Don't Cry For Me, Argentina
My family and I just returned from a two-week trip to Argentina. This was a leisure trip for a change, with highlights including Buenos Aires, Iguazu Waterfalls, and Bariloche, to name a few.
Argentina is a great country - beautiful, extremely nice people, and easy enough to travel (even with the kids). Overall, we had a terrific time! Nevertheless, one phenomenon troubled me throughout the trip: rampant price discrimination.
You see it across the board in Argentina: taxis, hotels, airlines, visas, and what not. In some cases, tourists are charged double or even triple the local price for practically the same products and services. To be fair to Argentina, I believe this to be a common practice in other countries as well, especially where huge gaps in GDP per capita still exist compared to wealthier, more developed regions.
In my view, price discrimination is a short sighted business practice that will do more harm than good in the long run. In 2005, according to the National Institute of Statistics and Census, tourism from abroad became the third largest source of income for the country, so it’s hard to imagine that Argentina would want to risk one of its prime industries for short term gains.
Customers always have choices. We could have easily chosen to travel to Brazil, Costa Rica or Mexico on this trip, and I am sure we would have had just as great of a time. That’s why I believe that in order to stay competitive for the long run, prices should be a derivative of actual costs, the value provided, and a reasonable profit margin that will assure your business long term survivability. Any other practice is short lived, especially given today’s proliferation of information on the Internet. In short, discriminatory practices are doomed to fail.