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Unit 14 Tour Operations Management Assignment - TUI & Thomas Cook
Tourism is fastest growing industry in world and having the significant contribution in the GDP of nations. In addition to this, the spending power of people is increasing that helping the organizations to develop the different and sustainable plan according to needs and expectation of different target groups. Tour operation management is generally considered as market evaluation, planning, implementation and monitoring of the tasks and activities to meet the business objectives and maintain the flow of functions in professional manners. The Unit 14 Tour Operations Management Assignment TUI & Thomas Cook will analyze the effect of current trends and developments of tour operation industry within UK by using the examples of TUI. In the next tasks report will explain different methods of contracting and assess the timescale for developing the holidays. Moreover, report will evaluate the planning decision taken for designing the brochure and assess the suitability of alternatives for different types of tour operators as well as the methods of distribution used to sell a holiday for different types of tour operators. At the end, report will evaluate the strategic decisions made by the different types of tour operators and compare the tactical decision that could be taken by the tour operators in different situations.
1.1 Effect of current trends on tour industry in UK
The industry is reshaping the structure to deliver maximum comforts and services to customers as according to changes in customer demands. Recent changes in industry has affected the organizations to customize them self according to trends. TUI group which is a leading tour and travel organization in UK has effect of trends in business operations. Organization has analysed several effects on operations of organization.
Technological changes: Traditional way to book ticket and to collect information about the packages is being replaced with technological approaches. TUI group is using mobile app or/and website to facilitate customers at door step to deal with tickets and packages. Customers can book their tickets or can cancel prior to travel and has no need to go outside for booking. They can now most of the information about packages and can select the most suitable for them. As internet has become the inseparable part of modern life style, TUI group like big organization are putting their efforts to attract the customers on online interface (Moutinho, 2011). This helps the customer to query on most of information about the packages and ticket details whereas organization gets the benefit of reduced overload and human resource along with the cost minimization to manage the customer relations. Technology is helping organization to bring the most of task in more effective and automatic form.
Increase in purchasing power: Increase income of customer is leading them towards the luxurious travel and trips. Customers are expecting more facilities to them during the travel and tourism period. They are seeking for speciality in comforts and amazements for their tour. As a result, TUI group is investing much of capital to analyze the customers’ satisfaction and appraisement sources. TUI group has defined several holiday packages and regular programs to meet the need of customers those are different in income (Moutinho.et.al.2011). Organization is also making special programs to get the benefits from the luxurious packaging and tours demanded by upper level of customers enrich in income and expenditures.
Climate awareness: TUI group manages the availability of packages according to the climate at destination. Organization analyzes the customers and destinations to find the most appropriate session to enhance the customer experience at destination. For instance, if a place is more awesome and amazing to visit in winter, then TUI group organize the special events to aware and attract the customers about the beautiful impression of climate at destination. This trend is leading to pre forecast the upcoming climate and nature at destinations so that customers can be drawn in bulk towards the organizational tours services. Addition to it, TUI group is providing climate details to customers those are planning for their own tours and travel via the TUI group services. Demand of personal tours to specific locations is leading the trend to be aware with climate at destinations (Thomas.et.al.2011).
Cost effectiveness:As the business is going online, customers have also facility to compare the services and packages of TUI group with other organizations. Thus to take competitive advantages, TUI group is making strategies to cut the cost of packages so that more comfort and services can be offered to customers against the services of opponents in market. To cut the cost, organization is focusing on the demand of customers to a specific destination to visit so that arrangement of resources and travels can be done in better way to reduce the cost on per package. Customers are being attracted towards the comparison of services and there prices with organizations, TUI group needs to find the alternative ways to deliver the high quality services with the balance in maximum benefits and minimum cost for holiday and standard packages (Richards, 2011).
Dynamic Packaging: Customers are demanding their custom packages for their own tours as personal tours and independent travels are in trends. Customers are choosing their own destinations to visit in preferable time. TUUI group provides the facilities to customers to put their wishes on destinations and services so that organization can manage the resources to make their tour personal and customised. For example, customers willing to visit a place that is not in current service of TUIO group, then TUI will organization the need of customers to specific destination. Also, the pricing and packaging in such cases may be dynamic and depends upon the selection of services and number of customers in tour. Current trend of making dynamic packages is a challenging task for TUI group to offer the desired satisfaction to the customers in cost effective manner (Sharpley, 2011). However, organization may charge differ from other organizations but quality of services are preferred by customers willing to take dynamic packages.
Assistance of services: Customers are demanding the assistance in accommodation and guiding services from tourism industry. This trend is affecting the industry to offer and arrange the accommodation for customers in addition to tours. Customers are expecting the arrangement of accommodation from tourism business so that they can make their experience more concentrated on tourism destination. As a result, TUI group is making partnership and contracts with other organizations to assist the tourist in accommodation. The increasing trend of accommodation with tourism is encouraging tourism business to dive into the hospitality industry. As a result, TUI group is clearing the concept of hospitality services to establish own accommodation to customers in different locations so that cost can be cut on accommodation charges and more benefits can be generated. Addition to it, TUI group is also providing their employee as a guide to assist in historical development and special destinations so that customers can make the more understanding about the destination details (Mariani.et.al.2014). All this, is becoming the part of tourism industry as to enhance the customers satisfaction and trust in services. Personal guide service is helping customers to know the untold realities of destinations.
It is necessary for tourism industry to be aware with recent changes so that sustainability and improvement can be managed in order to survive. Customers’ satisfaction is at core of changes but it should be managed parallel to the future of business.
2.1 Assessment of the timescales involved in developing this holiday
According to the given scenario, a holiday package for the Chinese students had to be developed. The students are planning to travel France and Paris for sightseeing from London. The packages would be designed for approximately 15 students and is been estimated that the tour would be of 4-5 days. Moreover, TUI which is the leading tour operator group in UK would be developing the holiday package as per the demands of the Chinese students. It has been identified that the tour operator is seeking to expand its market coverage and thus had initiated with new attractions and offerings as per the requirements of the travellers and the market trends (Becker, 2016). The holiday package would be proposed for the August 2018 and would include various attractive offering by TUI. In order to develop an effective holiday package TUI would follow certain steps which would help in acquiring fruitful results and develop the most appropriate and profitable package out of it. TUI would follow the steps given below:
- Market research: The foremost activity is the market research in which TUI would be evaluating and collecting the information about the market trends and the attractions of the destination. It would be collecting the information related to the weather condition, accommodation facilities, major attractions, culture, events, safety and security, food, etc. In addition to this, the research team would also find the details about the entry fees, cost of transportation, miscellaneous cost, etc for the tour.
- Negotiations with the other hospitality vendors: After collecting the market information, the management of TUI would contact the other suppliers of tourism like hotels, airlines, transport companies, ground operators, car rentals, sightseeing vendors, etc (Buckley, 2014). TUI would negotiate with these vendors as per the requirements of the tour and would avail the best possible deal out of it.
- Cost assessment of the package: Tour cost is been generally referred to the total expenses incurred to develop a tour package and set a reasonable price of the same. The total cost of the tour package mainly includes the research cost, payroll cost, accommodation cost, air travel and tourism cost, local arrangement cost, marketing cost and other additional expenses. The prices of the packages would be estimated on the basis of the overall expenses of package.
- Planning and scheduling: TUI would then plan the entire trip and would set a schedule for the entire tour. The management plan for the time management of the tour and would ensure the proper distribution of 5 days for each and every activity at the tour (Evans.et.al, 2012). TUI would also make sure that all the proposed destinations are covered in the set time of 5 days and provide the customers with full satisfaction.
- Administrative staff: In order to deliver the best services TUI would recruit a temporary staff having adequate amount of knowledge about the destinations, good humor, sense of ethics, capable of making effective decisions, etc. The staff looks after the entire tour, deals with the issues, organizes various activities; deliver the best services to the tourists at whole.
- Evaluation of post package development: With the development of the tour package, TUI would then evaluate the package with the help of feedbacks and other parameters like marketing activities, interest of customers in the package, etc. TUI would also evaluate the effectiveness of the package by collecting market information about the package (Horner and Swarbrooke, 2016).
In addition to this, it has been anticipated that the entire planning of developing the tour package would be completed in 6 months. The activities are been depicted with the help of a Gantt chat below:
Table 1: Gantt chart
2.2 Methods of contracting for different components and different types of tour operator
In order to provide the best services to the customers and avail best deals out of the package, TUI comes into prior contracts with different hospitality vendors such as airlines and hotels at the proposed destinations i.e. Paris and France for Chinese students for 5 days period. The tour operator gets into contract prior 1 year so that to get best offers and negotiation with the vendors and earn higher profits out of the package as well. There are various types of contracts which the organisation could adopt and get into contract with the vendors. However, TUI would mainly adopt two types of contract for booking various facilities for the holiday package. The contracts are:
- Ad hoc: The ad hoc contract is mainly considered as the most flexible way of arranging the resources for the package and books the facilities prior to the tour. According to this contract, the cost of facilities are been set as per the activities which has to be carried out in the tour either hourly or daily (Lu.et.al, 2015). The contract facilitates TUI in managing financial resources services and gets the confirmation by emails and other documentation.
- Fixed contract: This contract helps the tour operators in ensuring the use of the volume based on the capacity of the vendors in the off season. TUI came into fixed contract with the airlines prior one year and had reserved the seats as per the proposed number of 15 students and had made the payments accordingly. It has been also found that in this contract the non usage of the volume would be paid by TUI itself (Candela and Figini, 2012).
In addition to this, there are various types of tour operators which serve people in different ways. Some of the major tour operators are inbound tour operator, domestic tour operator, Outbound tour operator and ground tour operators.
2.3 Calculate the selling price of a holiday
The tour is planned for a group of 15 people for 5 days. The stay would be organised in St Michelle Hotel which is offering a twin room for two people at 60 Euros. The functional currency for calculating the tour cost is pound. Hence the cost of hotel would be converted to pound and the conversion rate considered is as of today which is 1 Euro =0.84 pounds.
Cost of Room (2 adults sharing) is = 60 * 0.84 = £ 50.4
For 15 people (room will be shared by two), number of rooms required = 15/2 =8 rooms.
Cost of Hotel for 8 rooms for one day=50.4 * 8 = £ 403.2.
Cost of hotel for 5 days = 403.2 * 5 = £ 2016
Cost of BB for one person = 10 *0.84 =£ 8.4.
Cost of BB for 15 person for 5 days = 15 * 5 * 8.4 =£ 630.
Cost of 20-seater luxury coach =£ 1000
Cost of local tour guide =£ 200
Cost (in pound)
Cost of Hotel
Cost of BB
Cost of Luxury Coach
Cost of local tour guide
10% profit Margin
The total cost for the package will be £ 4230.6
Cost for one individual will be = 4230.6/15 =282.04
The cost of package for an individual will be£ 282.04
3.1 Decisions taken for designing the brochure
In order to create the awareness and market the plan that TUI has developed for students, management would take following decisions for planning the design of brochure. This will help organization to target the potential customer groups and gain the competitive advantage. Following are the key decisions that will be taken by TUI management.
Figure 2: Brochure design
- Formant of brochure: For the attractive design of brochure, format plays critical role as the people get pull towards the information that provided by TUI. For the developed plan the management could select the Z format to put information in different category which will be easier for people to find and understand (Bellman, 2015). In this formant, management will offer the information about destinations specifications, transportation services options, accommodation, contact and prices as well the duration of plan including the images. This kind of formatting of brochure will create the curiosity and engage the target customers.
- Paper quality: For designing the brochure the management of organization will take decision about the quality of paper according to brand positioning (Chan and Guillet, 2015). In addition to this, organization will proposed the glossy and smooth paper for developing the brochure.
- Content: After making decision about the formatting the management would take the decision about the content of brochure. In this the, TUI manager will consider the competitors plans and information that has been provided to customers. Moreover, organization will take the decision about the languages according to target groups to develop the content.
- Colours and graphics: In the current scenario, combination of colour and graphics has significant impact on the design of brochure that increases the interest of people to read the brochure (Duffy and Stroebel, 2015). Considering this fact, TUI management will make decision about the choice of colour that will be according to summer session and locations that have been selected for tourism.
3.2 Alternatives of traditional brochure for different types of tour operators
There are majorly four types of tour operators performing the business according to capacity and resources to meet their business objectives. In the recent time changes in the marketing tactics due to globalization and use of internet services has forced tour operators to select the different ways to offer information through brochure. For example, the inbound tour operation organization like TUI that directly deal with the foreign tourist can use the e-brochure for promoting and offering the information to target customer groups (Goodall and Ashworth, 2013). This kind of brochure will help to cover the wide areas for targeting the customers and meet the objectives more effective manners. Apart from that, the outbound operators like Tomas Cook and Thomson also use the online alternatives for promoting the packages and gain the attention of customer. By using the email functions that, management of these organizations could offer the information about the plan with effective design and detail information about the transportation, accommodation and local sightseeing with images and prices.
On the other hand the tour operators like domestic and ground level could stick to traditional brochure for offering the information about the accommodation and transportation which are the major services provided by these organizations. For example Kuoni is domestic tour operating organization that offering the high quality services for local areas and creating packages for niche segments which could be promoted through traditional marketing concept of brochure. This kind of advertising will be beneficial for home customers who are looking for low cost services (Moutinho.et.al. 2015). However online market is major trend in the travel and tourism industry that helping the organization to meet the objectives more easier manners but for ground level and domestic tour organization traditional brochure are more effective. In addition to this, promotion through website and email are key trends in the travel and tourism industry to gain the competitive advantage and reach to the high numbers of customers.
3.3 Distribution methods used for holiday
For distribution of brochure and information about the packages and plan that has been developed by TUI and other tour operating organizations could use the following options:
- Direct selling: This kind of distribution would be helpful for domestic and ground level tour operators like Kuoni and Cox & Kings. By using this method of distribution the organizations will able to make the strong interaction with the target customer groups and retain them by offering the plan and packages according to their needs and demand (Nielsen and Nielsen, 2011). Direct selling is one of the most used distribution method that helps ground and domestic level organization to create awareness about the products and services in different category and analyze the needs of the target customers. Moreover, direct selling option for distribution of brochure will support the organizations to gain the attention of target people and collect their feedback about the services and choice of plan. This will help to upgrade the services and planning of operation to achieve the new standard and retain the customers.
- Online: For outbound and inbound organizations like Thomas Cook this kind of distribution method of brochure. According to current scenario of business in tourism industry online distribution is helping organization to cover the wide areas of offering the information about the plan of holiday and attract the visitors from international market. For example, e-mail marketing tools could also be used by TUI for selling the holiday package brochure among the targeted audience. In order to apply suitable method for selling the packages it is crucial to make use of both the direct sales and online methods so that to approach wider scopes of the target market (Papadakis and Barwise, 2012). However organization is using both kind of distribution methods to create the awareness and influence the decisions of most numbers of customer but high level of competition is affecting the strategy as well as the local tour operators also entering into international market that hindering the opportunities for leading tour operating organization. By considering these facts it is been recommended to TUI to use both direct and online selling methods for distribution of brochure.
4.1 The strategic decisions made by different types of tour operator
The tour operators such as Thomas Cook adopt numerous types of strategies in their business with the purpose to expand their business globally. These decisions are taken to achieve customer satisfaction, increasing profit, expansion of business, achieving goodwill, etc. These decisions are taken in day-to-day operations like, fixing the prices of offered tour packages, identification of consumer segments, developing and designing brochures, etc (Grant, 2016). A strategic decision made my Thomas Cook is very important because it help the organisation to face efficiently with any emergency or crisis in the business. The business of tour and travel is very flexible in nature and to face with this, appropriate strategy is required at every step for the smooth running of the business. Some of the strategic decisions made by the Thomas Cook are as follows:
- Distribution decision: The distribution decision is the strategic decision adopted by the Thomas Cook for satisfying the demands of its customer by making available the requirements at a committed time. This decision helps the organisation to attract and retain its customer (Stadtler, 2015). While taking such decision the company take into account that such decision may not cause or hinder the growth the business.
- Segmenting, targeting and positioning: In this, the Thomas Cook identifies the targeted consumers so that the tour packages are developed by keeping in view the positioned client. This is the key decision of the company because all other important decisions of the business depend fully on this. This decision is made after analysing the competition prevailing in the market and the services to be offered to the targeted customers for achieving their desires in a pre-defined budget (Bickhoff.et.al, 2014).
- Promotional strategy: This includes the decisions to be made for promoting the business by using various tools and techniques. This is an important decision of the Thomas Cook because the overall profitability of the business depends on this decision. This forms a base of the generating income for the organisation (Kotler.et.al, 2015). Thus, Thomas Cook makes promotional decisions very carefully by keeping in mind the growth and goodwill of the organisation.
- Consumer relation: The strategic decision of Thomas Cook related to customer relation includes providing valuable services to its customer in a minimum of budget. These decisions are made to achieve the trust of customers on them (Christophe.et.al, 2013). This decision is made by the company in order to retain its current and future customer and to maintain its goodwill in the market. This includes assuring health and safety of customers, achieving the demands of the customers, providing them with the branded products, etc.
- Pricing strategy: Thomas cook uses various pricing strategies in order to attract the customers for buying their products which indirectly increases their sale. The main aim of such decisions is to retain and attract its customers. The company takes the decision of the pricing in according to the quality of the product. The pricing decisions made by the Thomas Cook are economical so that any type of consumers can easily buy them.
4.2 Comparison of the tactical decision being taken by Thomas cook and Cox & Kings
Tactical decisions are basically those which are taken for implementing the strategic decisions in the organisation. These are short term decision which may influence the organisation for a shorter time period (Radford, 2012). There are various tactical decisions which are made by the organisation in their day-to-day operations. These include arrangement of the accommodation, food and other facilities, negotiation with service provider, etc. The comparison of tactical decisions taken by the Thomas Cook and Cox & Kings are as follows:
- Pricing strategy: Thomas Cook is a sound organisation in terms of financial condition. Their financial conditions are better so this reflects on the pricing strategy being used by them. The company provides economical products with a good discount schemes to attract more and more customers. It focuses more on customer satisfaction rather than on profit maximization. The pricing strategy of Thomas Cook is consumer-oriented (). Where else, the pricing strategy opts by Cox & Kings is profit-oriented. The company is not so good in terms of financial condition thus it mainly focuses on maximizing its profit. The prices of its products and services are high as compared to others which are not affordable by the customers.
- Currency rates: The Thomas Cook is an international tour operator. It deals with the customers of different nations. Because of their international level of business they are directly affected by the fluctuations in the currency rates between the countries. To face this fluctuation, Thomas Cook makes some tactical decisions to avoid the loss that occurs from such fluctuations. On the other hand, Cox & Kings deals within a nation. Its business is of national level thus, it does not have to face fluctuation problem. Therefore, the company does not make any tactical decisions to overcome from this problem.
- Government support: Thomas and cook work at an international level and they have to often face the interruption of the government of various countries where they plan a tour. The company, Thomas Cook is requires to take an appropriate decision which would helps the organisation to deal accordingly and peacefully with the government of various countries. While, Cox & Kings is running a national level business and they does not face any issues related government of other countries. The tactical decision made based on this is different from Thomas Cook. They take such decisions which help the government of their nation and also to gain support of their government in promoting the business.
From the above Unit 14 Tour Operations Management Assignment TUI & Thomas Cook it is been considered that travel and tourism business is having significant impact on the GDP of nations. The resent trends and development in the industry are beneficial for tour operating organizations like TUI and Thomas Cook that are offering services across the globe. Report has provided the information about the effect of trends and development in UK tour industry and different methods of contracting for holiday packages. Moreover, report has evaluated the designing decision taken by the organization for brochure and alternatives of traditional brochure. At the end, report has evaluated the strategic decisions made by the different types of tour operators.
Books and journals
Becker, E., 2016. Overbooked: the exploding business of travel and tourism. Simon and Schuster.
Bellman, R.E., 2015. Adaptive control processes: a guided tour. Princeton university press.
Bickhoff, N., Hollensen, S. and Opresnik, M., 2014. Step 2: Strategic and Operative Marketing Planning—Segmenting, Targeting, Positioning. In The Quintessence of Marketing (pp. 47-110). Springer Berlin Heidelberg.
Buckley, R., 2014. Tour production costs. Journal of Travel Research, 53(4), pp.418-419.
Candela, G. and Figini, P., 2012. The Production and the Sale of Holidays: Tour Operators and Travel Agencies. In The Economics of Tourism Destinations (pp. 243-268). Springer Berlin Heidelberg.
Chan, G.S.H. and Guillet, B.D., 2015. Implementing Revenue Management for Travel Agencies. Journal of Management and Sustainability, 5(4), p.17.
Christopher, M., Payne, A. and Ballantyne, D., 2013. Relationship marketing. Taylor & Francis.
Duffy, R. and Stroebel, M., 2015. Protecting Holidays Forever: Climate Change and the Tourism Industry. Brown J. World Aff., 22, p.7.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and tourism. Taylor & Francis.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Horner, S. and Swarbrooke, J., 2016. Consumer behaviour in tourism. Routledge.
Lu, F., Huang, G.Q., Niu, W. and Zhang, J., 2015. Incentive Contracts on Tourism Service Quality under Asymmetric Information. Journal of China Tourism Research, 11(4), pp.402-423.
The Unit 14 Tour Operations Management Assignment TUI & Thomas Cook will analyze the effect of current trends and developments of tour operation industry within UK by using the examples of both companies, We are posting Locus units solutions so scholars can explore the our Assignment Help in UK and get review the quality of our work.