Tour Package Evaluation using NPV and IRR

The assignment focuses on evaluating the financial viability of different tour packages offered by a travel company using Net Present Value (NPV) and Internal Rate of Return (IRR). Data for tours in Dubai, Morocco, Turkey, and Cuba is analyzed to determine which package offers the highest potential return on investment. The analysis highlights the importance of considering both NPV and IRR when making decisions about capital budgeting in the tourism industry.

BUSINESS DECISION
MAKING

INTRODUCTION
Business complexities can be managed by taking right action at right time in order to
safeguard its business from its overall negative impact. This project is about designing a product
for tour and travel operator whose desire aim is to cater variety of needs and expectation of
various customers. This project report classified into four parts such as creating data collection
plan using bot primary and secondary method. Second part states about evaluating statistical
efficiency of the data and third part is all about presenting data and lastly it tells regarding
checking feasibility using capital budgeting tools and techniques, critical path of project and
supplying information using appropriate information processing tools.
TASK 1
1.1 Identify sources of primary and secondary sources of data
Research will be conducted by an entity in order to resolve al the issues faced y an
individual as solutions to all the problems will produce by conducting a particular research study.
The major objective of the researcher is to emphasize on various aspects covered in their
business in order to satisfy various customers exists in the external market as their desired aim is
to get higher customer satisfaction level (Brooks, Dula and Boone, 2013). The research can be
conducted collecting data from two particular approach such as primary and secondary collection
of data that helps an entity to support their overall research with good conclusion.
Primary collection of data- In this approach data will be taken from its original source to
remain its reliable and accuracy to support an entity in resolving all the current issues faced by
the researcher. Questionnaires are used to evaluate all the problems currently faced by customers
which will help in designing appropriate products according to the needs and the expectations of
various customers. Questionnaires are created by the researcher about different tour companies
such as existing data of Thomas cook will be assessed in relation to the tastes and preferences of
all the customers. Thomas Cook data will be analyzed in order to craft new strategies in order to
improve the existing performance of an entity.
Secondary collection of data- In this method data can be generated from the external source
using books and journals, new articles and magazines to generate reliable sources of data to
accomplish all the objectives of an entity.

1.2 Present survey methodology
Research methodologies are used by an entity that helps in generating higher business
performance by focusing on its weaknesses which helps in collecting important data (Golbraikh
and et.al., 2014). Sampling is one of the important method used by an entity that helps in
selecting import data in order to facilitate the researcher in obtaining reliable data.
Random sampling method used by the researcher to select the best suitable data which will help
an entity owner in generating reliable data. The accuracy o the data is regarded as the direct
weapon by the business as it is important for an entity in order to grab higher market
opportunities. In the current sampling process 90 respondents are chosen by the business to take
their opinion or consent about the outbound tourism that helps in generating higher outcomes for
the current business enterprise (Haq, Brown and Moltchanova, 2014). Major outcome of an
entity is to grab higher opportunities by enhancing overall skills and the capabilities of an
individual as it is essential approach followed by an entity. Random sampling gives equal
enhance to an individual to get selected in the process of sampling to provide ultimate benefit to
the researcher in generating higher outcomes in the near future.
1.3 Design questionnaire
Questionnaire
Name _______________
Gender
Male
Female
Transgender
Que. 1. How old are you?
 20-30 years old
 30-40 years old
 40-60 years old

 60 years and above
Que. 2: Do you think tour operator will be able to meet with your satisfaction level by providing
tour products ?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
Que. 3: How often you are purchasing a tour package within one year ?
 Monthly
 Quarterly
 Half yearly
 Yearly
 Sometimes
Que. 4: You will buy a tour package or product for destination A such as Morocco in further
years ?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
Que. 5. How much you are going to pay for tour package or product for every person or traveler
for the destination A like as Morocco ?

 £600 but less than 625
 £625 but less than 650
 £650 but less than 675
 £675 but less than 700
 £700 but less than 725
Que. 6. You will buy a tour package or product for destination B such as Turkey in upcoming
years ?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
Que. 7: How much you will spend on the ravel package for the destination B like as Turkey ?
 £600 but less than 625
 £625 but less than 650
 £650 but less than 675
 £675 but less than 700
 £700 but less than 725
Que. 8: Are you going to buy package for Cuba destination in upcoming years ?
 Strongly disagree
 Disagree
 Neutral
 Agree

 Strongly agree
Que. 9. How much do you pay for booking ravel package for the destination like Cuba?
 £800 but less than 825
 £825 but less than 850
 £850 but less than 875
 £875 but less than 900
 £900 but less than 925
Que. 10. Will you book a tour package for destination D such as Dubai in near future?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
Que. 11: How much you can pay for the tour destination Dubai?
 £900 but less than 925
 £925 but less than 950
 £950 but less than 975
 £975 but less than 1000
TASK 2
2.1 Summarizing of data
Number of customers agreed
500-1000 19

1000-1500 20
1500-2000 18
2000-2500 15
2500-3000 6
3000-3500 7
3500-4000 3
4000-4500 2
Costs of tour Number of customers
agreed
X FX
500-1000 19 750 14250
1000-1500 20 1250 25000
1500-2000 18 1750 31500
2000-2500 15 2250 33750
2500-3000 6 2750 16500
3000-3500 7 3250 22750
3500-4000 3 3750 11250
4000-4500 2 4250 8500
N 90 163500
Mean 1816.67
Costs of tour Number of customers
agreed
X CF
500-1000 19 750 19
1000-1500 20 1250 39
1500-2000 18 1750 57
2000-2500 15 2250 72
2500-3000 6 2750 78

3000-3500 7 3250 85
3500-4000 3 3750 88
4000-4500 2 4250 90
Median 45.5
Lower Limit 1500
N 45.5
Cf 39
f 18
I 500
Median L+N1-cf/f*i
Median 1680.555556
Mode 0
2.2 Analyze range of results
Mean: An average of set of value, as calculated as by adding them together and dividing by the
number of terms in the sets. Or simply mean or average when the context is clear, is sum of
collection of numbers divided by numbers of number in collection.
Median: Median is a value separating higher half of the data sampling of a population or a
probability distribution from the lower half (Mir and Pinnington, 2014). In simple term it may be
thought as a middle value of the data sets. For ex.(1,3,3,6,7,8,9,) median is 6, the fourth no. is
sample. Median is commonly used to measure the property of data sets in statistics and
probability theory. The formula used to find the middle number of a data set of n numbers is (n +
1) ÷ 2.
Mode: The number which appears most often in a set of number. For ex. (6,3,9,6,6,5,9,3) the
mod is 6 it occurs most often.
Arithmetic mean: In q. No. 2 average falls in 4.15. It gives information about option 4 is
majority of people agrees that tour package provided by company satisfies majority of people.
In Q.3 Mean is 3.3 which suggest how often people purchase tour package in 1 year. So majority
goes with half-yearly basis.

In Q.4. Mean number is 4.22 which means most of the people agrees that most of the people will
go for Destination A such as Morocco tour.
In Q. 5 mean is 3.07 which means most of the people would likely to pay £650 but less than 675
on tour package or product for every person or traveler for the destination A like as Morocco
(Beltrame, Cappelletto and Toniolo, 2014).
In Q. 6 Mean is 4.1 which means majority of people are agree to buy for a destination B package
for tour like Turkey.
Median: Q2 gives data 4.3 which suggest option 4 which is majority of people are satisfied that
tour package provided by company satisfies majority of people.
Q.3 Median is 3.4 suggest on half yearly basis people frequently purchase a tour package within
one year
Q.4 Median is 5 which means people strongly agree to buy a tour package or product for
destination A such as Morocco in further years.
Q.5 Median is 3 which shows option 3 that majority of people would like to spend £650 but less
than 675 is capable to pay on tour package or product for every person or traveller for the
destination A like as Morocco.
Q.6 Median is 4.26 which means majority of people are agree to buy for a destination B package
for tour like Turkey (Baum and Crosby, 2014).
Mode: In Q2, mode is 5 which means majority of people strongly believes that tour package
provided by company satisfies majority of people.
Q.3 Mode is 5 which means that majority of people opt for sometimes purchase tour package in
1 year.
Q.4 Mode is 5 which means people strongly agree to buy a tour package or product for
destination A such as Morocco in further years.
Q.5. Mode is 3 which is option 3 that majority of people would like to spend £650 but less than
675 is capable to pay on tour package or product for every person or traveller for the destination
A like as Morocco (Measures of Central Tendency, 2017).
Q.6. Mode is 5 which means majority of people are strongly agree to buy for a destination B
package for tour like Turkey.

2.3 Analyse data using suitable measures of dispersion
Inter quartile range
Particulars Amount
Q1 22.75
Q3 68.25
IQR Q3-Q1
IQR 45.5
Standard deviation
Costs of tour Number of
customers agreed
X X^2 Fx^2
500-1000 19 750 562500 10687500
1000-1500 20 1250 1562500 31250000
1500-2000 18 1750 3062500 55125000
2000-2500 15 2250 5062500 75937500
2500-3000 6 2750 7562500 45375000
3000-3500 7 3250 10562500 73937500
3500-4000 3 3750 14062500 42187500
4000-4500 2 4250 18062500 36125000
N 90 370625000
STD √(fx^2/n)
£2,030.00
Standard deviation: In statistical, SD measures the quantify amount of variations or dispersion
of set of data value. A low sd indicates that data point tend to be close to mean also called as
expected value of the set, While high SD indicates that data point are spread out over wide range
of value.

Q2: SD is 1.63 which strongly disagree, In Q3 SD is 1.46 people go for monthly in yr. In Q4.
SD is 1.09 which means people strongly disagree to by for Morocco for next further year. In Q5.
SD is 1.15 which means people will spend only £600 but less than 625 for Morocco (Irani,
2010). In Q6. SD is 1.09 which suggest people strongly disagree in going turkey.
2.4 Explain Quartile, percentile and correlation
Quartiles
Table 1: Computing quartile
Particulars Amount
Q1 22.75
Q3 68.25
TASK 3
3.1 Produce graphs and charts
Pie chart
For the year 2014
931
959
1104
713
For the year 2015

957
997
1163
769
2016
1008
1035
1189
811
Interpretation
Pie chart is one of the important method of presentation of data that shows all the tour
packages currently offered by an entity in order to gain higher trust and loyalty among variety of
customers in the external market.
Bar Chart

500-1000
1000-1500
1500-2000
2000-2500
2500-3000
3000-3500
3500-4000
4000-4500
0 5 10 15 20 25
Tour packages designed by customers
Number of customers agreed
Number of customers
Cost of tour
Interpretation
Bar chart is the horizontal presentation of data which shows the relationship among
various parameters and the overall entity's performance in the best possible manner. It shows that
the performance of the business is increasing with the passage of time.
Line chart

500 1000 1500 2000 2500 3000 4000 4500
0
5
10
15
20
25
Tastes and preferences of customers
Number of customers agreed
Number of customers
Cost of tour package
Interpretation
Line chart is one of the important tools of presentation which helps in reflecting higher
business performance to determine the growth of an entity to design all the products or services
currently offered by an entity to its variety of customers in the external business environment
(Carr, Kolehmainen and Mitchell, 2010). Th above line chart shows the higher performance of
an entity by showing upward trend in three of the years such as 2014,2015 and 2016.

3.2 Create trend line
1000 1500 2000 2500 3000 3500 4000 4500
0
5
10
15
20
25
f(x) = -2.93x + 24.43
R² = 0.91
Tastes and preferences of customers
Number of customers agreed
Linear (Number of customers
agreed)
Number of customers
Cost of tour package
Interpretations
Trend line is an important approach used by an entity in order to predict the future
performance of the business by the current performance of an entity in order to generate higher
outcomes in the near future. The trend line of all the products states that in year 2014,2015 and
2016 the value of the business is increasing over the years (Ford and Richardson, 2013).
3.3 Prepare business presentations
3.4 Prepare formal business report
To
The director of tour operator
Date- 15th April 2017
Sub- Product development
Introduction
The current research study conducted by an individual is to meet all the desired aims and the
objectives framed by an entity owner for the embitterment of the business. The current aim of
an enterprise owner is to consider all features on designing of products such as quality of
services, tastes and preferences of various customers, external market trend as the latest fashion

will be considered in order to meet all the expectations of variety of customers located in the
external business environment.
Data collection
Questionnaires is used as one of the important method in collecting reliable data from its
original source by taking consent of all the customers who are traveling from on place to
another to accomplish their various purposes. Primary research is conducted that research wen
an entity wants to generate reliable and accurate data s every wrong data will deflate its aims
and the objectives of completing the overall research in the bad manner
Secondary research method will be used in which market trends of the travel and tourism
industry will be observed in order to determine the external pressure of tourism by focusing
especially on outbound tourism from which an entity can generate higher outcomes in the near
future.
Conclusion
It can be articulate from research that higher level of customers satisfaction can be gained by
satisfying all the customers exists in the external environment as their major objective is to cater
all the needs and the expectations in the best possible manner.
TASK 4
4.1 Use appropriate information processing tools
Information Process System: An Information is an organised system for collection,
organization, storage and communication of information. More specifically it is study of
complementary networks that people and organization used to collect, filter, process, create and
distribute data. An information is a group of components that interact to produce information.
There are various types of information system, for ex. Transaction Processing system(TPS),
Decision Support System (DSS), Executive Information System (EIS).
1. Transaction Process System (TPS): It is an information process system which keeps record
and watch for day to day business transaction like keep record and retrive day to day business
transaction (Nowduri, 2011). Specific characteristics of TPS include performance, reliability and

consistency. TPS is also called real time processing. The firm of businesses transaction process
how maintained like tally or book keeping. tally is part of TPS. This is worker level base.
2. Management Information System (MIS): It is computer generated database system of
financial records which are maintained in company database to keep records of all management
and financial activity of organisation in database server. With the help of computer software any
reports can be quickly generated in splits of second. It is also possible to get reports from
database easily. the main purpose of MIS is to give manager feed back about their own
performance, top management can monitor the performance of company as a whole.
3. Decision Support system (DSS): DSS is a computer based information system that helps and
supports senior manager to take decisions related activity in the organisation. It helps in giving
ranks, Sorting and choosing among best alternatives. Senior level manager monitor it (Schulam
and Saria, 2015).
4. Executive information System: It is also known as Executive support system gives support
and facility to executive level manager and decision making requirements. It gives easy access to
internal and external environmental information to executive managers.
4.2 prepare project plan and determine critical path
S. No. Name of activity Activity Preceding activity Duration (in days)
1 Analysing market trend A - 11
2
Analysing about consumers and
people of country B A 14
3
Choosing business mode for
deliver products and services C B 10
4
Funding the project using different
financing sources D B, C 7
5 Create a schedule or plan E D 6
6 Implementing above prepared plan F E 5

7 Launching the new tour product G E, F 2
Interpretation
Project management is used by an individual in order to manage overall project by
allocating various business activities in the business in order to determine the overall project
report. Critical path analysis is an important approach used by an individual to ascertain the
overall time taken by a particular project to facilitate its variety of users of the business to
achieve all desired objectives (Indiveri and Liu, 2015). The critical path analysis shows that this
project takes time of 2+3+4+5+6+7 that it takes total 44 days to complete overall project.
4.3 Use financial tools to test feasibility
Name of Tour Initial Variable cost Fixed cost Profit Cash

investment flow(VC+FC)
Tour A
(Morocco) 520000 500 225000 90200 315700
Tour B
( Turkey) 475000 475 250000 100190 350665
Tour C (Cuba) 459000 775 275000 110310 386085
Tour D
(Dubai) 550000 850 300000 120340 421190
Name of tour
Initial
investment Cash flow PV@9% Present value NPV
Tour A
(Morocco) 520000 315700 0.5263157895
166157.89473
6842
-
353842.10526
3158
Tour B
( Turkey) 475000 350665 0.5263157895
184560.52631
5789
-
290439.47368
4211
Tour C (Cuba) 459000 386085 0.5263157895
203202.63157
8947
-
255797.36842
1053
Tour D
(Dubai) 550000 421190 0.5263157895
221678.94736
8421
-
328321.05263
1579
NPV: It is difference between the projects present value of cash inflow and cash outflow. IT is
tool used in capital budgeting and management accounting to get the profitability capacity of
alternative projects. Because NPV is negative in all tour so it is not feasible to pick anyone. It

should be in positive. But if needs to pick anyone from above data then Cuba tour C would be
picked because its NPV is high among all (Golbraikh and et.al., 2014). The cash flow would
have been brought down then its final npv might be in positive.
Name of tour Initial investment Cash flow IRR
Tour A (Morocco) -520000 315700 -39.29%
Tour B ( Turkey) -475000 350665 -26.18%
Tour C (Cuba) -459000 386085 -15.89%
Tour D (Dubai) -550000 421190 -23.42%
Internal Rate of return (IRR): It is mathematical tool used in capital budgeting to measures the
potentiality and profitability of business projects. IRR is discounted rate at which all projects
future value are discounted to present value and make projects vale at zero. So in above data all
tour investment have negative irr which is not feasible to choose (Mir and Pinnington, 2014). So
generally speaking higher a projects IRR, the more desirable is it to take the project. But if we
talk about above data Tour C(Cuba) having -15.89% is suitable to pick.
CONCLUSION
It can be concluded from the above assignment that projects are evaluated using NPV and
IRR technique in order to facilitate its variety customers. This project report is all about
assessing the statistical accuracy of the data collected about the tour operator of various tours
such as Dubai, Morocco, Turkey and Cuba out of which Cuba will be taken into considerations
as this is more effective than all other tour packages offered by an entity to its variety of
consumers who get mesmerize with the amenities provided to them to gain their loyalty and
confidence.