BTEC HND TT Unit 14 Tour Operations Management

This is a solution of BTEC HND TT Tour Operations Management Assignment which discuss our operators industry, stages involved in creating holidays, review brochures and methods of distribution used to sell holiday and more.

Task 1

1.1 Current and Recent trends and developments on the tour operators industry

After the completion of my education, I got the opportunity to work with reputed tour operator – Thomson Holidays.

Thomson Holidays BTEC HND TT Tour Operations Management Assignment

As my first assignment, they asked me to research the current trends in the tour operations industry and further analyse the impacts of the current trends on the tour operator industry. After completing the research I presented the following report:

Tourism has become the most dynamic industry in past 20 years and contributes 95 percent in total GDP of Europe. The industry has developed a lot with standardized mass production of package holidays. The market has fragmented into various segments like cultural tourism, destination wedding etc. In the past decade tourism has continued to develop rapidly, with the rise of budget travel, more holistic, spiritual and creative forms of tourism and the rise of more individualized production and consumption, facilitated by the growth of Information and Communication Technologies.

The most significant drivers of travel and tourism industry:

Technological Drivers

  • Due to the technological advancement, information about the tourism is readily available over the World Wide Web and hence the booking has become very easy.
  • The transportation mode has become cheaper and faster
  • The new destination search and the tracking facilities are also available now
  • The technology and environmental control is most important for current travel industry.

Social Drivers

  • In Europe the young and children are in shorter supply than elderly, so the ageing society is very important factor.
  • The demand for individual holidays is growing more as compared to packaged holidays.
  • The new structure of the families are small and even the singles are in majority.
  • Due to increased health consciousness; the destinations that have any kind of potential health hazard are not preferred by the people.
  • The society has become more value oriented.
  • In Western Europe, the retirement age has been augmented and hence the number of senior travellers is reduced.

Economic Drivers

  • Due to the increased competition in the market the customer demand more value added services from the tourist industry.
  • The variance of demand for luxury and cheap offers
  • Increased exposure to the financial markets across the globe.

Ecological Drivers

  • The unspoiled nature and destinations are scarce and hence are more valuable.
  • Due to increased traffic jams, the travelling has become cumbersome.
  • Depletion of ozone layer has made the tourist to avoid certain destinations that are near the equator.
  • The climatic change has led to opening of new tourist destinations.

Political Drivers

  • The political uncertainties are important driving factors for increased or restricted travels at some point of time.
  • Due to increased terrorism, the immigration and visa procedures are become tougher and security oriented.
  • Travelling becomes dangerous due to the clash of cultures.

The above mentioned are the current trends of the travel industry. Tourism for leisure is a mass market but it is still not completely organized. The package holidays are losing its charm in front of individualistic holidays (Richards, 2005).

In current trend, the tourism, leisure and work is mixed together which is called as hybrid tourism. Pilgrimage is also in demand and holidays are much more than just going and relaxing.  The hybrid tourism is growing.

The rising economies are contributing with the new consumers for the travel and tourism industry and the old patrons are still active as they are now able to find the good health services all over the places. One more vital trend to consider is of the shorter trips. This is due to the availability of budget airlines and that has facilitated the expansion of small cities where people prefer to come for the short vacations (Willms, 2007).

The online travel trends have also increased and expected to increase more in the near future (Urry, 2003). People are becoming technologically strong and they prefer to make the trips booking online after analysing the wide information about the destinations.

The table shows the European online travel trends:

Percentage of Trips January till August 2008 January till August 2009
Online Booking 61 70
Online information 15 16
Internet users 75 82
Non Internet users 65 59

(Source: IPK (2009) Tourism trends in Europe: Pisa Meeting, November)

The table clearly depicts the changing trends towards the online networking in travel industry. This is also supported by the geographical shift in the demand.

Europe is very expensive and as a result l       oozing the market in front of other tourist destinations across the globe that are relatively cheap. In Europe, the domestic tourism is increasing, but the international tourism has decreased in past decade.

Summary

To conclude, the report clearly shows the current trend in the travel market. The consumer’s preferences and demands are changing rapidly with the environmental and economic conditions. The advancement in technological environment has also shifted the trend of travel market to online travel market. The up-and-coming economies are contributing with the new customers for the tourism industry and the old customers are still active as they are now able to find the good health services ubiquitously. The development of travel and tourism industry and other areas of social and economic intercourse in recent decades is that the beginning of the network society has brought reflective changes to the relationship between consumption and production.

 Task 2

2.1 The stages and timescales involved in developing holidays

I am functioning as team leader in planning and operations department of Thomas cook in “Signature” package and products department. I am asked to create the two new packages.

Package 1: A wedding package tour of 7 seven days in Las Vegas, USA where the wedding ceremony takes place in a helicopter sightseeing tour

Package 2:  Walking tours in the VIA ALGARVIANA, Algarve, Portugal (green tourism) a 7 days.

For creating the packages the first step is to recognize the stages and timescale involved in developing holidays.

The tour manufacturer has very diversified functions. They are facing the extensive competition in the international travel market (Beaver, 2002). They must attain the comprehensive knowledge about the recent trends in the travel industry. The adequate knowledge, skills and expertise can help the tour operators’ to create the best and value added packages for the customers. The satisfaction of the customers is the main motive of the package and hence it should be designed with commitment, farsightedness and determination.

The stages and timescales involved in developing holidays

  1. Research for Destination: The first step is to recognize the key essentials of the destination in order to make the adequate arrangements for the tourists. The comprehensive information of the destination is necessary and that includes:
  • The identification of social, economic, climatic and political factors
  • Creating the tour package as per the target market
  • Identifying the key destinations
  • Approaching the suppliers and making the key decisions.
  1. Development of Tour Itinerary: This is done on the basis of the research of destinations and the tour ingredients. It is comprises of collection of the essential information like assembling point, departure time, tour duration, destination’s features, activities included and meals. This also involves the classification of the required vendors.
  2. Negotiations with the Suppliers: After deciding the itineraries, the next and vital step is to negotiate with the suppliers at the destination. These negotiations are important for plummeting the air fare, hotel accommodations, and the ground operators like restaurants, insurance companies, cruise operators and many more. It is recommended that the negotiated arrangements agreed upon through discussions with property executives be detailed immediately after each meeting and the tour planner must strike a balance in obtaining quality accommodation at a price that is affordable for the target market being solicited for participation in the tour.
  3. Costing of tour package: This is the most crucial step. It involves the determination of the cost related to the tour packages. The cost structure has the direct relation with the market, clients and company’s strategies. There is no defined approach for costing in the travel industry however the step by step approach is recommended.
  4. Pricing: Once the costing of the package is complete, the tour operator has to take the other crucial decision regarding the final selling price of the package. This decision is very complex and directly impacted by external factors. The tour pricing is either cost oriented or market oriented.
  5. Marketing the package: The next step after the pricing is the effective strategy for marketing of the package. This is the deciding factor of the success rate of package tour.

After all the costing and pricing, the next step is the effective marketing of the tour package. The package should be marketed in domestic as well as international market. (Wilkerson, 2003).

  1. Brochure Development: Tour brochure are very significant as it contains the information to persuade and motivate the people. This is a marketing strategy and is pivotal in consumers market.

As per the given situation, the destination and the duration are already fixed. So the main thing required is the cost determination of the package and based on that the actual pricing of the package. After the pricing, the appropriate marketing strategy is required so as to make the potential customers aware about the package. To facilitate this, attractive brochure with comprehensive information is required.

2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of tour operator

Tour operation industry is very complex in nature and is required to work with different components. Along with this they have to comply with the laws and regulations. The industry faces many challenges and external influences.

The tour operators develop the important link with many organizations while working with the various components. The different components are:

Travel Agents: They are the people that are placed at the sales outlets. They have the agreement with the operator and work on the commission payments. They contribute in increasing and maintaining the market share of the tour operator.

Transport Providers: These include the rail operators, taxi operators, coach companies etc. with whom the tour operator has to negotiate as per the package tours.

Accommodation Providers: The operator negotiates with them regarding the bed space and other element for accommodation included in the package tour.

Other Providers: The operator deals with other providers like insurance agent, excursions etc. for the package tours.

The groups of the travel industry are linked horizontally and vertically with each other and provide the different services within the industry. In the past decade the competition has intensified in the travel industry. The tour operators are merged with others in the tourism industry. This refers to the situation when hold the control of other companies at the same level.

The tour operators divided into many categories. These are:

  • Mass market tour operators are specialized in selling the high volume of package holidays mainly of the short haul holiday destinations. In United Kingdom many companies appoint them. Some of the major names are: TUI, Thomas cook, First Choice Holidays and my travel
  • Specialist tour operators as the name suggest are the providers of the specialized packages for holidays and adventures. They don’t deal with the mass market products. The best example for this is a provider of packages to the specific countries like Amazon adventure tour. They attain the deepest knowledge about the tour elements and the specific destinations. They are popular among the adventurous people and the customers who are looking for the individualistic experience.
  • Domestic tour operators, operates within the country only. In United Kingdom, the leading provider is the WA Shearing. This is based on the coach journey to the different parts of the United Kingdom
  • The last category is of inbound tour operators. They are available across the globe and provide the services to customers for travelling in United Kingdom to other parts of Europe. They help the travellers from around the world about all the formalities required for visiting Europe.

The travel companies and the tour operators must adhere to the following rules concerning their links with other components:

  • The agents must display the notice in all the shops that prominently outlines the link between the ownership.
  • The notice should be designed in a way that the front cover of the brochure is also displayed that explains the details of the agency and the owners.
  • The company stationery should also outline the agent’s link
  • The operators’ name that is part of the group must be displayed inside the shop.
  • There must be emphasizing on the joint advertisement.

2.3 Calculate the selling price of a holiday from given information

The given information is - Air Tours operates a time-series charter travel to Rhodes, Greece and specializes in seven days and fourteen days all inclusive tours to Rhodes. This is a short haul journey of approximately three hours from London Gatwick. The company will charter Thomas cook airlines a Boeing 737-800 with seating capacity of 180 seats

B&B rate per person inclusive of taxes on Avra Beach Hotel, Rhodes-twin room (2 adults sharing) fixed guaranteed contract = 30 Euros.

The passengers will travel by air with Thomas cook airlines from Gatwick each Saturday and stay for 7 nights. You have a fixed contract for 80 seats. The agreed rate is £130 per person return, including all taxes. You will have to pay in advance for 80 seats on each flight even if you have no bookings made.

The agent has quoted a rate of 10 Euros per person for the return transfer by coach between Rhodes airport and any of the hotel resort chosen by you, or 35 Euros return trip by taxi. He will also charge a flat sum of 100 Euros for each group to cover the cost of a local representative making a daily visit to the hotel.

The resort selected is Avra Beach Hotel, Rhodes. The total cost of the package will be

Description Cost (In Euros)
B&B Rates for 7 days 210
Supplement Cost 105
Air fare 130
taxi Charges 35
Representative fees 100
Total 580

Summary

Holiday package development is very complex task. The various stages involved in the development must be taken care of properly. The operator has to make the extensive research of the destination. They are also required to do negotiations with various group for effective and efficient costing and pricing of the package. Once the pricing is dome, the company has to plan the marketing strategies along with brochure designing. The tour operator cannot function in isolation; hence he has to maintain the link between the various components of the tourism industry.

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Task 3

3.1 Planning and Designing of brochure

I am placed in the marketing department of the Thomas Cook and the management has asked to design the brochure for the current year. Brochures are an important marketing tool. It contains the detailed information about the destination and package that persuades the consumers for buying the package. As compared to other marketing principles, tour marketing is majorly dependent on the brochure marketing.

The brochure is significant for creating the quality expectation, value for money and product image among the customers (Harrell, 2008).

I will design the brochure with following information:

  • Name of the tour company
  • Modes of transport involved – aircraft type, carrier name or other charter services
  • Destination details, itineraries and the time of travel
  • Total duration of tour
  • Accommodation type
  • Meals included in package
  • Services included by ground operators
  • Price of the package
  • Extra charges included (if any)
  • Special facilities and arrangements included in package
  • Terms and conditions for booking and cancellations
  • Details of required insurance cover
  • Required documentation while travelling
  • Recommended inoculation

The brochure will be designed with various heads and sub heads. The cover of the brochure will have the theme, date, title, tour code and the name of company.  Then in the inside pages will have the above mentioned points with destination overview, free mailer, website, currency details and other information for registration. The brochure will be printed and distributed through the ground operators and retail travel agencies.

As the company ethics are environment friendly, the brochures can also be sent to customers via email.  This e – brochures will reduce the paper usage and wastage along with reduction in printing cost. In addition to this, other marketing tools like personal selling, advertising campaigns and sales promotion techniques will be adopted.

Printed brochure can be used as the personal sales services as it contains lots of information (Adcock, 2001). I will also include the pictures of the destination, accommodation and other sightseeing included in the package.

The steps of designing the effective brochure are:

  • To determine the actual purpose behind brochure designing. This will cover the main points like what is required to sell, what is the objective and who will be the audience.
  • To determine the self- life of the brochure
  • Consider the seasonal accessibility and price changes properly
  • To develop the competitive brochure.

The good brochure design is pivotal. Before finalizing the design the following points must be considered:

  • The Brochure must be concise and clean
  • Ensure to avoid the solid blocks of the text
  • Limited use of descriptive language
  • Consider the target market
  • A proper layout that facilitates the ease of finding appropriate points
  • Use of extensive headings and images
  • Practical size and shape
  • Use of clear directions and maps
  • Proof read it twice before getting it printed
  • Selecting the appropriate channel of distribution

3.2 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 paramount alternative to the conventional brochure is the internet marketing and information (Karanasios, 2008). The community now days are more prone to internet usage and it turn out to be cost effective for the companies to propel the information about the package over the internet (Lu, 2004). They can send it to the target customers easily. It saves the cost of printing and reduces the paper wastage.

However, the Thomas cook group has also launched the new brochure that has the details of all the packages. It has all the range of packages provided by the Thomas cook along with the time lines. They have also set the new colour coding for the brochure which is all the more attractive.

Thomas cook has taken the unusual step ahead for the launching and designing the new brochure. It has included the larger range of the segmented program. These are based on the customer’s research. This also includes certain destination specific brochures.

A Sample of Brochure from Thomas Cook BTEC HND TT Tour Operations Management Assignment

   (A Sample of Brochure from Thomas Cook)

The conventional approach of sending the brochures has totally changed and the specific printing is also stopped. The internet brochure and all inclusive brochures are in the fashion and also more valuable from marketing viewpoint.

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

The different tour operators within the Thomas Cook mainly use the two methods of distribution for selling the holiday packages. These are:

Travel Agents: They deal in retail distribution. This is a conventional method and is significant channel of distribution used for selling the holiday packages (Jonathan, 2009). Their main role is to promote and sell the product offered by the tour operators. For their services they earn the commission based on the percentage of booking amount. For gaining the more amount of commission, they work towards selling more and more packages. They are also motivated to attract the repeated business opportunity.

Direct selling: This is a process in which the customers directly contact the tour operator by email or telephone. The customers get the information through the internet brochure or mailer. This is new channel of distribution but is equally important as of the travel agents. More and more customers are connected to the internet, so this channel is very effective for the increasing the sales.

Summary

This task is entirely based on the marketing of the package deals. The brochures are very important marketing tool and must be designed effectively. It should contain all the comprehensive information so that customers get motivated towards buying the package offered by the tour operator. The printed brochures were the traditional way but it is still prevailing. The new way is the internet marketing. The tour operators can send the e – brochure to customers reducing the printing cost and paper wastage. The main channels of distribution for selling the deals are agents and direct selling.

Task 4

4.1 Strategic decisions made by different types of tour operator

Tour operators are the integral part of the tourism industry. The tour operators organize the entire packages and combine all the different elements of the package in effective way. These elements include the accommodation, food, transportation and other service. The tour operators are classified in four major categories. These are:

  1. Mass market tour operators: operators are specialized in selling the high volume of package holidays mainly of the short haul holiday destinations. In United Kingdom many companies appoint them. Some of the major names are: TUI, Thomas cook, First Choice Holidays and my travel
  2. Specialist tour operators: As the name suggests these tour operators’ are the providers of the specialized packages for holidays and adventures. They don’t deal with the mass market products. The best example for this is a provider of packages to the specific countries like Amazon adventure tour. They attain the deepest knowledge about the tour elements and the specific destinations. They are popular among the adventurous people and the customers who are looking for the individualistic experience.
  3. Domestic tour operators: These operators operate within the country only. In United Kingdom, the leading provider is the WA Shearing. This is based on the coach journey to the different parts of the United Kingdom
  4. In-bound tour operators: United Kingdom has very wide and important market for the tourism. The last category is of inbound tour operators. They are available across the globe and provide the services to customers for travelling in United Kingdom to other parts of Europe. They help the travellers from around the world about all the formalities required for visiting Europe.

The tour operators are required to take the various strategic decisions for increasing the sales of the package tours. The various strategic decisions by the tour operators include:

  • Integrating the sustainability into the business
  • Cooperating with the destinations
  • Customer relations
  • Supply Chain Management
  • Internal management
  • Product development and management

The tour operator alone has the great impact over the entire tourism industry (Lennon, 2000). They need to be very careful concerning the business decision making process. Along with these the other strategic decisions include the interpretation of the external environment, pricing decisions, and customer portfolio and product image.  Choice among the various available distribution channels is also part of strategic decisions.

Example: This example is based on the strategic decision concerning the customer relations development. The TUI group is constantly making the efforts for increasing the sustainability in the tourism industry. For this purpose they came up with the plan of guest orientation and elucidation of eco diving standards of the Curacao. To facilitate this, they maintained the good buoyancy control, practiced the fining technique and body control. In addition to this they ensured that the diving staff must follow the eco diving standards. With this the clients who chose for the holiday us Curacao had the best experience and partnering hotels adopted the environmental improvement program. This way they build the good customer relationship and decreased the harmful impacts of tourism on islands.

Customer Satisfaction BTEC HND TT Tour Operations Management Assignment

4.2 The tactical decisions that could be taken by a selected tour operator in different situations

The tactical decisions from the tour operators include the decision regarding the marketing in different situations (Singh, 2008). The aim is to ensure the continuous flow of bookings from the very first day of the package introduction. For these the tour operator has to consider the demand for the various packages.

In case of the low sales volume, they should encourage the customers through their tactical actions and try to achieve the targeted break even occupancy level.  If the booking numbers are higher than the expected numbers due to the favourable market condition, they must reduce the promotional cost and look for the additional capacity with the tactical decisions.

For tour operators, tactical decisions regarding the promotion include the following:

  • Increase in advertising
  • Various sales promotional methods
  • Price cutting fir increasing the sales volume

Example: Within the holiday season almost all the tourism companies offers the various package to the customers. The Thomas Cook is leading company but they still face the cut throat competition with other companies in United Kingdom. So for that they have adopted the intensive advertisement in the leading newspapers and through social networking sites. They introduced the contests to persuade the customers through value prices like free stay for one day with seven days package to Paris. This is the tactical decision they took to increase the sale in the holiday season.

Read about Tour Operations Management in Travel and Tourism Industry.

Summary

There are many strategic and tactical decisions required by the tour operator. They are integral part of the tourism industry. The strategic decision relates to the supply chain management, internal management and developing the customer relations. The tactical decisions are related to promotional decisions. The promotional decisions are important for increasing the sales. The tactical decisions include advertising related decisions.

References

  • Adcock, Dennis; Al Halborg, Caroline Ross (2001).Introduction”. Marketing: principles and practice. p. 16. ISBN 9780273646778. Retrieved 2009-10-23.
  • Beaver, Allan (2002).A Dictionary of Travel and Tourism Terminology. Wallingford: CAB International. p. 313. ISBN 0-85199-582-9. OCLC 301675778.
  • Castells, M. (1996) The Rise of the Network Society. Blackwell: Oxford.
  • Harrell, Gilbert D. (2008).Marketing: Connecting with Customers. Chicago Education Press. p. 286. ISBN 9780979830402.
  • Jonathan Mitchel (2009)."Value chain analysis and poverty reduction at scale". Overseas Development Institute.
  • Karanasios, S., & Burgess, S. (2008). Tourism and Internet adoption: a developing world perspective. International Journal of Tourism Research, 10(2), 169-182
  • Lu, J., & Lu, Z. (2004). Development, Distribution and Evaluation of Online Tourism Services in China. Electronic Commerce Research, 4(3), 221-239.

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