Unit 14 Tour Operations Management

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This unit enables learners to gain understanding of the tour operators industry, the stages involved in creating holidays, brochures and methods of distribution used to sell holidays, and strategic decision making.

Unit abstract

Learners will investigate the tour operators industry of the travel and tourism sector, including the different types of operator, their products and services, the scale of the industry and how it has been affected by trends and developments. Management issues will be covered by examining strategic and tactical decision making in order to develop learners’ decision-making skills. Learners will explore the stages involved in creating a holiday and develop skills associated with determining a selling price for a holiday from given information. The role of the brochure will be reviewed against the introduction of new methods of promoting holidays. Learners will also review distribution methods used by tour operators to sell holidays, including the traditional use of travel agencies and the emergence of methods such as the internet and television.

Learning outcomes

1 Understand the tour operators industry within the travel and tourism sector

  • Tour operators: as defined by EU Package Travel Directive; different types of tour operators including outbound operators, domestic operators, incoming operators, specialist operators, direct sell operators.
  • Industry: identification of major tour operators including their origins, ownership, market segments, competition, identification of specific operators within each category; scale eg number of passengers carried, market share, turnover; products and services to meet different markets; vertical and horizontal integration in leading operators; impact of integration; European and global links; trends to include changing trends in holidays (eg mass market tourism to customisation, product range, all-inclusive holidays), expansion of the cruise market; environmental awareness of tour operators, responsible tourism; effect of economy and other external factors eg discounting, emergence of e-commerce, budget airlines; role of trade bodies including The Travel Association (ABTA), Association of Independent Tour Operators (AITO), Federation of Tour Operators (FTO), UKinbound, the UK Civil Aviation Authority (CAA)

2 Understand stages involved in creating holidays

  • Stages:steps eg market research; planning and scheduling; forecasting; contracting eg allocation, commitment, ad hoc, time series charters, split charters, ad hoc chartering, scheduled services, using air brokers; costing the holiday (fixed and variable costs, direct and indirect costs, load factors, mark-up, profit margins, seasonal flexing, competitive pricing, skimming, special offers, discounting strategies, currency exchange eg forward buying of currency, interest earning, cash flow); timescales.

3 Be able to review brochures and methods of distribution used to sell holidays

  • Brochures: recognition of the planning issues including deciding the format (content, structure, style, paper quality, size), based on product, target market and budget, determining print specifications, print run, multiple editions; timescales and stages of production including creative brief, copywriting, proofing, colour proof, printing; brochure launch; recognition of legal implications; other formats eg CD, video, internet, intranet, television; examination of distribution channels eg direct mail, specialist carriers, haulier, consolidated delivery companies, travel agencies, intensive/selective distribution systems; racking agreements
  • Methods of distribution: methods eg direct sell, agencies, call centres, internet, teletext, telephone

4 Understand strategic and tactical decision making for tour operators

  • Strategic: examination of strategic decisions eg volume, pricing strategies, surcharge policy, positioning and image/branding, choice of product in relation to customer portfolio, distribution decisions; investment funded by capitalisation eg cruise ships and aircraft.
  • Tactical: responses eg triggered by competition, price wars, external factors; decisions eg fluid pricing, yield management, maximising occupancy of contracted beds, utilisation of coach and aircraft seats, consolidations; tactical marketing eg discounting, late sales.


  • McFarland D – JavaScript: The Missing Manual,first edition (Pogue Press, 2008) ISBN 9780596515898
  • Veer E – Flash CS3: The Missing Manual(Pogue Press, 2007) ISBN 9780596510442

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