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Intoduction : Unit 14 Tour Operations Management Assignment
Tour operations are all about clubbing together tour and travel elements to develop a holiday package. There are tour operators or agencies that take care of it. In this report, some efforts are put in order to make learners understand the tour operator industry within the travel and tourism sector. For this purpose, an analysis of the effects of current trends on tour operator sector is done. A report is provided that assesses different stages and timescales needed in developing holidays. Furthermore, various methods of contracting different holiday component and tour operators are also evaluated. In the later section, the planning decisions needed while designing a holiday brochure is evaluated. An assessment is also provided for a different variety of tour operators and based on it, the aptest alternative is recommended for normal and luxury tour package individually. The report ends with a management report summary of strategic and tactical decision-making for tour operators.
LO1. Understand the tour operators industry within the travel and tourism sector:
1.1 Analyse the effects of current and recent trends and developments on the tour operators industry.
Tour operators and providers should keep updated about the new travel trends. This leaflet will discuss the effects of current trends and development in the tour operator sector.
The last is the specialist operators that are specialised in a few countries only.
Effects of Current Trends
Like other sectors, the tour operator industry is also hit by the winds of change and new trends are emerging out from the interaction between the two. The first and foremost is the change in the holiday trend. The current days' travellers are more specific about travelling. Along with exploring all popular sites, the modern travellers are more into exploring lesser- known places (Grant, 2016). Other changes are related to food facility while travelling. Modern day’s travellers are demanding the taste of home even on their trip. This has forced the service providers to arrange for the home-cooked food so as to provide local experience to their clients. In addition to this, the rising market of cruise tourism is also making a difference. This has driven the tour operators to associate cruise industry with flight and shipping industry. Furthermore, changing economic factors also affect the industry. These factors govern the pricing strategy of the tour operators. Rising environmental awareness worldwide, the tour operators are now customising the tour packages in accordance with the environmental consciousness.
Here in this leaflet, the effects of current trends and development in the tour operator sector were discussed.
Basic Understanding of Tour Operators
The tour operator can be defined as a person or a company that buys various items as part of an inclusive holiday in bulk. These items are later combined and sold as the final products to the general public by the company (Becker, 2016). In the UK, there are many tour operators associations, such as Association of Independent Tour Operators, Association of British Travel Agents (ABTA), European Tourism Association (ETOA), ECTAA, etc. There are various types of tour operators in the tourism industry. First is inbound tour operators that deal with the overseas tourist and making arrangements for them while they are on a visit to the country. They provide services, such as accommodation, sightseeing, transfer, insurance, transportation, services, currency exchange, etc. Second is outbound tour operators deal with the native travellers and send them to other nations. The third is domestic tour operators deal with the UK's residents and arrange tour facilities within the UK only.
LO2 Understand stages involved in creating holidays
With the rising expectations and demands of the tourists, the tour operators are facing some serious challenges. In order to satisfy those demands, a wide range of packages are developed by the operators which are not a cakewalk. This section would describe different stages in developing a holiday package.
2.1 Assess the stages and timescales involved in developing holidays
There are many stages involved in developing a holiday package. These stages are discussed below:-
- Destination and Market Research: This is done to understand and analyse the particular elements associated with a destination. The basic idea behind the market research is to arrange all things for the travellers (Becker, 2016).
- Determining the factors affecting the future development of holiday package: Many a time it happens that the holiday packages are designed while incorporating political, social, economic, and environmental factors.
- Planning and Scheduling: It reflects the sequence of different tour ingredients and activities (Grant, 2016). It contains information, such as assembling point, date of arrival, departure point and date of departure, legal requirements, tour durations, characteristics, activities, meals, etc.
- Negotiation with the Suppliers: Once the planning stage is over, the next stage is negotiating a deal with the suppliers. These vendors include lodging companies, airlines, Transportation Company, sightseeing vendors, etc.
- Costing of a holiday package: Since a tour package is not a manufactured product but an assembled one. Therefore, its cost is determined while considering the market requirements and strategies of an organisation. The overall cost is the combination of both direct and indirect cost.
- Financial Evaluation and Pricing: Once the costing stage is over, the tour operators try to determine the exchange rate, ROI, and selling price in order to finalise the tour prices.
- Marketing of a tour package: Due to varying nature of customer’s demand, there are a large number of tour packages. Therefore, the tour package marketing is different from another tourism element. The marketing helps the operators to develop an image essential to hit the volume sales.
- Developing a marketing plan: it is usually a short-term guide for the tour operators. It directs the operators to carry out marketing actions in a systematic way.
- Developing a brochure: A tour brochure is crucial for tour operators as a part of the marketing plan. It contains an extensive amount of information to impress and motivate the potential customers to purchase tourist products.
As a responsible tour operator, it is beneficial to have timescales of each stage of development of holiday package. This could help in achieving goals well on time. A timescale of creating a holiday package is given below:
Destination and Market Research
Determining the factors affecting
Planning and Scheduling
Negotiation with the Suppliers
Costing of a holiday package
Financial Evaluation and Pricing
Marketing of a tour package
Developing a marketing plan
Developing a brochure
2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of the tour operator.
Since tour operators assemble the products of different service providers in order to develop a particular holiday package. Therefore, there a wide range of contracts that govern the deal between them. Contracts are usually made 12 months prior to the actual deal. The contracts are developed after estimating the needs of the tour operators. The contracts are semi-rigid as some minor changes can be made in later stages but making a major change is quite difficult because that would change the overall price (Lu, et.al, 2015). There are usually three types of contract:-
- A fixed Contract
- Allocation Contract
- Ad-hoc Contract
In a fixed contract, the supplier is benefitted as he/she gets the full payment even if the accommodation remains unbooked. The tour operators usually avoid this kind of contract. In the ad-hoc contract, the operator only agrees on a rate with the supplier but does not give any fixed requirement. When the tour operator gets a booking, the arrangements are made with the supplier on the previously agreed amount. Talking about the allocation contract, it is the most sought-after deal every hotel seeks. The suppliers contract the tour operators for more beds than they have in actual. By the agreed date, the operators confirm the number of accommodation they are in need of. This allows the hotels to take the bookings for the remaining beds.
In the given case, the tour operator has to make arrangements for a luxury coach and hotel accommodations. With the hotels, the tour operators can have two types of contractual relationship i.e., ad-hoc and fixed. But, the former is more beneficial as the number of bookings varies with the season (Lu, et.al, 2015).
For booking the luxury coach, the ad-hoc is the best method. Since, the luxury coach demand comes very seldom, making a contractual deal for such services can be a major loss for the company.
2.3. Calculate the selling price of the tour package and the price per person from the information given
Room rent per person including taxes = 92 Euros
Person’s stay for 5 nights = 460 Euros
Total luxury coach charge = 7350 Euros
Luxury coach charge per person = 175
Cost of the local guide for the whole group = 1020 Euros
Cost of local guide per person = 24.29 Euros
Total cost per person = 659.29 =
Margin @ 25 % = 164.82 Euros
The total cost of the package per person = 829.11 Euros
This report concluded with a discussion on the different stages of developing a holiday package. It also reflected how tour operators in order to satisfy the customers’ demands develop a wide range of packages.
LO3: Be able to review brochures and methods of distribution used to sell holidays
3.1 Evaluate the planning decisions taken for the design of a selected brochure
3.2 Assess the suitability of alternatives to a traditional brochure for different types of tour operator
3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator
Designing a holiday brochure requires a deep knowledge of potential travellers' psychology and what they are seeking. The brochure designing is a well-planned process that starts just to have a long-lasting first impression over the audience. That's why brochures are full of comprehensive content, colours, pictures, and much more. The planning of the holiday brochure starts with the development of a theme. It can be the main message a company wants to convey to its target audience. Themes can say the whole site story. The next stage is the setting up of the brochure objectives. According to HDC International, objectives can be of three kinds, namely learning, emotional, and behavioural objectives. The learning objectives are set by considering the benefits to the tourist, the facilities require to be provided, and operation & admission cost. In the emotional objectives, the visitor’s experience and feelings are stressed upon. In the behavioural objectives, the course of actions and code of conduct for the potential tourist are emphasised. Many researchers believe that the behavioural objectives are fulfilled when the emotional and learning objectives are accomplished. This proves that there is a direct relationship between all the three objectives. The next stage is determining the target audience. This can be bifurcated based on sex, special group, age, school groups, retired people, families, local tourist, international tourist, etc. This division can help the operator to cater to their specific needs. Understanding the target market can help the organisation to identify the distribution strategy of a brochure, what pictures to be put in the brochure, and much more. In general, there is no strategy for a successful brochure. The one which works the best can be termed as a successful strategy. However, one must have the aforementioned things in the brochure in order to provide a well-structured information to the audience.
Nowadays, traditional paper brochures are outdated versions of marketing that may or may not work for every business in the travel and tourism industry. Many forward-thinking organisations are taking up innovative ideas for their promotions. One of such approaches is social media platform. Facebook, Twitter, YouTube, Instagram, etc., can be very effective in approaching buyers (Lockyer, 2013). By using these platforms, tour operators can deliver information regarding the holiday packages to the audience. This can also help the organisation in getting the feedback about their services. By this way, they can improvise on their existing services. Another method is the use of emails in approaching the potential customers. It delivers direct information to the buyers in order to persuade them to make a decision regarding a particular offer. It would also help them to get information about the particular discount offers related to a specific package. The best thing about sending a direct mail to the customers is that it helps in improving the sales turnover and increasing the consumer's base. Another most important and widely used method is collaborating with the travel agencies. Tour operators keep in touch with some of the famous travel agencies of the UK. The benefits of this method are that the travel agencies promote services and packages, and can increase the reach of the promotion by distributing brochures in a plane. The most advanced and rapidly emerging way of promoting the travel scheme is the digital business card. Going digital with the help of many apps and services can help the organisation in storing the customer information and contacting them electronically. These apps assist in keeping the customer stay updated (Horner and Swarbrooke, 2016). Apps like SnapDat can be used in order to develop a digital business card using graphics and some templates. A tour operator must remember the following thing while developing the digital brochure. First, the brochure should reflect the goals of the brand. Second, it should be creative and focus on the demography. In addition to this, the distribution of the brochure should be through a well-effective channel.
Among the different available options of distributing the brochure to sell their services. The first method is the using the social media platforms. This method has registered outstanding growth, in last 5-6 years. The main advantages of using this as a distribution channel are that these platforms can help in building long-lasting relationships with customers and offer a very high reach. In addition to this, these platforms promotions can be relatively inexpensive. On the other side of the coin, this method also has certain downsides. Due to the diversity in the customer base, it has a low ROI as audiences do not convert (Evans, 2012). Most of the buyers on these platforms are in the learning stage and hence informing them is also a big challenge. For small tour operators, creating awareness and appeal through social media is not an easy task and it may take a long time. Another method that is widely used is telemarketing. In this method, the travel packages are introduced to the audience on phone calls. This is effective because the company can easily get the right person to talk to. In addition to this, it is the most cost-effective way of promoting the tour package and its results can be measured easily. But, it requires an exceptional professional to convert the customer. These calls can be rectified and blocked using certain services and apps. This has created a major setback for the telemarketers. The government of the UK is also taking some serious measures in order to screen out certain unscrupulous calls. A small discussion on direct mail was also done. This method has also its advantages and disadvantages. Through direct mails, the organisations can target the potential customers who are willing to purchase a service. These emails can be made personalised and can enhance the positive response (Evans, 2012). One can easily measure the effectiveness of the channel. But, it has been found that many customers do not like receiving offer emails and do not even open the mails or read them. This method consumes a lot of time of both the sender and the receiver. Tour operators keep in touch with some of the famous travel agencies of the UK. The benefits of this method are that the travel agencies promote services and packages, and can increase the reach of the promotion by distributing brochures in the plane. But, this can have negative impacts also. The overall revenue decreases as travel agencies cut their commissions from the booking amount. Many a time, agencies are into illicit activities that harm the image of the tour operators as well.
LO4 Understand strategic and tactical decision making for tour operators
4.1 Evaluate the strategic decisions made by different types of tour operator
4.2 Compare the tactical decisions that could be taken by a selected tour operator in different situations.
According to Trailfinders, there can be innumerable decision-making strategies in the tour and travel industry. These decisions are driven by the objectives of the business that can be increasing profit, customer satisfaction, goodwill, and brand image. The aim behind making a strategic decision in the business world is to curb the situations of crisis or market fluctuations. These decisions in the tour operator sector could be related to the following aspects (Lockyer, 2013):-
- Market Segmentation: Segmentation can help in serving the customers with varying needs with a more specific solution. This can help the business organisation in improving the customer-relationship and the satisfaction level as well. This can also help the businesses in gaining an edge over their rivals.
- Distribution Decision: This decision helps the business in reaching out to their customers in a more effective way. A sound decision regarding the distribution strategy can help the organisation in strengthening its position in the market, improving the market share, and enhancing the customer-relations.
- Promotional Strategy: This decision making is regarding the selection of a promotional tool or strategy. The overall profitability depends on the effectiveness of the chosen tool. This can help in generating large revenues. The promotional strategy affects the growth and brand image of an organisation.
- Pricing and Costing: Every organisation understand that if it wants to increase the customer base rapidly, then nothing can be more effective than the pricing strategy. The pricing strategy depends on cost. Keeping services affordable for the target audience can make the difference and provide an edge to the company.
- Consumer Relation: It is characterised by achieving the trust of the target audience. It can be by assuring them that their demands are heard and addressed (Horner and Swarbrooke, 2016).
According to investigators, for the future growth of the company to be ascertained, it must consider both tactical and strategic decisions. The former is essential to implement a strategy while the latter decision is necessary to direct the growth upward. Tour operators should make tactical decisions by arranging the available resources. This would help in implementing the plan of grabbing and converting a large fraction of the customers. On the other hand, strategic decisions are taken when a company wants to expand its business, setting up the prices of the services, and choosing the approach to increase the customer base. For strategic decision making, the company will go for both traditional and non-traditional modes of communication. The customers’ attention is grabbed by offering a wide range of additional services along with the particular travel package. Tactical decisions are taken by the higher authority who is responsible to take right decisions at the right time. In addition to this, the authority is also responsible to allocate funds for the chosen strategy. Mostly, tactical decisions are taken while making a plan for the specific tour offer. In strategic decision making, the decision regarding the selection of a particular channel of distributing a tour package brochure is taken. This strategy may involve the use of various social media platforms, direct mails, newspaper, collaboration with the travel agencies, etc. All of these can help the organisation in keeping a long-lasting relationship with customers. This step is also important from the organisation's perspective as it can help in getting the feedback from the customers. A tour operator must remember the following thing while making the strategic decision. First, the decision should reflect the goals of the brand. Second, it should be creative and focus on the demography. In addition to this, the distribution of the brochure should be through a well-effective channel.
In this report, the tour operation management was discussed thoroughly. The basic definition of tour operation was explained along with the types of associations of tour operators in the UK. It was talked that tour operation is all about clubbing together tour and travel elements to develop a holiday package. There are tour operators or agencies that take care of it. In this report, some efforts were put in order to make learners understand the tour operator industry within the travel and tourism sector. For this purpose, an analysis of the effects of current trends on tour operator sector was done. A report was provided that assesses different stages and timescales needed in developing holidays. Furthermore, various methods of contracting different holiday component and tour operators were also evaluated. In the later section, the planning decisions needed while designing a holiday brochure were evaluated. An assessment was also provided for a different variety of tour operators and based on it, the aptest alternative was recommended for normal and luxury tour package individually. The report ended with a management report summary of strategic and tactical decision-making for tour operators.
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