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Why are the costs of tours to the Tibet so expensive?

Travel to the Tibet is not considered "cheap" because all foreigners must have travel permits, a tour guide and a private vehicle with a driver. The cost of vehicles in China, especially imported vehicles such as the Toyota Land Cruisers that are usually used in Tibet, is much higher than in North America and Europe. Even used Land Cruisers sell for much higher (as much as double) than they do elsewhere. So the higher vehicle costs add to the tour price. Another factor is fuel prices. Fuel prices on the Tibetan Plateau are probably a little less than most of Europe, but is still considerably higher than in North America. The fuel and vehicle charges make up more than 80% of the total tour price. Guides are usually paid between 200 RMB and 250 RMB per day, which also adds up on a 10 or 14 day tour. Though the roads in the Tibet are improving, the distances are still far between places, especially if you are traveling to Mt. Kailash in far western Tibet. Tour prices are normally based on the distance traveled so if you are doing a lot of overland driving to places like Everest, the Nepal border or Mt. Kailash, the price is going to be higher than if you are just staying in the Lhasa-Nam Tso-Shigatse area.
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