Ticket Prices For The Taj Mahal - Consulting Case Interview Problem
Your Case Topic - The Government of Uttar Pradesh wants your help to decide the ticket price to explore one of the seven wonders of the world - the Taj Mahal, located in the North Indian city of Agra. What should be the ticket price for the Taj Mahal?
The Deadline - We expect your responses to be in by 11:59 PM, Sunday, 26th July 2020. Responses beyond the deadline will be accepted but not evaluated.
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The entry fee should depend on whether the visitors are Students or not, and also whether visitors are coming in groups, and also the location of the visitors.
There are times when students bunk classes to hang out at a particular place. If the entry fee for students on weekdays are Rs. 20/- then, student groups will be interested to visit this place.
Current fee for Indians is Rs. 50/-. It should be a little bit less for people from Agra or nearby. In that way, more local people will visit the place to hangout or gossip. It should be Rs. 40/- . And Rs. 30/- each for 3 or more visitors.
For tourists from outside Agra or nearby, the Taj Mahal will be a checklist, so no need to decrease the prices. Rather, increase the prices a bit more and give discounts on groups.
New fee for Indians living outside Agra or nearby is Rs. 100/- . Rs. 80/- each for 3 or more visitors.
The rule of free entry for below 15 should be scrapped. Rather, Children below 5 should be entry free, and children aged between 5 to 10 should have a minimal fee of Rs. 10/-.
For Main Mausoleum, the price for entry for all should be same as current, i.e, Rs. 200/-. As local visitors may not be interested to go there more than once, so no need to decrease it.
For SAARC/ BIMSTEC/ Foreigner/ NRI
For foreigners, Taj Mahal will be a must see. So, we may increase the price around 10%, as increasing a huge amount will be eye-catching. Also, There should be discount for big groups (5 or more), because it will seem as equal opportunity for both Indians and foreigners.
For SAARC/ BIMTEC
Previous Fee- Rs. 540/-.
New Fee- Rs. 600/-. And Rs. 570/- for 5 or more visitors.
Previous Fee- Rs. 1100/-.
New Fee- Rs. 1200/-. And Rs. 1170/- for 5 or more visitors.
For all foreign visitors, irrespective of the country, entry to the Main Mausoleum can be increased a bit more, as they will definitely visit the place. The new price should be Rs. 300/-.
I have Took some details of the previous revenue earned by the Taj Mahal from Times of India in the year 2018 and based on that made a model representing the cost for the tourists.
Total number of tourists = 69,05,000
Total number of Indian tourist = 60,94,000
Total number of paid Indian Tourist = 39,98,678
Total Number of Foreign tourist = 7,29,000
Total Number of paid Foreign Tourist = 4,40,615
Total Number of Saarc tourist (10% of foreign tourist) = 81,100
Total Number of paid Saarc tourist = 48,957
Total number of Non-paid Tourist (15% of total tourist) = 24,16,750
Total revenue earned in a year = 118,00,00,000
Maintenance cost of the Taj Mahal in a year = 11,00,00,000
Additional cost of RS 200 by 35,743 people = 71,48,600
Assuming the cost of the ticket for an Indian Tourist = x
Cost for the SAARC Tourist = 10x
Cost for the Foreign Tourist = 20x
(3998678)*x + (48957)*10x + (440615)*20x = 1180000000-110000000-7148600
x = Cost paid by Indian tourist = 79.9
10x = Cost paid by SAARC tourist = 790
20x = Cost paid by Foreign tourist = 1580
These prices are exclusive of RS 200 which is paid for visiting the main mausoleum.
The major source of revenue for the Taj Mahal is the price paid by the tourists. The expenditure is the operational cost like cleaning, maintenance of the lawn, maintaining water supply and maintenance cost for reviving it lost sheen and appeal due air pollution and other natural factors that affect the marble surface of the monument, causing physical and chemical reactions, resulting in erosion. This is the main reason why costs involving the upkeep of the monument has increased from Rs 12.04 crore in 2012-13, to Rs 13.73 crore in 2013-14 and Rs 16.24 crore in 2014-15 and it is estimated to be around 34.11 crores for 2019-2020.
Following is the revenue in the last 3 years
|Year||Revenue in cr.|
Looking at the historical data, we see that the revenue for the year 2019-2020 should be approximately 109 crores.
Following is the number of visitors in the last 3 years.
The number of visitors on a weekday is around 35000 during summer and on weekends and holidays is around 55000-60000. Taj Mahal remains closed on Fridays. Assuming that we have a footfall of 58000 on 70 days in a year (out of 90 holidays in a year). Let us assume a footfall of 35000 for 80 days and a minimum footfall of 10000 for the remaining days. The estimated footfall by calculation is around 87 lakhs and footfall arrived at by following historical trend is around 75 lakhs. Let us take the footfall to be the average value 81 lakhs
The price is Rs.50 for Indians, Rs.540 for tourists from SAARC and BIMSTEC) and Rs. 1100 for other foreign nationals. There is a separate fee of Rs.200 for seeing the main mausoleum. Taking into account last year’s data : the revenue was Rs. 77.9 crores and the total number of tourists was 69 lakhs of which 8.83 lakhs2 foreign nationals. We see that this revenue is achieved when it is assumed that 2% of the people (all 3 types) visit the main mausoleum and that only 5% of the foreign nationals are outside SAARC and BIMSTEC.
The footfall estimated is 81 lakhs. Assuming the same percentages as the previous year, we see that the price can be fixed as follows:
|Type of tourist||Normal (in Rs.)||Main mausoleum(in Rs.)|
|Foreign nationals (other than SAARC and BIMSTEC)||1130||1330|
The entry fees should be free for all the people weather it is Indian tourist or foreign tourist. As of now the entry fee for indians are 45Rs and for foreigners it is 1050Rs. Being one the 7 wonders of the world the more peole will see its outlook the more it will be alive in the memory of the people.
By making the entry only free the government can attract a humongous increase in people and once the people are in they will be trapped to see inside the Taj Mahal. Something like Jio telecom which in starting gave internet free for 4-5 months and made peole habitual of good internet and then started to charge for it as a result people were forced to make recharge of 300-400Rs. Now for main Mausoleum the government can charge around 100-150Rs from Indians. The government should provide some exciting offers in combo for family people,students coming from college, school for visit or foreigners as to attract more. For a family consisting of husband wife and childern it should give discount this will gernerate a good strategy and positive view in the eyes of public.
In case of foreigners it can be 500-700Rs and combo should also be applicabale to them as everybody should be treated eually. Since majority of the tourist will be fom U.S or Europe and the currency of dollar or pound is quite high as compared to Rs so it will good for both the government and the foreigners. Hence by doing this government can make more profit and attract more number of viewers as compared to previous years with was around 6.9 million.
Pricing for the tourism of Taj Mahal depends on major factors like age, nationality, geographic location, number of visitors visiting year, hygienic facilities.
The pricing should be different for students and minors from elders and foreigners because its a monumental place whose purpose of the visit is majorly for educational purpose. For a greater revenue, I believe that pricing should be higher than that of Indians. Taj Mahal is one of the seven wonders and it requires a lot of hygienic maintenance like cleaning the gardens, a fountain pool so frequently. This is also placed on the bank of the river Yamuna which adds additional scenery view for tourists. To protect Taj the govt of UP has not given authorities for factories nearby to operate which should lead to an increment of prices.
Assuming an average of 10K visits on 215 weekdays annually and 30K on the weekends and other holidays; 100 police and 200 guards for security and administration, 40 gardeners and sweepers for regular maintenance, 50 tourist guides, 50 vehicle guides to transport older people and foreigners around the monument and 25 other labour for any other general dispensaries with shifts maintained. Let's say the salaries of all workers are 20K/month. This leads to nearly 450-500 workers.
So their wages annually are around 500*20K*12 = 120Million INR.
Total footfall annually = 10K*215+ 30K*150 =6.65Million (7Million approx)
The Govt needs to invest heavily on equipment and funds for the maintenance. Let's say its 3-5Million INR annually.
So Total Investment is 16Million on avg.
Since as pointed that Govt makes a loss on closing factories and Industries in the nearby region it focuses a lot on tourism.
Assuming the price is 10INR for children below 18Years, 30 for other Indians, 10$(700INR approx) for foreigners. Let's assume on avg children below 18 constitutes 30%, 65% RoI, 5% foreigners.
Revenue generated = (10*0.3 + 30*0.65 + 700*0.05)*7M = 350M INR approx.
The Taj Mahal is considered one of the Seven Wonders of the World and as such attracts a massive footfall throughout the year, and has been doing so for years on end, and will in all probability continue to do so for years to come.
Now, as far as the case in question is concerned, this is typically a pricing startegy case which has to be viewed through the consulting lens. It is critical to observe that such monuments of historical significance charge an entry fee which typically varies for national citizens and foreigners. The charges (as of now) are detailed as below:
|Indians||Foreigners||SAARC and BIMSTEC individuals|
|Rs. 250 (Additional Rs. 200 to view the mausoleum)||Rs. 1300 (Rs. 1100 + Rs. 200)||Rs. 740 (Rs. 540 + Rs. 200)|
Now as far as the question of disparity in fees charges is concerned, that is outside the purview of the discussion. Entry fees have been determined and standardised through the Government of India Gazette under the Guidelines on Ancient Monuments Archaeological Sites and Remains (AMASR) rules of 1959. A study is done every 15 to 20 years for making necessary alterations to entry rates. The additional revenue earned through admission tickets of visitors goes to the Consolidated Fund of India and is not directly utilised by the ASI, What is significant to note is that these charges are accrued for proper maintenance and operational purposes. The monument has also been recently literally loosing its lustre due to air pollution and other factors (both artificial and natural) as a result of which the costs involving the upkeep of the monument has increased from Rs 12.04 crore in 2012-13, to Rs 13.73 crore in 2013-14 and Rs 16.24 crore in 2014-15.
About Rs 12.68 crore was also separately allocated for conservation, preservation and environmental development works at the Taj Mahal in the last three years (2015-16: 3.65 crore, 2016-17: 4.8 crore and 2017-18: 4.2 crore). Despite such low investments, 10 out of our 119 ticketed monuments earn about Rs 90-100 crore annually, which is over 30 per cent of the culture ministry's allocation to the ASI. The Taj Mahal in question earns about Rs 25 crore annually and it takes care of all its expenses, including the salary of the local staff in the Agra Circle, security at the monument and other expenses. But it doesn't have a ready corpus fund of a couple of crores of rupees for any emergency maintenance or a restoration work promising a long-term facelift.
Taking this into account, it is of my opinion that the monument shouldnt have to wait for funds. Unlike globally acclaimed sites, even the Taj Mahal lacks basic services which could contribute towards revenue generation. With a state-of-the-art interpretation centre including cafe, site museum, book shop, exhibitions for children, the revenues earned could be manifold. More facilities mean more tourists. Through direct earnings at sites, employment creation, indirect revenues to hotels, transporters and restaurants, the nation's heritage can contribute to GDP if efforts are made to manage it in a manner similar to the Eiffel Tower where 17 million visit annually.
These are but a few suggestion oother than altering the current prices which could account for higher revenues in return which wouldn't irk the crowd and would please many in exchange. Who says you can't please everyone? Such a limitation is only in one's head.
Taj Mahal, being one of the 7 wonders of the world earns it's revenue from the ticket prices it charges to the visitors. Taj Mahal is a historical monument which is visited by people of all age groups and the purpose is to educational and understanding the history and culture of India.
Therefore, it is important to understand that the ticket price is not to be determined on the basis of making profits for the UP government. The ticket price should be such that it is affordable for most segments of the society. The other important to consider is the cost of running and maintaining the monument. This would include expenses for cleaning, polising, salaries of staff and other misceallenous expenses.
Currently, the Taj Mahal ticket price is structured as follows:
|Indians||Foreigners||SAARC and BIMSTEC individuals|
|Rs. 250 (+200)||Rs.1,100 (+200)||Rs. 540 (+200)|
It also has zero value tickets for those under 15 years of age.
The maintenance costs are as follows (in Rs.crores):
It is assumed that the maintennce costs will not change in 2020-21 as there would be lower maintenance expenses due to the decrease in footfall. For the previous years, a constant growth rate has been assumed.
In 2020-21, the expected costs p.a. is Rs.8.8 crores.
The footfall in 2018 as follows (in lakhs):
Out of the total footall, 35% was of children under the age of 15 years. Therefore, the total revenue-generating footfall is 89.7 lakhs.
Assuming 50% of the footfall as the previous year, as there would be a decrease due to the Coronavirus pandemic, the footfall for 2020-21 would be approx. 45 lakhs.
Considering the same ratio for pricing the tickets, we can estimate the ticket price as follows:
- Indian nationals - 55
- Foreign nationals -1130
- SAARC - 550
The Taj Mahal has seen an increase of both visitors and revenue in the last 5 years. According to the data given by the government, in 2014-15 , the visitors were around 6.09 million and the revenue earned was 21 crore 23 lakhs. In 2018-19 visitors grew by around 1 million to 7.09 million and revenue increased to 86.5 crore. The maintenance cost of the Taj is around 5.5 crore. Keeping in mind the increased pollution effect on the monument and the pressure on the government to conserve the pride of the nation, the maintenance costs will increase in the future due to additional conservation measures. The increased costs can be estimated to be around 7 crores. Also, the supreme court had in its 2019 hearing held the government responsible for the functioning of 1167 polluting industries in the Taj trapezium zone. Relocation of these industries can amount to another 5-6 crores loss for the government. Taking all this into consideration, an additional 7-8 crores have to be earned from the ticket sales.( To make up for the increased costs). However, on an average there is an increase of 250,000 tourists each year in the past 5 years.
Target revenue- 86.5+7 crores= 93.5 crores.
Visitors expected= 8 million
Price of the ticket per person= 116 rupees.
This is one third of what an average indian earns in a day. Considering that more than 90 percentage of the tourists are indians, this price may be too much for them to pay. The ticket price should be about 10% of the daily earning of an indian which is 35 rupees. Additional 200 rupees must be charged from the people who want to visit the mauloseum so as to avoid alot of crowd and stampede. Also, children below age 15 are given free entry. Assuming atleast 50% of the Indian tourists decide to pay the additional 200 rupees fee and around 15% theof the visitors are children, revenue earned so far is
= 7.2 million* 0.85* 35+ 3million*200= 81,42,00000.
Foreign nationals amount to 0.8 million. Hence the additional 12 crore revenue needed can be collected from them by keeping per head charge to 7$ or 525 rupees (10% of what an average human earns which is 75$). Assuming atleast 50% of the visitors decide to pay extra 200 rupees for the mauloseum , revenue earned= 525*0.8million+ 200*0.4million= 50 crore.
Total revenue will be 131.4 crores.
100 rupees can be deducted from the ticket prices of BIMSTEC nationals. Considering most of the foreign tourists are from CHINA, EUROPE and AMERICA taking the figure to be around 50% , it will lead to an increase of rupees 100 in the ticket prices of non BIMSTEC nationals. Final ticket prices can be as below-
INDIAN NATIONALS- 35 rupees+ 200 FOR mauloseum
BIMSTEC nation visitors- 425 rupees+ 200 for mauloseum
OTHER FOREIGN NATIONALS - 625 rupees+ 200 for mauloseum.
The solution is given in the link below:
Pricing of entry to Taj mahal varies from diferent residents. For example indians should be charged at one price and foreigner should be charged at another price. As foreign currency attracts more value and it encourage indian tourism.
Presently if ticket price is 300/- for indians, it should be the same price but to attract more people like school groups, tourist groups, they should attract group tickets. Example: 30 tickets per group and can avail 10% discount who avail that. This is because due to present conditions to encourage people to visit taj mahal. Give an additional option to tourist to opt for guide and extra services which would charge them extra 200 bucks, but if you opt now for overall pricing, discount can be availed of 5% or 10%.
For foreigners(including SAARC/BIMSTEC/NRI) if price is 1100/- or 540/-, they should be allowed from another gate of taj mahal which would be well hygienic and well sanitised. If the cost for santising costing overall comes to 1 million per day. This cost should be covered by chaging them extra 500 to 600 bucks. They should provide option for another sight seeing places for 7000/- per person including food.
Taj Mahal's main attraction will be on full moon day. Suppose if entry price on that day is 500/- for indians, then provide tickets to 20/- people to who registers to visit before 15 days on that full moon day. And substantially increase entry price while days passes by. For a trail purpose, keep a tatkal ticketing which will be 100% price of orignal ticketing. It can added revenues for the government.
For additional revenue for the governement, ticket price for sunrise and during sunset should be charged higher. As most people desire to visit taj mahal during those times. If price is for indians is 300/, then in these times it will be 500/- not including another services, that too time restricted. this case will be applicable to foreginers also.
If government can allocate enough place near Taj mahal for marriages, that will be the very added advantage revenue to the revenue. As most of the indian celebrities and foreign celebrities wants to host their marriages with Taj mahal in background.
Ticket prices for Taj mahal can also be dependent upon other factors to climatic conditions, footstep of visitors. Presently under this conditions of pandemic, governement of Uttar Pradesh losing its revenue share from taj mahal. So it would be better to find alternative routes for revenue than to revise the pricing.