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Unit 14 Tour Operations Management Assignment Cox & Kings & Thomson
Diploma in Travel and Tourism
Unit Number and Title
Unit 14 Tour Operations Management Cox & Kings & Thomson
The unit 14 tour operations management assignment Cox & Kings & Thomson report is all about the management of the tour operations and the important factors associated with the same. Tour operators are mostly those companies which make a purchase of the various items in bulk which are meant to a part of the holiday package tour and makes a combination of all the items are offers the final product to the tourist or the customers. Some of the world famous tour operators include Thomas Cook, Kuoni, Cox & Kings, Thomson, the TUI Group, etc. who are well known for providing excellent services to their customers. Some the marketing strategy of the above mentioned tour operators have been discussed in the following report.
P 1.1 Analyse the effects of current and recent trends and developments on the tour operators industry
The industry of tour operations is very wide and is spread across the world. Such an industry is considered to involve a very complex and dynamic business environment. Hence it becomes important for the companies belonging to this particular industry to sincerely comply with the laws or the rules and the regulations followed by the different countries and also to ensure the amalgamation of the different components of the travel and tourism industry in order to efficiently manage the external challenges which as barriers towards the growth of the growth and the success of the industry. Moreover the industry needs to be at par with the continuous changing demands and preference of the customers as well as the changing trend in the business environment in order to meet the expectations of the tourists who are the valuable customers of the tour operations industry.
The factors mentioned below proves to be helpful in providing a detailed view regarding the impact of the current trends as well as the developments that has taken place over the recent few years –
Changing Features or Categories of the Travelers– There has been significant increase as well as evolution of the different types of customers. Moreover the purpose of travel of the tourist have also widened over the years and is not only limited to spending quality time with the near and the dear ones but also involves travel for study, research opportunities, religious festivals, sporting events, etc. Furthermore there has been significant increase in the number of individual travelers who are mature and independent as well.For example independent travelers have increased due to the reach of the education as well as technology. Applications of the technology are making the travelers aware of the particular areas. The development in the education system like the apprenticeships also encourage the people to select their trips based on the free times. These travelers do not depend on the tour operators and they set their plans as per the knowledge they have received.
Technological Advancements- It is considered to be one of the most significant factors which have facilitated the growth of the tour operations or on a wider scale the travel and tourism industry over the years. The internet facilities have proved to be very useful for the industry to collaborate easily with the different components associated with the travel and the tourism industry which includes travel agencies, service providers, transportation facilities, etc. Moreover the suppliers can also be contacted instantly and as such pre-arrangements are not required. Internet facilities also help to ensure customization of the services (Baddeley and Font, 2011). Some of the other important facilities which resulted due to the advancement in the field of technology over the years includes the following – e-commerce, electronic payments, search engines, mobile and tablet applications, travel wholesalers operating by the means of internet, information portals, online trip advisors, etc.If we consider the internet then around 90% of the UK people are accessing the internet. The penetration of the smart phone is also significant which help the people to book their services in advance and also to get the reviews of their selected plans from the web based platforms like Trip Advisors. Mobile based applications are also developed which simplified the booking process as well as the payment.
Integration in the Industry of Travel and Tourism- With the increasing popularity of tourism the industry has headed towards the strategy of integration in order to ensure its growth and the success in the coming years. Integration is all about establishing a link or a bond between the different components of the tourism industry or the various organisations which are a part of the industry in order to form a powerful organization. Integration can be classified into two types –
- Vertical Integration– It mostly takes when a company within the industry of travel and tourism can exert control over the other companies that may belong to different industries or the different chains of distribution. Some of the examples of Vertical Integration include –
- TUI Travel Group UK which is one of the market leaders of the tour operations industry owns the entire travel agency chain of Thomson and also owns the tour operating businesses of First Choice and Thomson and is the 60% share holder of the latter.
- Thomas Cook AG owns the travel agencies of Going Places and a travel agency under its own brand name. Moreover it also owns a number of tours operating companies working under its own brand name Thomas Cook.
- Horizontal Integration – It also ensures the growth of the company when it aims to expand its business activities in the other locations by widening the range of products and the services offered by the companies going for horizontal integration. It mostly involves acquisition of one company by another belonging to the same industry (Buckley, 2011).Marriott International is a poplar hotel which has acquired Delta Hotels Ltd with a value that is 135 million dollars. This will increase the market share of the Marriott International by adding 10, 000 rooms. This integration will help the management to continue its operation in a same way as both the organization Delta is from same industry and from the same business. The result is the increase in the assets or the portfolio which will attract more guest towards their services.
Changing Spending Patterns of the Customers – With the increase in the disposable income of the customers their spending power has also increased significantly which has ultimately proved to be profitable for the tourism industry. Moreover the amounts spend by the tourist in the different countries or tourist destinations have also helped the domestic industries to grow and to earn significant amount of revenues as well.
- Marketing Intermediaries and Channels – It is very important for the tour operators to select appropriate marketing channels in order to ensure the success as well as the development of the business. The marketing channels are of two types –
- Indirect Marketing Channels – They are generally inclusive of tour brokers, air brokers, destination management companies, sales representatives, franchises, tourist information centers, etc.
- Direct Marketing Channels – Such marketing channels are more technological and include virtual reality, call centers, ICTs, mobile apps, global distributions systems, multi-media kiosks, etc.
Increasing Importance of Information and Communications Technology (ICT) –It has brought about significant changes in the operations of the travel and the tourism industry. It has ensured easy access to the various facilities associated with the new products and services offered by the companies (Robinson, Heitmann and Dieke, 2011). It has facilitated the process of innovation at reduced costs and easy access to the different markets across the world. It has also ensured increased availability of information for the customers. The different functions of ICT can be cited as office automation, procurement, payroll, reservation, e-tickets, knowledge management systems, internal management, etc. For exampleCRM tool like Data Mining software is used by the tool operators to record the feedback from the customers and to send them to the appropriate department based on the nature of the feedback.
P 2.1 Assess the stages and timescales involved in developing holidays
Tourism planning consists of a number of stages and is also considered to be long and a hectic process. The tour operators are required to conduct an effective analysis of all the available options regarding the products and the services associated with the holidays as well as the contract with the different suppliers, etc. The maximum time limit for the completion of all the stages of planning is mostly allotted within the range of 12 to 18 months.
In order to meet the changing demands and the expectations of the customers as well as to be at par with the industry standards and also to handle the tough competition successfully proper planning is really important for all the tour operators.
The different stages involved in the process of planning can be stated as follows –
- Market Research – It is very imperative for the tour operators to conduct proper market as it helps to provide information regarding the current market trend, consumer behavior and the competitors existing in the market. The selected destinations will need an analysis based on the influencing factors. For example different countries have different tax rate say, UK has a VAT charge around 20% but in case of Dubai the taxes are very less. Thus it is depending on several variables which are needed to determine in the market research. The market research will need nearly about 1 month to get the proper picture of the destination. The parameters will be the availability of the transportation, accommodation, communication facilities and Government initiatives for the tourist etc.(Romero and Tejada, 2011).
- Planning – It involves different types of planning regarding the choice of tourist destinations , schedules the dates or times, hotel bookings, etc. Planning will take place after the feedbacks from the tourist will gathered. Identification of the origin points, destinations, activities etc. Nearly 2 months will be required to frame the requirements based on the feedbacks
- Contracting – This mostly involves the negotiation with the different suppliers as well as the service providers. Contracts are mostly made based on the demand of the tourists. It is a continuous process. The tour operators have to determine the popularity of the places based on the preferences of the peoples selecting the trips. After that the contracts with the accommodation providers, transport, tour guidesand food suppliers will be done. For a small company the preferences have to be recorded in order to make contract but for the large companies they can set the period for 12 months.
- Budgeting- the holiday package includes the costing of the tour. The cost is related to all the expenses that will be incurred while developing a tour package. Cost including the accommodation, local transport, tour guides, research cost etc. The foxed cost is to be determined for calculating the break even. After the break even the tour operator can help to determine the profit. There are also other factors which are unpredictable that can increase the cost like the terrorist activities, weather changes, political unrest etc. Cost based pricing is needed to be considered while fixing the price. All the expenses will be considered to determine the cost of the tour. Later it will be the objective of the organization to select the pricing objective say it can be Penetration or skimming. For a small tour operator skimming will help to attract many travelers around the world. as well as the execution or the implementation of the planning is needed. The staffs are needed to be recruited to implement the strategy and the marketing team will attract the customers with their convincing skills. Thus a structure of the operation is needed to be designed to remove the misunderstandings and to promote the coordination. 3 months is necessary to start the recruitment process and to design the structure of the work activities.
- Creation or the designing of the travel brochure- it is the step of the tour operators towards attracting the tourist as well as creating an awareness regarding the holiday packages offered by the same and also regarding the different facilities the tour operators aims to provide to its customersThe brochure will contain the detailed of the destinations, night stays, per head cost, sight scenes activities, details of the company, contact details etc. I month is sufficient in this activity.
- Post tour Management- it involves all the activities which takes place after the tour has been conducted. Feedbacks will be taken from the tourist top address the deficiencies.
P 2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of tour operator
Contracts are mostly based on the holiday seasons are basically for a period of 12 months. It is the responsibility of the tour operators to make proper estimations regarding the different requirements as well as the capacities in order to enter into a contract with the airlines, hotels, etc. there are different types of contacts which have been discussed in detail below –
- Fixed Contract – In this type of contracts advanced booking as well as payments are done for all the seats in the airlines or the rooms of the hotels. This type of contract is more advantageous for the suppliers or the service providers as it means that even if the seats are not filled or the rooms are not used they will be receiving full payments for the same. However there are certain advantages for the tour operators as well which includes flexibility to reduce the price rates or move the tourist or the guests or to make various upgrades as well (Shaw, Bailey and Williams, 2011).
- Allocation – It is considered to be one of the most popular contact methods among the hoteliers who make sure that all their beds are sold. They contract the tour operators for selling of their extra beds while the tour operators need to confirm that by which date they require the extra beds and the number of beds they require. This helps the hoteliers to apply the strategy of competitive pricing.
- Ad hoc Contracts – Such contracts are mostly made by the tour operators when they beds or flights. Such contracts are important as well as popular because they do not involve any risk although their cost of administration is quite high. It is very useful for the tour operators in case of overbooking that when the tour operators require extra accommodation at the last time. Such types of contract are very popular among the specialist tour operators like Kuoni, Cox&Kings, etc.
- Sale Only Contract – These types of contracts are also used by the specialised tour operators as it involved grouping the customers into certain segments. They mostly target the niche market and develop strategies for conquering their respective target market. For example Cox & Kings segments the target group on the basis of their income. Moreover in such type of contract the tour operators are required to pay for only those facilities which are used by their customers. However fixed contract is more beneficial for the tour operators as they even receive discounts as well. On the other hand the sale only contract saves the wastage of money and ensures effective utilization of the services.
P 2.3 Calculate the selling price of a holiday from given information below.
This particular task is mostly concerned with the calculation of the selling price of the holiday tour package which is to be designed for a group of Chinese students who are approximately 15 in number. The starting destination of the tour will be that of London, UK while the final destination will be the beautiful place of Paris in France. The following table shows the calculation of the total cost involved in the aforesaid package tour –
Luxury coach is 1000 for 15 students including driver, fuel, road taxes etc.
Accommodation charge= 50 Euros for 5 days per person. Thus it is 43 pounds for per person for 5 days.
Costs Involved in the Package
Price per Individual (Pound)
Price For 15 students
Tour Guide charge
Package cost will be calculated by adding the all cost of 15 students.
Assumption= profit margin of 10% = Pound 2670*10%= 267
As we know Selling Price (S.P.) = Cost Price + Profit
Hence, Selling price of the total package= Pound 2670 + Pound 267 = Pound 3937 approx
P 3.1 assesses the suitability of alternatives to a traditional brochure for different types of tour operators and recommend the most appropriate for your tour package.
With the passage of time, advancement in the field of technology as well as the changing demands and expectations of the customers The popularity of the traditional travel brochures have decreased significantly which has lead to the evolution of the alternative travel brochures (Mak, 2011).
The different alternatives of travel brochures include the following –
- CD ROMS (Compact Disk read Only Memory)
- Android applications including IPADS
- Leaflets or Flyers
- Social Media
- Television Advertisements, Radio or the Print media
- Outdoor media such as Billboards, TfL buses, etc.
E-Brochures: E-brochures have been able to gain instant popularity among the customers as well as among the tour operators because it is cost effective and is much more appealing than the traditional travel brochures. In addition the CD-ROMs are also more appealing to the customers as it is flexible, more interactive and even provides sufficient information regarding the different tour packages offered by the different tour operators. Such alternative brochures are less time consuming, more appealing and also provide much more information regarding the tour and the different facilities associated with the same.
The following diagram shows the image of the travel brochures –
CD ROMS: For example the use of CD ROMS as a travel brochure was promoted by the tourism of Malaysia in the year 2003. In the same year one of the famous tour operators Kuoni also launched a coloured E-brochure in the official website of the company and the response it received from the customers was overwhelming. In addition the CD ROMs are also considered to be one of the first digital brochures which are less costly and are easy to distribute as well.
Social media: Social media can be used in order to share the brochure. Social media platforms like Face book can be used which can attract all the people at a time. It will help to reduce the cost as no sharing cost is needed or to open a social media profile. Thus in a low cost reach can be maximized with the help of the social media.
Leaflets: Leaflets are the piece of paper where the brochure can be printed and it will be distributed by visiting every houses or to stand in a place where the traffic is high. The people who do not use internet or social media they can be targeted. But the cost is high due to the printing and also for the distribution.
Television: Television can be used for displaying the brochures in the form of advertisement. The reach will be high as most of the people used to watch the television but chances to see that advertisement is very low along with that the cost is also high.
So after assessing all the alternatives, internet or social media profile can be used to share the brochures due to the increased use of the internet or social media. The organization can save their cost which includes the printing and for distribution. As most of the people are now using the internet or social media in their daily lives. The message of the brochure can be shared to all the people at a time with the social media.
P 3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator and recommend the most appropriate for your tour package.
Distribution channels play a very important role in the marketing of the products and the services offered by the tour operators to their customers. It is mostly associated with the selection of the appropriate channels as well as their operations in order to communicate effectively and efficiently with the target markets and also with the suppliers both of which play a significant role in the development of the tourism business (Aldebert, Dang and Longhi, 2011).
Distribution systems can involve a third party to conduct the interactions of the business contract or may even involve direct interactions which may include online communication mediums. As it is very crucial for the tour operators to make appropriate choice of distribution so as to achieve its objectives successfully, it is hence important for the tour operators to consider the following factors while making a decision regarding the tour operators
Direct Distribution Channels – They involve direct interaction and the sales also takes place by the means of direct contact with the potential customers.
Some of the advantages associated with the same are-
- As direct communication takes place hence it is less time consuming
- It is flexible in nature and hence changes can be included as and when required
- As there is no middle men or third party involved hence no commission is required to be paid for the same and hence it results in increased profits hence they are comfortable and secured regarding the transactions
- As the tour operators can exert greater control
But the disadvantages can be the fixed cost associated with the direct distribution which have to bear the organization for the distribution. The tour operators have to give fixed margin to the distributors at the end of the month which is the return of investment for the distributors.
Indirect Distribution Channels – It involves one or more intermediaries in order to conduct the transactions. It provides the following benefits to the customers – less costly, provides more variety, professional consultation and also involve a system of single payment. But certain disadvantages can be the less responsibilities for the distributors. As they know they will not get any fixed return apart from the commission so they will do their duties will a less effort.
The most recommended system will be the direct channel which involves the permanent distributors for the tour operators. They will give their best performances to maximize the reach and availability due to the sound return on investment at the end of the specific period. They are very much aware of the business process that the tour operator will only renew their deals if they can give more business turnover to the tour operators. As a result the business of the tour operator will increase.
P4.1 Evaluate the strategic decisions made by different types of tour operator
The decisions of a company or an organization are basically taken under three levels which includes strategic, tactical and the operational level. Strategic decisions are mostly concerned with the overall planning to ensure the success implementation of the policies of the companies and are taken by the top executives, managers, director, CEOs or the owners of the company (Brown, Bessant and Lamming, 2013).
The following diagram helps to provide an insight regarding the decisional structure as well as the information flow within a company –
Decision making is all about choosing the best form the available alternatives and the different types of tour operators involves various types to strategic decisions in order to achieve their respective targets as well as to ensure competitive advantage over the others. Moreover strategic decision making involves or rather requires detailed understanding of the problems or the current situation of the company and the market for providing flexible and appropriate solutions for the same. The process of strategic planning involves three important direction directions which include low price leadership, differentiation in the range of products as well as focus on the target market (Thomas, Shaw and Page, 2011).
Mass tour operators like Thomas Cook often applies the strategy of low price leadership is mostly adopted by the large companies in order to cut down its competitors or rivals on the basis of pricing. Such companies can also benefit from the economies of scale which acts as barriers of entry for the new companies in the market as they are not able to compete with the big ones. The negative side is the setting of the price as to attract the customers they used to give discounted pricing which can affect their costing. But to remain in the top position of the mass tour operators they often follow this decision.
Tour operators like Cox and king sconsiders the Product differentiation strategy for distinguishing their service from which helps to provide competitive advantage to the companies and also helps to meet the changing expectations as well as preferences of the customers. Such a strategy is adopted by the companies for retaining their old and loyal customers and prevents their customers from switching over to their customers. But the negative side can be the intense competition among the mass tour operators. But for the specialized tour operators product differentiation is the key strategy area in the decision making as their specilisation depends on the distinguished service they are offering.
Promotional decisions are taken by both the tour operators but the social media profiles are used by Thomas Cook to share their offers or reminders for the holiday packages. It helps the target audience to aware of the offers For the specialized tour operators focus to the target marketmainly done to achieve their most important objective of customer satisfaction as well as generation of profits for the development of the company as well as its sustainability. By catering to the needs of specific markets the companies also have to deal with fewer competitions. Moreover capturing niche markets also helps to provide monopoly to the companies. For example Cox & Kings are the market leaders in the category of the specialized tour operators while Thomas Cook is the market leader in the category of the mass tour operators. Moreover the marketing mix also plays a major role in the developing of strategies associated with the marketing of the products and services of the different companies or the tour operators in the industry of travel and tourism.
P 4.2 Compare the tactical decisions that could be taken by a selected tour operator in different situations
Tactical decisions are mostly concerned with the day to day activities of the company and on a broader scale it is associated with the ways involved in the implementation of the corporate strategies. They are mostly on the operational or the functional levels and influence or rather have an impact on some parts of the organization only. Such types of decisions are mostly short term in nature and are taken to achieve certain specific objectives within limited intervals of time.
The tactical decisions of the tour operators mostly include tactical responses, pricing, marketing and planning regarding the products and services offered by the same. Moreover the short term pricing strategies adopted by the tour operators helps to fight the competitors successfully and also helps to provide market entry when the company aims to penetrate within new markets. In addition the tactical planning also involves the sevens P’s of the extended marketing mix which includes product, price, place, promotion or communication mix, people, process as well as physical evidence (Moutinho, 2011).
For example the pricing strategies of Thomas Cook are such so that they can attract the mass tourist during the different seasons around the year while the tour operators like the Cox & Kings mostly concentrate on special segments of tourist hence their pricing strategy is different from that of the Thomas Cook. The pricing strategy of Thomas Cook is wide so as to accommodate different groups or segments of the people while that of Cox & Kings are not as wide as they special facilities and cannot compromise on the pricing as their target customers are lesser in number as compared to that of Thomas Cook. The strategies of the Thomas Cook are mostly directed towards deriving the maximum benefits from the pricing strategies while Cox & Kings believes is proving value to the customers.
The management of the tour operations is an uphill task as can be concluded forms the above report. In order to keep up with the changing as well as the current trends of the business environment it is indeed very vital for the tour operators to provide innovative services to their customers and also to make use of the advanced technologies for reaching out to their customers. Moreover it is equally important for the tour operators to prepare appropriate strategies in order to achieve its objects on time successfully and also to derive expected results from the implementation of the strategies or the policies. Above all the selection of the proper distribution channels also helps to provide competitive advantage to the concerned tour operator. In addition the alternative travel brochures help to attract more new customers.
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