fees.