This is a solution of UK College Tour Operations Management Assignment which discuss tour operators industry, stages involved in creating holidays, review brochures and methods of distribution used to sell holiday and more.
LO1. Understand the tour operators industry within the travel and tourism sector.
Many countries are focusing on developing their famous tourist destination as they know that the tourism industry is contributing a major part in developing their economy. As the demand is increasing, the numbers of tourist operators are also increasing. The competition among these tour operators are also increasing and the customer can choose one of them according to their preferences (Poon, 1993). This was not the same in the earlier days. Earlier it was difficult for the tour and travel operators to make this arrangement as the communication was not so developed. Earlier the tour operators were specialized to their local destinations and the industry was very small. But with the advancement of technology, communication, awareness, information flow it has become easier for the tour operators to widen their services overseas. Earlier there were many difficulties like different languages, lack of robust communication facilities, lack of proper information flow, foreign currency problems and many more but all these have been solved with better technology, improved facilities, and development of foreign embassies. Earlier travelling to different countries was not so easy because of the legal requirements but that process has become easy. The technology has also made it easier for the travellers to plan every part of their holiday themselves but most of the people don’t have so much time and they don’t want to put so many efforts. Hence they chose these holiday packages where do not have to put much efforts. Moreover, the tour operators possess the skills and competence to arrange these packages for their customers (Buck, 1977). They also have contracts with various service providers so it becomes cheaper for the customers to pay a single price for all the services. So these holiday packages become less expensive as compared to the case when the customer will pay separately for the services during their holiday. After the holidays are prepared, the details of the holiday packages are communicated to the customers with the help of brochures. The tour operators prepare these brochures by including all the details of the holiday packages which will help the customers to make decision on holiday selection. These brochures are distributed to the travellers through different distribution channels. The tour operators either distribute the brochures directly to the customers or take help from the travel agents to distribute those (Buhalis, 2001). There are many tour operators which have developed their brand names in different parts of the world. In the US and the Canada region, the most popular tour operator is the Trafalgar Tours. They have arranged a large number of successful tours in different parts of the world. They have featured more than 69 tours in the US, Mexico and the Canada region (Carey, 1997). They have conducted tours for the entire major tourist destination in these countries. They have holiday packages that range from low prices packages to very high end packages. Their package starts from the price of $1000 for each person. One of the famous tours provided by this tour operator includes “Canada Rockies” tour. Apart from these, there are also others which Globus, Maupintour and Collette Vacations. In the European regions also, the Trafalgar Tours have high visibility. They have arranged more than 330 tours around the world. They also include the holiday packages of all price ranges. The lower end packages include bus tours for sightseeing and the high end packages include trips for multiple countries. The most popular tours provided by them are Grand European tours which includes the tour of 10 countries. The price of these packages starts from $3.6K per person. Various cruise lines are also very popular in Europe. One of the most famous cruise tours is Tauck World Discovery. For the Latin America, the Go South operator is the most popular operator. Other famous operators are Latour, Travcoa, Abercrombie and Kent. These operators have their own specialized tours. The Go South Adventures are specialized in arranging tours for small groups. Latour are specialized in offering holiday packages for more than 16 countries. Travacoa specialize in providing high end tour services. Abercrombie and Kent also specialize in providing high end holiday packages. In the Asia region, the most common tour operator is the Pacific Delight Tours. This tour operator offer packages of various price range. The other famous tour operators in Asia are Gate 1 Travel and General Tours. The Gate 1 Travel specializes in providing services for both independent and guided tours. The General Tours offer packages for all major Asian countries. In the African countries, the most famous tour operator is the African Travel Inc. This tour operator provides specialize in providing two types of tours. These are the Safaris and the Dreamscapes. The Safaris are the packaged deals which are arranged frequently. Dreamscapes are the tours of less duration as compared to Safaris and consist of full vacations. The most famous tours example is the Lion World Tours. Read about Tour Operations Managment.
As mentioned in the case study, we can also analyse the wedding tour package. This is really a good proposition that the tour operators provide to the customers and it is worth taking. This is something unique and the tour operators can set their price for giving such a unique offer. The wedding package can be very popular and this can be boon for the tour operator. This also depends on the interest of the people where this package will be sold and if the customers are interested in such kind of a wedding. Of course this will be quite expensive as the rent will be high for the helicopters. This depends entirely on the response of the customers.
LO2. To understand stages involved in creating holidays
P2.1. Access the stages and timescale involved in developing holidays
If we consider the end to end process of creating holiday packages then this can be distributed into 12 steps. This is a general steps which will be followed in all the holiday packages but we will also see them in respect to two new packages. These would be a wedding package tour of 7 seven days in Las Vegas, USA where the wedding ceremony will take place in a helicopter sightseeing tour and Walking tours in the Via Algarviana, Algarve , Portugal (green tourism) for 7 days.
- Extensive Research: The first and the foremost step of creating holiday package are doing an extensive research. The research will include the study of the tourist destinations and the tourism market.
If we consider the case of the above mentioned 2 new packages. Then we need to do some research in these things. For the wedding package, we have to take the feedback of the customer that how many of them would be willing to conduct a wedding ceremony in a helicopter. Also if they are willing to do this, how much are they willing to spend on this? Similarly for Walking tours, we need to research that how many of the tourists are enthusiastic of these kind of long tours where they need to travel so much and gain new experiences.
Every minute detail of the tourist destinations and the market conditions should be known before creating holiday packages for those tourist destinations. There are many characteristics of the tourist destinations which have a direct impact on the number of people willing to visit them. These are mainly the economic, social, political and the climatic conditions of the tourist destinations (Higgins, 1996). The research includes the study of the preferences of the customers. This will include the study of the tourist destinations. These also include the study of the facilities that are requested by the customers during a package. They also have to do a research on the supplier who are providing those services and which is the best for them. They have to do an in depth analysis on the components of the holiday packages which will highly satisfy the customers and which will create a brand image of the company in the minds of the customers.
- Tour Itinerary development: After the research is completed and tour operators have done ample analysis to take actions, they have to decide on creating the tour itinerary.
In case of wedding package in Las Vegas, we need to create the list of all the events which will be organized for the couple and the sequence of these events and their timing. They have to decide for how long will be the wedding ceremony, how the guests will be entertained in this, etc. Similarly for Walking tour, the route has to be decided and where will they stop in this route. Also the time that will be spent at each stoppage of the route.
The creation of the tour itinerary depends on the research results of the first stage. The new tour operators where required to do their analysis mainly on the tourist destinations and the components of the holiday packages whereas the old tour operators were required to analyse the feedback of existing customers and work accordingly. The contents of the tour itinerary include a summary of all the details of the tour. These will include the information on the origin points of the holiday, tourist destinations to be covered during the tour, route details of the holiday, accommodation details, travel details, sightseeing details, etc. It will also contain information of the sequence in which the tourist destination will be visited and how much time will be spent on each of them. Apart from these details, it will also contain information of the tourist destinations to be visited, legal documents required to visit those destinations, activities included in the package and the food which will be provided at the tourist destinations and while travelling. The itinerary can be developed in 2 ways. One is by vising the unknown vendors and comparing them to choose the best one. The other method is where they get in contracts with all the potential suppliers in advance.
- Suppliers/Vendors Negotiations: When they have the itinerary ready with them, the next step is to identify different supplier of the services of the holiday packages and negotiate with them. This negotiation will depend on the quality and uniqueness of services provided by the suppliers. They negotiate on the services that the suppliers are required to provide with proper details on the timing and quality.
Same will the case for the new package for wedding tour. Thomas Cook have to get into contract with the helicopter company and decide on the services they will provide.
They tour operators formally get into contracts with these suppliers which include every minute details of the services which is agreed to be provided. These contracts also include the penalty clause where if the suppliers are not able to deliver as agreed in the contract and if the contract is breached then the suppliers have to pay some penalty to the tour operators. These contracts ensure the quality of services expected from various suppliers.
- Determining the total cost: The next step in this holiday creation process will be determine the total cost of the holiday package. This will include the individual cost of the services that the tour operator will be offering to the customers. Determining the total cost of the package is really important for calculating the final price to be charged from the customers and for calculating the total profit. The total cost is reached by adding all the individual costs, These costs includes mainly the cost of providing the airline services, accommodation facilities, ground operators’ cost, etc. They can also adjust the constituents of the packages depending on their cost. The total cost will also include the other costs like marketing cost, promotion cost, salary of different employees, etc.
For the above mentioned 2 new packages also the cost has to be calculated to decide on the price. Surely the wedding tour will be expensive as the wedding is decided to be done in helicopters.
- Fixing the final price of the package: The first input for fixing the price of the holiday package is the total cost of the holiday package. There are various methods adopted for calculating the price of the holiday package. The most common method used is the method where the final price of the package is calculated by adding the profit margin and the cost of the package. The tour operators should also keep in mind other factors before finalizing the price of the holiday packages like the price of the competitor products, government policies, components of the tour, number of countries and tourist destinations to be covered, exchange rate fluctuations, inflation, target market segment, etc.
For the above mentioned two new tours i.e. the wedding tour and the walking tour, the price has to be decided by Thomas Cook depending on the research done in the first step, the total cost and currency fluctuations.
- Administrative staff: The tour operators also need administrative staff apart from the regular staff as during holiday seasons the work load is tremendously increased. This calls for the additional staff for the administrative work. The tour operators should properly define the work of these additional staff. The hiring of such staff should be done based on how trustworthy they are and how effectively they can complete the given work. They should be able to meet the requirements of the job.
If we take the example of the Walking tours in the VIA ALGARVIAN, a lot of administrative staff would be required as this route is very long and the service will be required at each stop of the tour.
- Marketing a Tour Package: Once all the above steps are completed that is the package is ready to be launched in the market, it calls for a proper marketing strategy. The marketing strategy is the key to attract maximum customers towards the offered holiday packages. It is a very complicated process which will identify the demands of the customers and provide appropriate services. The packages have to be marketed in such a way that it satisfies the customers in every possible manner.
- Tour Marketing Plan: Tour marketing planning is a plan which is developed by the tour operators for a short time like 1 or 2 years. This helps the company to use its resources to meet it objectives. The marketing plan should be capable of making the components of a holiday package gel with each other so that the plan can be executed effectively.
- Marketing inbound/outbound tours: The tour operators develop many different marketing plans depending upon the type of tour, inbound or outbound. The case of Las Vegas wedding tour, it will include both inbound and outbound tour as this is a very famous tourist destination worldwide and customer from across the globe will be buying this package.
- Brochures: The best way to communicate the holiday packages to the customer is through brochures. The Brochures is used for marketing of the holiday packages. The brochures are prepared in such a way that it contain all the details of the tour and help the customers to make decisions. The brochures are then distributed to the customers either directly or with the help of travel agents call centres, teletext, internet, social media, etc. Thomas Cook also has to develop brochures for the wedding tour of Las Vegas. They need to include all the details which make it easy for the customer to make the decision.
- Operation and Execution: The most important step in this process is the successful implementation of the holiday package. The success of the tour depends on the effective implementation of the plan. This step is the real test for the tour operators as they need to fulfil all demands of the customers and provide all the services to them as promised.
- Post Tour Evaluation: This is the post implementation evacuation and analysis stage. In this stage the tour operators create several reports on their performance and evaluate them. The analysis is used to improve the further holiday packages that the tour operator will offer.
This will approximately take 1 year. So if we divide the total time then the research will take approximately 2 months. Then the itinerary preparation will take another 1 month. Supplier search and negotiation would take another 2 months. Price determination and cost estimation will take 1 month. Marketing the product 1 month and brochures will 1 month. Rest 4 months for implementation and feedback.
P2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different type of tour operators.
For this we have compare different tour operators which get into contract with the supplier in different ways. Some of them get into contract directly with the service provider; some of them get into contract with the agents of these service providers.
We can take the example of Thomas Cook. Thomas Cook is also one of the most known companies and has a very rich background. They also have different options of contracting with the vendors. Like for the air travel they can directly deal with the airline companies as they have old relations with them otherwise the other option will be through air travel agents. Similarly for contracting with ground oprators is another option which can be replaced by directly contracting with the local vendors of the tourist destination. Similarly there are many other contracting options for Thomas Cook.
We have basically taken the example of Airtours and Flightcentre. The Air travel is a one stop travel shop. It provides several services varying from just ticketing to entire cruise vacations. The Flightcentre is also providing a lot of services like flight, vacations, hotels, resorts, car rental service, Cruises, rail services, travel insurance, foreign currency requirements, and visa related assistance
The Flighcentre in my opinion get into a detailed contract directly with the service providers and provide a broader range of services whereas the Air Travel will have a bit narrow scope so less detailed contract. The Air travel is basically getting into contract for the Airline Tickets, Holidays and cruises. Further there are other differences in the way the contracts are signed depending on the tour operators and the kind of tours. If we take example of the Thomas Cook for the wedding tour, this will need to get into an additional contract with the helicopter company for arranging the wedding in the helicopters.
There are different methods in which the tour operators can get into a contract with the suppliers. For example for the airline travel portion, the tour operators can either get into a contract with the travel operators directly or getting into a contract with the travel agents. If the tour operators has strong relations with the airline operators and they drive a major sales of the airline tickets, then in the contract the tour operators have more negotiation power but if the tour operators is new in the business then it is more preferable to get into a contract with the travel agents. The hotel operators have to sign a contract where there is a penalty clause also included which clearly indicates a penalty that will be levied on them if the quality of services is not rendered as agreed in the contract. The tour operators also have contract with other components of the holiday like the ground operators, local travel company, restaurants, insurance companies, banks, cruise companies, sightseeing vendors, etc. These contracts depend on the type and nature of service provided by these service providers (Ioannides, 1992).
There are many types of tour operators present depending on different basis like international tourists, regional tourists, inbound tourists, outbound tourists, organized mass tourists, individual mass tourists, explorers, stop-over tourists, business tourists, leisure tourists, pit stop tourists.
Generally there are of 4 types: inbound operators, outbound, operators, ground operators and domestic operators.
Inbound Operators: Inbound operators are the operators which arrange the tour operators for foreigners who visit their native country. They take care of all the facilities that the foreign travellers ask for during their holiday in the native country.
Outbound operators: These are the operators which arrange holiday packages for the people of their own country to foreign tourist destinations.
Ground Operators: These are the operators which are handling the services that is required at the tourist destinations. They are mainly local to the tourist destinations and are at a better position to provide the services at their local place. The tour operators get into a contract with these ground operators so that these people take care of the services at the tourist destinations
P2.3. Calculate the selling price of a holiday from given information
The selling price is calculated based on the cost of the package tour. The cost of the package tour can be calculated by adding all the individual costs that will be incurred while delivering different services to the customers. There are factors also which is kept in mind while calculating the price of the holiday packages. These are the exchange rates, financial risks, market share, and rate of return and the competition of price among the various tour operators. The pricing of the holidays is a very complicated process as it incorporated many important factors like degree and intensity of linkages, the components the holiday package, the competitive behaviour of the tourism industry and the demand of the customers (Levy, 2010).
The price of the holiday can be calculated by calculating the cost of the different components of the holiday package. Let us take an example of any such tour like a tour from London to Rhodes. While calculating the cost we should keep in mind the exchange rate between the currencies of the two cities. Let us consider that the 10 euros is equal to 8.27 British pounds.
Let’s consider the different cost now:
- Flight charges: let us consider the airline reservation charges for a round trip = 130 GBP.
- Accommodation charges (fixed accommodation): lets us consider that the accommodation charges for a couple on an average beach are 30 euros for twin room. So per person it will be 15 Euros per night. Let’s assume that the tour is planned for seven nights so the total cost will be (15*7) 105 euros per person. This when converted to British pounds will be 86.82 GBP.
- For food, let’s say price for meal for 1 day would be 15 euros, so for 7 days it will be 105 euros which in turn is 86.82 GBP. So the total cost for accommodation and food will be 173.64 GBP.
- Also consider the price of 80 pacs be 100 euros. For 2 coaches the cost will be 200 euros for 80 pacs. So per pac the cost will be 2.5 euros. This is equal to 2.13 GBP.
- Finally if we add all the above the costs it amounts to (130+ 173.64+2.13) 305.13 GBP. Adding the transaction charge of 8.27 it totals to 313.40 GBP.
So, this is the final cost of the package. We can decide the price of the package by adding the commission of the tour operator to this cost. Let’s take the commission decided is 20% so the total commission would be 62 GBP on this tour and the final price of this holiday package will add up to (313.40+ 62) 375.40 GBP.
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LO3. Be able to review brochures and methods of distribution used to sell holidays.
P.3.1. Evaluate the planning decisions taken for the design of selected brochure
The most commonly and widely used marketing tool of the marketing/tour operating companies is their brochure. Thomas Cook also has to go through such decisions that are needed to be made from their end. The content in the brochure is very comprehensive and informative for the customers and can always be modified for the best results. These brochures in various different forms are used by various travelling and marketing companies to persuade and encourage the customers. There have been amazing results to great brochures created by operators.
Thomas Cook know that the brochures not only define the quality of service and time they customers will be having during their holiday, but also has all the minute details of the holiday package they are interested in buying (Sheldon, 1986). A brochure ends up developing a complete image of the destination and the time the customers are going to have there. It helps the customers to estimate well if the holiday is going to be a good value for their money or not. There are a few things which should always be included in a good brochure and all the operators must keep them in mind while making a brochure for their company. These are the ones which Thomas Cook keep in the brochures like::
- The name and address of the operating company.
- The point of contact in the operating company which should include the mobile number, fax number and email id.
- All the mode of transports included from the start till end of the holiday.
- Details of the tourist destinations to be covered and time to be spent at each place.
- Type of accommodation provided.
- Details about the meals both included and excluded from the package.
- Any hidden or additional cost which the customer has to bear during the stay.
- The terms and conditions of booking and cancelling the deal. This should include the refundable amount, if any.
- Details about the insurance terms which might be optional and the customer gets to choose if he/she wants to buy it.
- List of all the documents which might be required during travelling.
- Any health threats and measures which might be taken.
These topics which should be covered in the brochure are not limited to those mentioned above. An operator and include any more additional details but should not miss on any of the details mentioned above. Brochures are generally divided into sections and subsections for better division of information and as per the convenience of the customer. The cover page is always dedicated to the information of the operating company. Inside the brochure, there should be the details of the tour features, a brief itinerary, types of accommodation to be provided, modes of transport that is going to be used, payment details, the specialty of the tourist destinations, payment conditions, insurance details, currency, documents required, internet addresses, websites, and also a self-mail page for the registration of the tourists (Dilley, 1986).
P.3.2. Access the suitability of alternatives to a traditional brochure for different type of tour operator.
Apart from the traditional ways of designing a brochure, there are alternate ways which the operators have come up with. There are many more mediums which can be used to communicate the holiday plans to the customers. These alternatives include various promotional programs to market the holiday packages such as sales promotion, direct selling, advertising campaigns, etc. The most common replacement of the traditional brochures is the websites designed by various companies to communicate to the customers about them and he various holiday packages they have to offer. Let us talk in detail about a few alternatives and their pros and cons.
Online Brochures: With the increase in the use and popularity of web, most of the tourist companies are getting tech savvy these days. Rather than printing brochures and handing them over to the customers, they choose to market their products over the web. This not only is a better way of marketing but also saves them the cost of paper and printing. Also, this way, they can target more customers in a shorter span of time. Once they have gone online, they can also use email as a medium to communicate any special offers or any new plans they might have come up with.
Video and Virtual Brochures: Selling a holiday package is all about creating a better picture about the deal in the minds of the customers. The best way to do this is to create videos with all minute details added as audio to it. The video can do amazing work in creating a real time impact on the minds of the customers and also help them make quick decisions for their holiday. This also reduces their task of reading and finding out minute details from the online or he traditionally used brochure. Also, the video brochures can be promoted the best using social media. This ways the operators can create a huge target population and give a strong competition to the other companies in the market.
P.3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator
After the brochures are created, the next main task is to distribute the brochure which might be using mails, online mediums, or social media. These methods vary from direct selling, hiring agencies to distribute the brochures, using call centres, internet, telephone, etc. The large tour operator companies in the developed countries print more than thousands of their brochures and distribute them through retails travel agencies, ground operators and other retail outlets.
The operators also maintain the data of their customers in the past and always send any new offers or new brochures to these loyal and past customers. These customers, depending on their experience with the operator, spread a good word of mouth with their group of friends. This also is a great way of creating awareness of the product to a larger group of people.
Also, there are agencies who do the distribution task for these operators. These agencies maintain huge data of the interested target population. The other good option is to use call centres to sell the product. Though it might turn out to be an expensive mode of marketing but it turns out to be an effective one at times. Nowadays with the advent of technology and the increasing number of people using internet, most of the tour operators put the soft copy of their brochures in their websites and make them available to be downloaded by the customers to make their decision.
LO4. To understand strategic and tactical decision making for tour operators
P.4.1. Evaluate the strategic decisions made by different type of tour operator
Let us take the example of Thomas Cook and Trafalgar Tours. As we discussed that there are various critical decision making which the tour operators need to make varying from the pricing strategies, marketing tools, combating competition, strategizing and positioning their brand, defining the product to be created for the best experience of the customers etc. The decision making also includes choosing the supplier for each and every component again depending on various factors like relations, pricing etc., quality and type of service being offered by the supplier etc. They also need to make crucial decisions while designing the brochures and choosing the media for publicizing it. The amount they are willing to invest in creating the brochure and then its distribution. There are also a lot of strategic decisions to be made by the company depending on the competition, price competitiveness, marketing decision like season sales, discounts, maximum utilization of resources, maximizing yield, etc.
P.4.2. Compare the tactical decisions that could be taken by a selected tour operator in different situations.
Here also take the example of Thomas Cook and Trafalgar Tours. The tours and travelling industry is a very vast industry and is growing with every passing day. There are a lot of different options available in the market for both the operators and the customers. Let us take a simple example of fixing the price of the holiday package. Now, if we consider, there are a lot of different situations which will end up changing/effecting the price of any particular holiday package. One can be with the change in the currency value of the country; the price of the package will directly vary. Another situation can be the variation in the currency of the country is directly proportional to the variation in the price of the holiday package. Similarly, if the competitors choose to strategically price their package and price them lower to other market prices, the customers will definitely prefer the lower rates and the other players in the market will be directly affected. Another tactical decision can be the positioning of the product, another decision can be the deciding the correct target segment. Etc. Likewise, there are endless examples which can be quoted to prove that the price of any particular package cannot be fixed in the market at any point of time.
The tour operators industry is flourishing very rapidly and the sector is growing at a very high rate. There is a huge potential for the tour operators to capture. The tour operators are already using the new marketing strategies increase their reach and can do even better. Also, in the highly competitive era of today, there are many situations where the smart players can take tactical decisions and win the game. Operators can gain benefits if they reduce the number of layers they have in their contract pyramid. There are many areas where the tour operators can work on and provide better services to the customers. The rate at which this industry is growing, it will definitely reach greater heights and will contribute even more to the development of developing economies.
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- Levy, D., Chen, H. A., Mueller, G., Dutta, S., & Bergen, M. 2010. Holiday price rigidity and cost of price adjustment. Economica, 77(305), 172-198.
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