Tour operator management

Table of Contents






Introduction

The present paper is prepared with the objective of discussion about the tour operators, their services to the general public leading to the growth of tourism sector. Tour operator managers arranges for the tours for the interested people by offering various other facilities along with the main service. The consumers now do not need to go the doors of various service providers for arrangement of their tours as a combination of various services are provided by tour operators in different packages (Paulo, 2012). Common auxiliary services which tour operator provide includes accommodation or lodging facilities, transportation facilities and various other facilities. Another benefit associated with these packages of tour operator is cost and time saving. Now the consumers get all the facilities at one place for arranging their tours at the locations offered by tour operators.
Tour operator managers play a key role in development of overall travel and tourism industries worldwide. The present paper would discuss the four objectives to gain more understanding about the tour operators’ management which is stated below:
P1 Understanding the tour operators industry in travelling and tourism sector
P2 Identify the various stages involved in creating holidays
P3 Review of brochures and methods of distribution used for sale of holidays
P4 Understand strategic and tactical decisions in operation tour operator’s business.
The above for objectives defines the area of analysis for understanding the role of tour operators. Our learning objective would be bring into knowledge the about the tourism industry, various stages faced by tour operators for designing a complete tour package, fixation of price to be charged from the consumer etc. Moreover, the selection of design and type of the brochure used and the distribution method used by tour operators to maximize their revenue shall also be discussed here. Further, the various strategic and related tactical decisions to grow the business is also required to be studied to gain a clear understanding of the operations of tour operators.

Task-1 Understanding the tour operator industry in travelling and tourism sector

P1.1 Analyse the effect of current and recent trends and developments on the tour operators industry

Tourism industries have led to the growth of the nation and have become one of the economic drivers for developed countries like UK. The standard growth rate in tourism sector is around 4% which is quite better as compared to growth rate in other sectors. According to World Trade organization, Tourism industry has a major contribution in terms of growth for developing countries as well as developed countries (Cooper et al, 2005). We would now discuss some of the current and recent trends and developments in travel and tourism industry:
o   Adoption of E-commerce Technology:
Tourism industry has been scattered worldwide its business by adoption of e commerce technology. By using this technology, it has now become easier for the consumers to know about the various packages online, booking of the tickets or suitable packages through online portal in a much lesser time. E commerce has made possible the complete knowledge about the various available tour packages through online medium to consumers located all over the world. A sudden increase in the number of foreign and domestic tourists for visiting famous places in UK has become possible only due to ecommerce technology adoption by tourism sector.
o   Increase in spending habits:
Now a day people have become capable of earning more income and have developed more spending habits. This has led to emergence of various opportunities to be offered by tourism sector to attract the consumers. The operators pull the attention of the consumers towards utilization of their vacation time in visiting different famous historical and beautiful places. Apart from generating revenues for tour operator, local public is also benefitted as they get more earnings if visitors come to the places nearby (Swarbrooke, 2009).
o   Target consumers:
Tours operator focuses on the particular segment of people who would be willing to avail their tour packages. Not adhering to the traditional system, now the packages are developed by focusing on the target consumers. E.g. High income people and the newly married couple are the key tourists segments these days. The package is framed so as to satisfy the target consumers along with the motive of revenue maximization.
o   Market research:
Conducting market research helps in identifying the needs and expectations of the consumers and accordingly extracting a tour packages fulfilling their need to the maximum. Thus, market research is an important element in enhancing the business of travel and tourism.
o   Demographic pattern change:
Change in the demographic patterns has offered various opportunities for tour and travelling sector. The tour packages are designed depending upon the demographic conditions of the client (Johnson et al, 2008). The consumers prefer to go on tour with their families and friends and therefore the places are selected to arrange tour for them.  
o   Offering Customized holiday packages.
Tour operators now offer customized holiday packages to the consumers which the availability of which the consumers selected their desired tour package according to the budget and place preference.
o   Focus on customer satisfaction:
The focus of tour operator is on consumer’s satisfaction by meeting their needs to a great extent keeping in terms of facilities offers and price charged. The main objective of the tour operators would be to offer good services to the consumers so that they would be willing to come back to avail new offers in future also. The consumer’s satisfaction is the need of the time in such a competitive environment. Thus, designing of packages should be made with utmost care so that it may result into growth of the industry.
o   Role of government and other organization:
Governments provide high supports to travel and tourism sector to enhance their business resulting into the growth of the nation as a whole. UK government also provides supports in terms of easy availability of VISA, spending huge money in development of tourist places, relaxation in taxation norms etc. moreover the government and various other organizations involves in several other activities to support the local public of the nearby area to generate means of income.
o   Marketing:
Tourism marketing plays a vital role in enhancing the consumer awareness about the travel and tourism industry. The consumers are now more knowledgeable about the various services offered by different tour operators. Availability of the online information about the destination places, tour packages, prices and facilities has made it easier to consumer to choose their suitable tour package (Kelsey, 2014).
o   Conservation of Tourist places:
The aim of the travel and tour industry is not only profit generation but to conserve the nature and the tourism destination. Government spends high amount on the tourist places conservation to keep them clean and long lived. Thus, conservation is also necessary to keep the places in good conditions so as to attract large number of tourists.
o   Role in economy:
Tourism industry has helped in providing means of earning to the local people residing nearby destination places. Thus, apart from contributing to the GDP of the country, various employment opportunities have also emerged leading to economy growth and development.
In crux, after analysing the present situation of the tourism industry, it be concluded that there are various opportunities for tour and travel agencies to grow for the development of nation as a whole.

















Task-2 Identifying the various stages involved in creating holidays

We shall develop an understanding of the stages involved in designing the 10 days wedding tour package in Las Vegas and in VIA ALGARVIANA.

P 2.1 Assess the stages and timescales involved developing holidays. 

For development of a good tour package, planning should be undertaken keeping it focus on the target consumers. It is the most important part of the overall travel and tour development business as it involves analysis of the place, research activities, understanding consumer’s needs and negotiations with required service providers (Porter, 2014). The planning provides the basis for designing the tour package according the customer’s expectation and fixation of price giving regard to company’s norms. It would take around 1 year time to develop a package for the selected destination. Some of the key activities of the planning are discussed below:
o   Careful examination of the destination place:
In the present case, Las Vegas has been selected as tourism destination which should be examined in context of environment, cost factors, different sites, nearby famous areas and restaurants etc. All these factors should be pre checked and shall take near about three months’ time to complete this step.
o   Research:
Research activities involve the investigation into the various available facilities that can be offered to the consumers in the selected destination. Whether these activities can be performed at the pre-selected destination place can be ascertained by researching of the concerned area. Thus, the research activity should forms part of planning activity and can take around 2 months’ time.


o   Negotiation:
Negotiation with the various service providers should be done so as to provide transportation facility, accommodation or lodging facility, food and other facilities required by tourist. Negotiating process would take around three to four months.            
o   Tour development:
Finally, the development of tour is undertaken by fixing the service provider, designing the tour including various facilities to be offered and communicating the benefits of package to the tourists. Promotional activities are done by offering the complete tor package on the online portals, huge banners, pamphlet and advertisements.
  • Financial evaluation and pricing
In order to evaluate the tours from financial aspects it is important that currency prices and overall costing need to be checked before the tour so that pricing is set in accordance with the profitability estimates. There can be two type of pricing i.e. cost oriented tour pricing and market oriented tour pricing.
  • Administrative staff
Due to involvement of seasonality there is requirement for the human resource at particular instant of time in right numbers. For managing staff required recruitment and selection process need to be managed so that there is no excess and shortfall for the staff
  • Marketing tour package
Marketing of the tour is done through online as well as offline methods so that more and more number of customers is aware of the different aspects of the tour package. Depending upon the target segment marketing would be done through particular advertisement media.
  • Tour operator’s brochure
Brochures are considered as the major marketing tool for the tour and brochure developed should contain complete information on the name of company, destination covered and site visited etc.
  • Post tour management
Post tour it is important that customer survey should be carried out as this would help in order to know the customer satisfaction index through the overall experience created from the tour services.

P 2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of tour operators.

There are mainly two methods adopted by tour operators for tour design packages which are Fixed Contract method and Sale only contract method. Here, in the present task we shall take examples of two different Tour operators –Airtour and Flightcentre who shall be compared in terms of various services provided. The prescribed two methods of the contracting are discussed here under in regard to Tour operator Airtour and Flightcentre.
o   Fixed Contract:
In the Fixed contract, the service providers charges for the volume based capacity so as to maximize their revenue by covering up the off season sale shortage. Thus, the tour operator books the total capacity regardless of what would be actually consumed. Tour operator Airtour has entered into a fixed contract of summer tour package containing a constant risk of un-utilized capacity because the operator has to pay the full amount as per the contract. High discounts are offered in these types of contracts as the volume of the people availing the tour packages seems high. Tour operator Airtour has selected its tour package based on this contract as it presumes that large number of people will come to get the benefit of discounted tour package.
o   Sale only contract:
In the present context, Tour operator Flightcentre has selected sale only contract to design its tour package. These types of contract are made in lean season and have comparatively high cost. These contracts are made keeping in view the needs of the target potential consumers. Tour operator Flightcentre will have to pay only for the capacity utilized by its client. There is nothing to concern about the un-utilized capacity. These contracts give special attention to the prospective consumers and indulge various facilities with high costs (Holloway, 2012). The risk factor associated with these contracts is risk of weak response for a particular tour package designed for a particular segment.
After discussing the two contracts above, it can be said that both the contracts have their own merits and demerits. While the Fixed contract offers high discounts, pre decided profits, advance booking of the facilities etc. On the other hand Sale only contracts reduce wastage of funds by non-payment of un-utilized capacity and focused on target consumers.

P 2.3 Calculate the selling price of a holiday from given information below.

In the present case, a seven day holiday package to Greece is developed by booking air tickets for around 180 tourists. Our agent is assigned with the responsibility for arrangement of accommodation in Avra Beach resort in 3 Star hotel. This hotel is booked on a fixed price contract of 30 Pounds as twin sharing basis. Booking of 80 passengers is made with Thomas Cook airlines on fixed contract basis (Thomas cook, 2010). All the payment has been made in advance regardless of the actual capacity utilized. Total air transportation charged agreed are 130 pound per person. Moreover, local conveyance charges are 10, 35 and 100 for transportation via coach, taxi or representative visit respectively. Other charges for entertainment facilities are separately charged at 40 Pounds per person.  The overall budget of the total package would be 335 Pounds per person and 535 Pounds per couple as the case may be.


Table 1: Showing the total cost involved in package of Greece.
Sr. No.
Package Details
Sale Price/ person
Sale Price/Couple
1
Charges for transportation via airplane
£130
£240
2
Transportation Local
By Coach
By Taxi
Representative visit

£10
£35
£100

£20
£55
£100
3
Booking for Hotel
£20
£30
4
Other charges for sightseeing and music
£40
£80

Total Cost
£ 335
£ 535
As shown in table above that price for the transportation, hotel and other purposes have been shown for the individual and couple as well. Prices for couple are higher as compared to the double of individual amount.






Task-3 Review of brochures and methods of distribution used for sale of holidays

P3.1 Evaluate the planning decisions taken for the design of a selected brochure.

Travel and tourism industry uses brochure as a medium of providing information about the tour package and communicated the key information to the clients. In the present context, we shall study the planning phase relating the designing and implementation of the brochure of Thomas Cook. Distribution of brochure is made with the objective of imparting information about the available tour packages to the maximum people in a much lower cost. For designing a suitable brochure that complies with the requirement, it is important to develop planning, organizing and implementation activities with utmost care. Some of the important planning decisions relating to present brochure design process are discussed here under:
o   Identifying issues affecting planning decisions:
Some of the key issues need to be identified before development of a suitable brochure. These issues involves target segments, format, objective of the information conveyed, , time limit available to generate the brochure etc. all these factors affects the decisions regarding brochure designing in tour and travel agencies.
o   Format of the Brochure:
Format of the brochure should be developed keeping in mind target consumer segment of the organization and information which need to be shared with the consumers. A brochure should contain the information such as name of tour company, duration of tour, description of destination, service of the ground operators, transportation mode, price, extra charge clearly indicated, full booking conditions and any health hazard related issues etc.
o   Budget consideration and Target Market:
The target market should be selected and in the present context of Thomas Cook, the target market would include niche segments. Budget also plays a key role which defines the spending habits of the target consumers.
o   Time limit and stages:
The designing of the brochure must have been completed in the prescribed time frame.  Entire planning, organizing and implementation stages should get accomplished within the allocated time limit for each stage.

P 3.2 Assess the suitability of alternatives to a traditional brochure for the following tour operators of the Thomas Cook Group: Air Tours Summer 2014, THOMAS Cook Cruises Summer 2014

The present task would describe various alternatives to the traditional brochure in context of Thomas Cook Cruises Summer 2014 and Air Tours Summer 2014 to attract the large number of consumers worldwide. Development in technology has made it necessary to evolve new alternatives to the traditional system of brochures. The system of e-brochure has made the communication easier and faster to consumers located worldwide. By designing an attractive brochure, consumers would be more desirable to know about the offerings of the tour operators. Newly found alternatives to the traditional system would result in attracting more customers and greater revenues (Streeter, 2012).
Designing through online method would help to generate more attractive brochure that can reach to large number of people by adopting various promotional activities. For the present case of Air Tours and Thomas Cook, e-brochure should be used to cover large network with lower cost. E- Brochure comes in lower cost and faster access as compared to traditional physical brochure system. Moreover, visual medium offers more clarity and eye catching feature as the message conveyed through images has high impact and clear understanding. Thus, visual medium can be adopted by Air Tours and Thomas to design their brochure.
The visual brochure conveys clearer message by depicting the images of the concerned destination place. Moreover, key features of the proposed destination places are also highlighted related to those pictures. Further, visual brochures can also be easily promoted through online social media sites like Facebook, Google+ etc. Apart from this, video brochures can also be integrated with internet marketing tools for their promotion. Video brochure includes sound as well as beautiful pictures of the concerned destination and features associated with it (Sachdev, 2013). These types of brochures can be easily uploaded on You Tube and involves much lower costs with fastest promotion worldwide. Considering the various aspect, it is suggested that Air Tours and Thomas Cook should use a combination of all the aforesaid brochures. An integrated brochure should be developed which includes the benefits of video brochure, visual brochure and e-brochure. All these types of brochures should be efficiently linked with each other so that the final brochure developed to be offered to the consumers should be widely approachable and attractive.

P3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator within the THOMAS COOK group.

There are several methods available with the Thomas Cook Group for selling of holiday packages. These methods include direct sale, online trading, telephonic sales, promotion and sales through call centres etc. Direct sale of holiday packages involves sales through online media direct to the consumers. This method of distribution can be used by Thomas Cook group as it will result into targeting high number of consumers in a much low cost. All the information about the proposed destination place is provided through online media along with the selected brochure. Consumers are more informed about the various tour packages offer by different tour operators. Moreover, email marketing tools can be used for the distribution of holiday packages. Through e mail, complete information is send to the target consumer segment about the available tour package. Sometimes, external agencies are hired for promotional activities to enhance the sale of tour packages. By opening a call centres, the sales executives of the organization conveys the information and tries to convince the consumers through telephonic call to avail the benefits of tour package (Levy, 2010). Thus, considering the various benefits associated with each type of distribution method, Thomas Cook can adopt a combination of these methods. It can make use of direct method or distribution through online media to reach the target consumer to sell the available tour packages.


Task-4 Understand strategic and tactical decisions in operation tour operator’s business.

P 4.1 Evaluate the strategic decisions made by different types of tour operator.

There are numerous strategic decisions which are made by tour operators in their business. All these strategic decisions are taken in day to day running of the business and involves decision regarding designing and developing a brochure, fixation of the price of the offered tour package, selection of the distribution method, identifying the particular consumers segment (William, 2010). Strategic decisions are of high importance are taken with due diligence by the organization. The travel and tour business involves high level of flexibility in some elements so as to run its business smoothly and hence, the constant decision making in required to be undertaken at each and every step for a profitable business emergence. Some of the key strategic decisions relating to travel and tour operating business are discussed below:
·         Segmenting, targeting and positioning:
Target consumers are identified by tour operators so that tour package developed keeping in view the demand of the positioned customers. The decision is made after analysis the present situation in terms of competitive environments and the services which can be offered to the target consumers so as to meet their expectation in the pre-defined budget. It is one of the key decisions taken by tour operators which form a base of all other important decisions relating to running of the business.
·         Discount pricing strategy:
Discount Pricing strategies are made to seek the high number of consumers to avail the tour package. Calculation of discount amount with fixation of price of a particular tour package is an important decision which is generally associated with fixed price contract. High discounts are offered to the consumers in terms of various seasonal packages. An attractive pricing strategy is developed keeping in view the earning capacity and spending habits of the target consumers.

·         Seasonal Aspects:
Seasonal aspects are considered before development of any tour package. In travel and tour business, off season and peak season affects the demand of the tour packages. In peak seasons, high discounts are offered to the consumers by arranging tour in desired destination place. Thus, seasons affects the overall revenue generation for the business. Pricing structure and selection of the destination place are the key decisions which are affected by seasonal change.  
·         Competitive pricing strategy:
Competitive pricing strategy decisions include the analysis of the prices charged by the competitors for the same trip and fixing the price of our tour package so as to attract more consumers to buy their holiday package. This decision creates customer loyalty even in a highly competitive market (Syratt, 2013). After understanding the present situation, proper decisions needs to be taken to face the challenges of the competitive environment.
·         Promotional strategies:
Promotional activities would include deciding about the method to be used for promoting the business by using the various tools within the prescribed budget. Overall profitability of the business depends on this decision as the promotional techniques used by the different tour operators forms basis of high generation of income. By selecting a suitable integrated promotional strategy, the consumers are made aware of the available tour packages.

P 4.2 Compare the tactical decisions that could be taken by a selected tour operator in different situation.

Various tactical decisions are made in day to day running of the business. These decisions would include negotiating with the service providers, arrangement of the accommodation, food and other facilities, tie up with the stakeholders foe becoming parts overall value chain. First of all, the list of service providers are prepares from who the proposed services are to be availed. There are various service providers for each activity such as transportation, accommodation, food and other related activities. Thereafter, the proposals are designed and send to these service providers for inviting quotations. Most suitable and effective quotation is selected out of the all the available quotations depending upon the pre-defined budget. The selection of the quotation is done with the objective of cost minimization and good services to the customers. In the present context example of Explore (UK) and Regal dive can be taken which are the two major scuba diving holiday tour package companies involved in development of holidays. There is price war between the two tour operators due to which prices are slashed.
Personal meeting would be done if possible with the service provider selected on the basis of suitability of the price, quality of the services and facilities offered to the positioned customers. The complete process requires tactical decision making such as pricing strategy, discussion with service providers and negotiating the price. Assessment of the consumer experience is another tactical decision making process (Cooper et al, 2005). The experience of the consumers is analysed and efforts are made to solve the problem which might have faced by the consumers. Only by solving the previous problems by performing corrective actions, the consumer will come back again to avail another tour package offered by the organization.











Conclusion

The present paper has discussed various aspects of business of travel and tour agencies. This sector contributes a major part in the country’s GDP and hence government also supports Tour and Travel industry. In the first task, we have gain an understanding of the present situation of tour and travel agency. Further, in the second task, the tour packages are developed considering the needs of the target consumer segment. Moreover, various pricing strategies are framed to attract a large number of the consumers. In the third task, we have discussed the designing and development of the brochures. And at last, Fourth task has thrown light on various strategic and tactical decisions in day to day operations of the tour and travel agencies’ business.










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