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Unit 14 Tour Operations Management Assignment - Cosmos
Diploma in Travel and Tourism Cosmos
Unit Number and Title
Unit 14 Tour Operations Management Assignment
This tour operations management assignment report gives a detail introduction about tour operator, types of tour operator and role of tour operator in tour industry. This report also provide a research based analysis of trends and development of tour industry and how tour operator plan different holiday packages and offer them to their customers. This report will also help in understanding the strategic and tactical decision making of tour operators.
Cosmos travel agency a leading travel agency in London, company is also taking sales agency for major airlines and tour operators. As a newly appointed marketing manager in I have to make a research on recent trends in tourism industry and on the basis of analysis of the research a business plan will be prepare to present to the board of director of the company so that company will decide and consider holiday packages to selling package holidays as an agent for major tour operators.
1.1 Identify three trends which will be important to your company when it has to make decisions about producing and selling its own package holidays.
Tour and travel industry is the main contributor in London economy. There is tough competition available in the tour industry. To take the competitive advantage over rivals company have to make new plans and strategies. Plans and strategies are based on research and analysis of recent trends and development in tourism industry. Presently London’s tourism is booming because large number of domestic and international tourists is attracted towards London (Papatheodorou, et. al., 2016). Three major recent trends in this industry include:
a) Increase in Inbound Tourism
The inbound tourism of London is increases in comparatively last years and London is preferred as most popular tourist destination in the world. Most of the overseas visitors travelled across the city’s monument, hotels and restaurants and other tourist attraction places. Visitors come here to see and take experience of historical and cultural monuments, shopping and world class events. This increase in inbound tourism brings foreign money to the London increase reserves of the country. The visitors plan their holidays in autumn season mostly (Papatheodorou, et. al., 2016).
b) Increase in domestic tourism
Along with inbound tourism there is also a certain increase in domestic tourism. Like overseas visitors residents of London would like to spend their holidays in London. City organises major events like free outdoor light festival, Lumiere London and annual cycle events etc are drawing interest of tourists towards London. Increase in domestic tourism increase money flow in the market and it helps in increasing government reserves also (Medlik, 2012).
c) Product range and Mass Market:
Now a day’s tour operators offer wide range of services in order to increase their sale. For example there is higher demand of package holidays, tour operator sale tour packages with attractive prices like they offer discount on the prices. Tour operators adopt mass marketing tool for advertising its services and make appeal to wide varieties of customers (Medlik, 2012).
Thus there are many opportunities available for tour operators they can plan many holiday packages for selling.
1.2 Analyse the effects of these trends and developments on the tour operations industry in general
Analyse the effects of these trends and developments on the tour operations industry
Tourism industry is playing a significant role in the London economy. On the basis of recent trends there is huge potential for future growth in the market. According to the analysis made of recent trends and development in tourism industry it is found that London becomes a most favourable tourist destination place for overseas and domestic visitors (González, 2011). Effects of these trends are as follows:
a) Effect of inbound tourism:
Increase in inbound tourism brings new opportunities for tour operators and travel industry. It will help in increasing the business of tourist operators. Increase in inbound tourism also brings job opportunities for youth and increases their living standard, which is the good sign of economic growth of the country. Inbound tourism provides economic benefits to the country. If the large number of tourist comes on the same destination to spend their holiday then the place creates its value and become preferable tourist destination for future also. With development of tourism sector it will also benefit the business of hotel industry (González, 2011).
b) Effect of domestic tourism:
Domestic tourism also gives equal contribution in the development of tourism industry. First of all domestic industry gives its contribution to the country’s economy. If the resident tourist preferred the local city for their leisure time then it will also affect the inbound tourism. There will be growth in domestic tour industry and it brings opportunities for tour operators. Domestic tourism also helps in expanding the restaurant and other businesses (Farid, et. al., 2016).
c) Effect of wide product range:
Visitors or overseas consumers attract towards those tour operators who offers wide varieties of services with attractive offers.
d) Effect of mass marketing:
If tour operator advertises their services through mass marketing tool then they can increase their sale. Mass marketing help tour operators in providing their services to every type of consumer whether it is middle men or highly rich profile (Farid, et. al., 2016).
Thus the recent trends in the tourist industry affect the whole industry in terms of money, in terms of job and in terms of competition.
1.3 Building on (I) and (II), make suggestions for the types of package your company should develop.
For economic growth and profitability tour operators should plan and offer different tour packages to their customer. On the basis of recent trend there are many options of tour packages available to the company. This includes:
a) Package Tour:
For overseas visitors company may plan for the package tour. Package tour offers visitors two or more than two tourism services. The service covers period of more than 24 hour or includes overnight accommodation (Evans, et. al., 2012). A package includes:
- Transportation services through road, rail or air etc from destination or to destination;
- Accommodation services includes hotel, guest house or cottage;
- Other tourism services (Evans, et. al., 2012).
Company can give option to its customers to design their shorter tour as per their requirement and customize their tour packages. If company provides this kind of attractive tour packages to its visitors then it can bring economic benefit to the company. This package tour is suitable for a family or visitors group (Evans, et. al., 2012).
b) Escorted tour packages:
Company can hire professional tour managers and organise escorted tour package for the visitors group. Company will get benefit from this escorted tours that it could not make any extra efforts to go to suppliers and other service providers for the arrangement of other services. The whole arrangement is in the charge of professional tour manager. He make structured programme of sightseeing, meals, transportation and accommodation. But these tours are expensive than package tours (Thomas, et. al., 2011).
c) All inclusive tour packages:
company can offer tour packages where it includes all types of cost related with each item and offers unit price for the package. All cost items includes cost of air or other transport, land accommodation expenses, cost related with meal and sightseeing etc. This kind of tour packages is suitable for professional and business personnel who are travelling for the business purpose with their families (Thomas, et. al., 2011).
d) For encouragement in domestic tour company can offer incentive trips for the members of business organisation or staff of an enterprise.
e) Apart from this company may offer study tours for those student group who are coming from the other country.
f) If tourist are like come London in a specific season company can also offer seasonal package tours to the visitors (Thomas, et. al., 2011).
2.1 Assess the stages that would be involved in developing that type of package and also estimate the timescales involved so that your company will know when they can implement their new initiative.
As per the recommendation given to the board of directors. There are multiple tour packages available to the company. Company can arrange group tours, study tours for students, escort tours etc for the visitors. A family plan their holiday in London and they contacted to the company. Company offers them five days tour package (Popp, 2012). There are many stages involve in drafting package:
The first stage is planning for a tour package. Visitors ask for unit price of whole package. So in that package along with accommodation and transportation services other services like breakfast meal, events, city night seeing are included.
For making arrangements for sightseeing. Tour operator should find out those places and tourist destinations which are suitable with budget of tour package. Tour operator should not choose too many places which cannot be seen by the visitors during time period of tour. It should be ensured that if visitors demand for any specific destination or tourist place (Popp, 2012).
Negotiation with suppliers
suppliers include bus service provider, hotel or accommodation service provider and tour guide etc. All suppliers are providing their services to the visitors on the behalf of tour operators. While planning for package tours company should negotiate with these suppliers and make agreements with them.
Making all the arrangements regarding to a package company should also ensure that it complies all the legal requirements which are applicable on tour operator (Muncey, 2010).
After making all the arrangements for the package, a budget is prepared which includes all cost like cost of search, cost incurred in making agreements with intermediaries etc. Budgeting gives a brief idea about the total prospective cost incurred in tour packages this will help in controlling cost of tour package.
Planning for the tour package take time around one month as the time period of tour is short. Searching destinations for tour package takes time 15-20 days which are suitable for the package , negotiation with suppliers take 15 days time because there are many suppliers and after that 3-4 days are required for fulfilling legal obligations so one month time period is required in developing the tour package. To plan whole package 2-3 months time scale requires (Muncey, 2010).
2.2 Different method of contracting for individual components of the package:
The most important think for the tour operator while planning for tour package is negotiation and contracting with individual components of the package. These individual components include transportation, accommodation and other services arranged by the tour operators (FitzRoy, et. al., 2012). There are two options which are adopted by the tour operators:
a) Fixed contract:
It is a written contract executed between tour operators and suppliers. Suppliers or service providers agreed at a fixed rate prices for their services for a fixed volume based capacity. Tour operators maximize their revenue and received benefits in off season sale shortage. Thomas crook enters into fixed contract with suppliers. The main feature of this contract is tour operator has to pay a fixed amount whether they utilize their full capacity or not. A risk related with unutilized capacity is involved in this contract. Sometimes higher discount are offered in these kinds of contracts because of their higher demand. Tour operator prefer fixed price contract because consumers also prefer transparency in prices of tour packages which can only be provided through fixed prices rather than flexible prices. Fixed price contracts also provide budgeting for all costs (FitzRoy, et. al., 2012).
b) Sale only contract:
In this contract prices for the services provided by the suppliers are not fixed. Prices of services offered by suppliers are flexible and keep on changing. Suppliers are only charge for utilized capacity. These contracts are made very rear because they have comparatively high and often use by the consumers. This also reduces the risk of weak responses for any tour package designed by the tour operators (Beria & Laurino, 2016).
After analysing the above two contracts fixed contract method provide more benefits than sale by contract method. Fixed contract are adopted mostly by the tour operators Thomas crook and TUI group adopt fixed contract method (Beria & Laurino, 2016).
2.3 Calculate, as the final stage of your research, the selling price of a package holiday using the attached itinerary & rates.
1. Calculations based on itinerary: -
(Eugenio-Martin & Inchausti-Sintes, 2016)
2. Calculations based on itinerary: -
(Eugenio-Martin & Inchausti-Sintes, 2016)
3.1 Evaluate the planning decisions that must be made for the design of a tour brochure for your company’s new package holidays.
Brochure is marketing tool used by Tour operators for advertising their tour packages. Brochures are in the form of small book or magazine which contains images, and information. There are two types of brochure used by tour operator online or e- brochure and offline or traditional brochure. Tour operator provides information of their different tour packages in attractive formats. Brochure used as informative tool it provides information to the general public. Brochure provides identity to the company (Papathanassis & Knolle, 2011). For designing attractive brochure structured planning is required. Planning decisions includes:
- Budgeting: A budget is prepared for that will come in brochure designing. Budget helps in controlling actual cost of budget design.
- Identify the customers: Design and structure of brochure is depending upon the type of customer market. Brochure only attracts the customers if it is designed as per the need and requirement of consumers.
- Objectives: Brochure should be designed as per the purpose or objectives of the company. Company should ensure that brochure should contain all the information related with tour packages (Papathanassis & Knolle, 2011).
- Collecting sample: For getting basic idea company should collect some sample designs of the brochure. These locusassignments.give the brief idea about formats used by competitors for attracting customers.
- Consider form and presentation: As per the collected sample company will decide format of brochure which includes colour schemes, information and images use to show tour packages to the general public. Presentation of brochure should be different from other competitors.
- Decide colour scheme: An attractive colour scheme should be decided for the brochure. Always use a good combination of light and dark colour. Colour scheme should not affect the typed information (Andrews, 2011).
- Decide time period: A time period should be decided so that designing process of brochure completed on time.
So, these points should be considers while designing brochure. A brochure should provide all the information to its reader. An attractive brochure design will help the company in attracting customers (Andrews, 2011).
3.2 Suitability of traditional brochure in comparison to E- Brochure:
Thomas Crook and TUI group both is used traditional brochure as their marketing tool but now with update of technology the tour operators adopt E- brochure for advertising their tour packages. E- Brochure is cost effective and time saving tool in comparison to traditional brochure. E- Brochure and traditional brochure both have their advantages and disadvantages (Andrews, 2011).
- Traditional brochure are available in paper form so there is no need of search engine or internet but e- brochure is require internet service and it can be downloaded and available for offline reading.
- There is wastage of paper and ink in printing of traditional brochure which is also not good for environment but E- brochure are in electronic format and there is no need to print this so it saves environment.
- Traditional brochure is very costly rather than e- brochure.
- Marketing personals are required to appoint for the distribution of traditional brochure but there is no such need for e- brochure (Andrews, 2011).
- Effective pictures and graphic designs are easily used in e- brochure but it is not possible to use 3D diagrams and graphics in traditional brochure.
- Traditional brochures are time consuming it take more time in printing and distribution but E- brochures are easily send to general public through e-mails and social media.
- E- Brochures approached many persons like potential consumer, investors and funders at a single point of time but this cannot possible with printed brochures.
- Designs and graphics are easy to change in E-brochure but it is difficult in case of traditional brochures (Andrews, 2011).
- Traditional brochures are useful only for those customers who take lesser or no use of internet.
- If company advertises its packages in the form of E- brochure then it can attract more consumers.
- E brochures help in increasing market of tour operator.
The above comparison shows that e- brochure enjoy more benefits than traditional brochures. Tour operator can use e- brochure of different type and styles at a time but this cannot be possible with offline brochures. E- Brochure appeal many people at a time but those who are unable to use internet services e- brochure is waste for them (Andrews, 2011).
3.3 Distribution channels use for selling tour packages:
Distribution channels are those ways used by the seller of product or services for selling to ultimate consumers. There are many distribution channels available for the distribution of services many of them are used by competitors of ` travel agency. Distribution channels are as follows:
a) Appointments of sales executives:
Tour operators appoint sales executives to sale its services. These sales executive interact with customers face to face and offer them different tour packages. Sales executive resolve the quarries arises by the customers. Sales through sales executives also help tour operator to identify the demand of the customers so that it can plan other tour packages for future (Beard, et. al., 2012).
b) Online sale of services:
Tour operator also provides their services with the help of internet. With the use of E-mail operator offers tour packages to the customers. It is a simplest way of direct sale. Tour operator cannot do any extra efforts for selling its tour packages and customers also ask their quarries directly from the tour operators.
c) Hiring Agents:
Tour operator can also hire agents for distributing its services. Agents are helping tour operator in expanding the market and increase in the potential customers. Agents charge certain percentage of commission in consideration of their services. They offer tour packages on the behalf of tour operator (Beard, et. al., 2012).
d) Partnership with related business:
Tour operator can also offers its services in association with other business. Tour operator may enter into partnership agreement with related business. For example: tour operator doing business in partnership with hotel or accommodation service provider. But tour operator only provides limited services or tour packages to customers in this channel.
e) Business to business channel:
Under this channel tour operator may hire services from other service distributors. These service distributors offer tour packages to ultimate consumer and the consumer could not about the original service provider. This channel is also called opaque distribution channel (Beard, et. al., 2012).
Thomas crook, TUI group etc are the major competitor of Cosmos travel agency. They adopts direct as well as indirect distribution channel for selling their tour packages. So, the company should adopt strategies like direct sale through online and offline for offering tour packages to its customer. If company uses technology and provide online services then customer will also attract towards the company and they take more interest in availing services of tour operator (Beard, et. al., 2012).
4.1 Your company will have many strategic decisions to make during the development phase of its own package holidays so you carry out some research to help with those decisions. What you then do is evaluate decisions made by two different tour operators considering:
Strategic decision making is a process where ideas are developed and putting into action for the future development of organisation. So, strategic decision making is very important because it is related with future. Strategic decisions are related with every function or activities of the organisation. Operational and day to day decisions are based on strategic decisions. Tour operators formulate strategies regarding pricing, volume and surcharge policy of tour packages with an objective of earning revenue from them (Jones, 2012). Tour operator makes following strategic decisions:
Tour operator take strategic decisions on the basis of their business volume in a particular season. They prepare tour packages as per the demand made by customers. For example during summer holidays international visitors demands for package holidays for their family and friends. To increase in sale of tour packages tour operator offers them children discount or senior citizen discount with attractive tour packages. They also make offer flexible tour packages where they can change their items in that package as per demand made by consumers. Tour operators make strategic decisions regarding tour packages on the basis of their business volume (Jones, 2012).
b) Pricing Strategies:
As per the study made around 36 million overseas visitors plan their holiday in UK every year. Most of the visitors demand packaged holidays because packaged holidays are sold by operators at a unit price. Tour operator should frame their price strategies with regard to the packaged holiday. Decisions include in pricing strategies are related with discount pricing or economic pricing of packages. Tour operator may offer their tours at the minimum cost after making arrangements and negotiation with the hoteliers and air lines (Rakic & Tivers, 2016). Due to high demand of these packages tour operator earn a margin of profit from tour packages offered as per economic price strategy. At the end of peak season tour operator sale their product as per discounted pricing strategy so that they cannot have loss of those amount which they paid to suppliers of services like hotelier and airlines.
c) Competitive Strategy:
There is huge competition in tourism industry because large number of tour operators provides their services. So, tour operator should formulate competitive strategies related with prices and type of services offered. In the environment of competition those offers attractive tour packages at reasonable price to the visitors will stand in the future market. Tour operators make close relationship with suppliers so that they offer more holiday packages for sale and increase their market share unless competitors reduce their market share by cutting their capacity (Rakic & Tivers, 2016).
d) Marketing Strategy:
In order to increase market share and enjoy higher profits tour operators should take decisions regarding their marketing strategies. Marketing strategies includes decisions for promotions and distribution channel of services. Tour operator should promote their services with the help of different advertisement tools like brochure and setting up different distribution channel for selling the tour packages to ultimate consumer.
e) Surcharge policy:
Many tour operators imposed surcharge fees along with the charges of tour packages. It is an additional fee occurs due to the currency fluctuations. When customers booked their tour holiday in advance and any changes occurs in currencies then tour operator may ask customer to pay surcharge on the tour packages. Tour operators are legally allowed to charge these surcharge fees but these are controlled by package travel regulation authorities. Tour operator plan their packages considering the surcharge fees and offer an option of cancelling the holiday package and take refund if surcharge increases more than a certain percentage of total cost of tour package (Rakic & Tivers, 2016).
4.2 Tactical decisions taken by Tour operators:
Tour operator takes tactical decisions in order to meet their action plans with their strategies. Tactical decisions are short term decision and narrowly focused. When the tactical decisions meet with the strategic decisions then they will improve the capacity of the organisation to survive and thrive. Tactical decision are depends upon the long term planning of the organisation. Tour operators like “Thomas Crook and TUI Group” takes many tactical decisions (Mancini, 2013). Tactical decisions include:
- Tour operator can formulate short term pricing strategy. If tour operator found that there is boom in tourism industry they change their pricing strategy in order to sale their services maximum. They offer discounts on holiday tours to attract more customers.
- Many tour operators provide facilities like car hire, airport parking and currency exchange at comfort level of the customers. It will increase customer’s loyalty and faith towards the tour operators.
- Tour operator tries to connect with their customers by using telephone text facilities, call centres, e-mail etc. This will help operators to know the requirement and demand of customers and they can sale their services directly to consumers (Mancini, 2013).
- In order to increase its sale tour operators enters into contract with many agents who provide services on the behalf of tour operators.
- Tour operator contacted with many suppliers like hoteliers and airlines so that they can offer tour holidays at an economic cost and bulk sale of services help them in earning margin profit.
- Tour operator uses cost effective advertisement tools in order to advertise their product. E-brochure, e-mail advertisement etc are the cost effective promotional tools (Mancini, 2013).
- Tour operators create websites and provide online services to customer. Website is not only use for selling the products but also help customers to collect information about the quality of services provided by tour operator.
Thus, these are some tactical decisions taken by tour operators in order to run the business in smooth and easy way and earn higher profit with competitive advantage. Tactical decisions are taken on the basis of realistic situation in order to meet strategic goal. Adopting wrong tactics will wrongly affect the organisation’s future. A right tactical decision ensures the success of organisation (Mancini, 2013).
The report explains the role of tour operators in the travel and tourism industry of UK. This report explains the recent trends prevailing in tour industry and their effect on the business of tour operators. Different type of holiday tours are available in the market and the role of marketing and promotional tools in the advertising of these holiday packages is also describes in the report. This report also explains that e- brochure is more effective and beneficiary advertisement tool than traditional brochure used by tour operators. Tour operators adopt various distribution channels to provide services to their customers. Tour operators have to take strategic decisions for the future business and tactic decisions in order to meet goal and objectives.
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