This assignment content discusses the marketing strategies used by tour operators, particularly Thomas Cook, to increase sales and combat dynamic situations. The strategies include price war, yield management, consolidation, and diversification. Additionally, the importance of supply chain management in the tourism industry is highlighted.
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 TASK 1............................................................................................................................................3 1.1 The recent developments in tourism industry.......................................................................3 TASK 2............................................................................................................................................4 2.1Determining the stages and timescales involved in developing holidays...............................4 2.2 Evaluating the suitability, destinations and attractions involved in developing holiday packages.......................................................................................................................................5 2.3 Cost of components and package and determining the selling price.....................................7 TASK 3............................................................................................................................................8 3.1&3.2 designing and planning a brochure and various methods of communication................8 3.3 Non traditional ways of selling tour packages.....................................................................10 TASK 4..........................................................................................................................................11 4.1 Emerging trends in the tour operations sector.....................................................................11 4.2 Difference between tactical and strategic decisions............................................................12 CONCLUSION..............................................................................................................................12 REFFERENCES............................................................................................................................14 2
INTRODUCTION Tourism industry is one of the fastest growing industry in the economy of UK. The tour operations management refers to administration of tour and travel components to develop a holiday plan for different customers. It is the function of tour operator to manage tour operations and combine different services like transportation, accommodation etc. to provide a complete packagetocustomers(MeredithandMantel,2011).Themainaimoftouroperations management is to minimize the cost for the customers by being a component of the whole supply chain in hospitality industry. The present report studies various aspects of tour and operations management. It further highlights the recent developments in the tour operations industry.In order to facilitate the study, Thomas Cook has been selected. It is renowned company providing travel and tourism services to more than 22 million customers. Thomas Cook was founded in 1841 with the mission of providing unique experience and leisure travel services to customers. TASK 1 1.1 The recent developments in tourism industry According to the recent study tourism sector is major source of economic booster. It has been identified the standard growth rate of 4% in tourism sector. This states the continuous growth in this sector will lead to fruitful outcomes for nation (Lennon, 2003).The recent development in the travel and tourism industry from year 2000 to 2015 has been explained as follows: TechnologicaldevelopmentinE-commerce:Therecentdevelopmentintourism industry relies majorly on the development of new E- commerce technology. Nowadays customer can use online medium to find suitable travel service.Thereafter, the customers can compare use online booking services to book transportation. It has also facilitated easy reservation and cancellations of transportation facility. Therefore, the development of E- commerce has lead to the addition in tourist visits to UK every year (Giaoutzi and Nijkamp, 2013). Increase in spending power:With the increase in disposable income the spending capacity of people have increased.From 2008 – 2015 the bank rate is lowest; 0.5% due to which there is more money in the economy. This further improved the disposable income 3
of the UK. This has further resulted in the growth of tourism industry.Therefore, the increased spending power of customers have also increased the opportunities for different individuals and organizations working in tourism sector of UK. Thereafter, the local people who are living in the tourist destination are also getting benefit from the expenditure incurred by customer in this tourist location. Niche segment of tourism:There are ample number of niche market segments that combine to form tourism sector(Salmerón and Apte, 2010). Therefore, there are different opportunities in various niche segment. For instance, at present the newly wedding couples are main focused tourist sectors for the tourism service providers. The reason being they are giving a greater possibility for development along with the larger expenditure on the travel services (Simpson, Power and Samson, 2007). Customized tour packages:The tour operators provide customized holiday packages to customers where they can choose the tour package according to their choice. This further enhance the customer satisfaction level as they enjoy decision making authority. Expansion of cruise market:The major recent development in tourism development is regarding development of cruise industry. The cruise industry is contributing large number of tourist to UK. Further, UK is emerging as one of the biggest cruise market with annual growth rate of more than 6.55%. in past 15 years; 1990-2015. Therefore, more than thousands of ships are build every year that provide unique and leisure travel experience to tourist (Growth in cruise market). One can experience local food, local customs, traditions and art in cruise ship. Therefore, it is major contributor of tourism in not only UK also around the world, this can be explained through graph which is displayed below. 4
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Thereafter, the recent trends have lead to the development of new tourist destinations like, Mongolia, Montenegro, Konkoda track, Luang Prabang and Stockholm etc. The natural beauty and rich cultural values of these places is also a reason of increased tourist attraction (Boyer and Verma, 2009). The major reason of holidaying is to spend from leisure time from stressed work life. The millennials take holiday for getting some adventure experience while newly married couples take holidays for spending quality time together. However, the recent developments are also causing negative impact on the overall economy of the nation. The increasing use of cruise ship are causing water pollution as oil spills are discharged in water. Further, the waste in cruise ship are released directly into marine water. In addition to this, it is also impacting the local tourism as cruise provide the entire experience of leisure tourism because of which tourist does not feel like going out to visit local destinations (Berkoune, and et.al., 2012).Further due to use of e- commerce sites for tourism, the internet frauds are also increasing. There are manycyber criminals who make fake tourist sites and provide fake tour packages and convince customers to make online payments. With this, they 5 Illustration1: Growth in passengers due to cruise market (Source:Growth in cruise market)
steal the banking information of customer, do advance payment scams etc. Page jacking is also a cyber crime by which some parts of travel agency sites like Expedia etc, are stolen and customers are redirected to fake website. TASK 2 2.1Determining the stages and time scales involved in developing holidays In the present section of the research specific holiday plan for heritage destination has been developed by Thomas cook which a renowned travel agency that provide travel services to its customers (Tour Operators, 2014). The company has designed a adventure tour for youths of fifteen days in South Africa and walking tour in Kamalame Cay, the Bahamas. Therefore, in order to develop an successful tour and increase the satisfaction level of customers it is important for company to do proper planning. However, it is important for travel agency to devote proper time to develop best suited plan for prospective customer. Therefore, it can take up to six months’ time as developing a holiday package for South Africa is very tough and time involving. In addition to this aspect, it will involve various complexities like, variations in currency and change in tax structure, managing transportation and accommodation for guests (Simpson, Power and Samson, 2007). The different stages involved in designing the holiday package are as follows: Studying the new destination:There is significant need for the travel agency to study the new destinations so that best services can be provided to customer. It involve an examination of overall external environment. It is the main function of tour designing and involves at least two months(Morrison, 2013). Research:It is important to conduct proper research of selected destination. The research will help in knowing the weather conditions, political conditions etc. The research will be focussed on finding the different types of heritage places, wildlife parks etc. Like wise, best beaches for holidaying in tropical destination will be researched. The whole process will involve at least three months times (Berkoune, and et.al., 2012). Negotiations:In order to provide affordable tour package it is important to negotiate with local service providers of host country. Therefore, different providers that give quality services at minimum cost should be selected. This process again involves one month time. 6
ï‚·Capacity:The tour package is developed according to the payment capacity of tourist. The budget of tourist is considered first, before making the tour plan and according to it services are added. For instance, if the budget of customer is low than low budget hotels will be provided, air tickets will be booked in economic class etc. ï‚·Planning:The tour package is planned considering the above mentioned factors. The best destinations that can be covered within the provided budget are selected (Simpson, Power and Samson, 2007). In order to ensure cost effective tour plan more bargaining is done with local service provider. Further, planning is done for providing maximum benefits and covering maximum tourist place within the paying capacity of prospective customer. ï‚·Marketing:The planned tour package is marketed on online portals and other offline modes like, travel books, magazine etc. to attract the target customers. This helps company in reaching at right customers and increase the sales of business (Tour Operators, 2014). ï‚·Administration:Thomas cook allocate resources to ensure its competence to provide services as per the plan. Therefore, it assure it have adequate resources like, availability of economic class seats in airline, buses and other local transport to visit tourist destinations etc. 2.2 Evaluating the suitability, destinations and attractions involved in developing holiday packages There are various methods that are used by travel agency to book the holiday packages developed by the organization for.The customer can either used fixed contract or only for sale contract to book the tour package developed for customers. In fixed contract the accommodation, transportation and other services are booked in advance by travel agent. This type of booking are advantageous for customers, hospitality organizations like, hotels, air buses or airlines and especially to Thomas Cook as it generate more profits in off season too(Morrison, 2013). However, the sales only contract, the tour is designed after considering the needs, preferences and budget of customer. It is more cost effective as it minimizes the unnecessary expenditure on unwanted facilities. In addition to this, it reduces the issues related to over booking and under booking of air tickets,accommodation, transport etc. therefore, the both contract methods can 7
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be selected as per their suitability. Such as, in off seasons, only for sales contract can be used while peak season fixedcontract can be used.The customer can use online mediums to select the travel agency. Here, the customer has chosen Thomas Cook which will provide travel service. The next step involves selection of places they want to visit in their travel destination that will also provide unique experience. Furthermore, the tour operator will play a major role in deciding the destination and develop best suited plan for tourists with attractive schedules (Simpson, Power and Samson, 2007). South Africa is tourist attraction and provides great contribution to travel and tourism industry. It is an inland safari destination which also offers various heritage destinations, concerning natural and beautiful places. The rich heritage culture of South Africa is a reason for attraction of ample number of customers on a regular basis. The availability of proper transport facility also provide great assistance to customers. Furthermore, there are large number of destinations like, Kruger National Park covered with shrub lands, Western Cape surrounded by lush wine lands and attractive wild beaches of Stellenbosch etc. The beaches present in the country add more laurels in the beauty of South Africa.The main aim of tourism department of country is to ensure the development of environment friendly and cultural tourism that will also help in preserving the heritage and cultural values of country (Font and et.al., 2008). The best tourist destination are Kruger National Park, which have different species of mammals, Table Mountain, Amphitheater and Durban beaches etc. In addition to this, the tourists are provided wide range of accommodation facility from luxury lodges, villas, boutique hotels and fine resorts. The Cape Wine lands is enclosed by majestic mountains, vineyards and lush sceneries(Berkoune, and et.al., 2012). Thereafter, the tourists are given best holiday packages at best price that attract people to visit country again. Therefore, attractive holiday package for fifteen days can be designed with an effective schedule of the tourist places to visit. Day 1-2Kruger National Park Day 2-3Table Mountain Day 3-4Amphitheater, Drakensberg Day 5Durban Beaches Day 6-7Knysna Day 7Victoria and Alfred Waterfront 8
Day 8Cape Winelands Day 8-9Blyde River Canyon Day 9-10Hluhluwe- Umfolozi Game Reserve Day 10- 11Sun City Resort Day 12-Resting day in resort Day 13-Shopping in local markets Day 14- 15-Travelling back to UK Thereafter, following is the tour package that will be offered to the customer: Tour ServicesCost (£) Hotel Beach View, 7 Night1000 Continental Breakfast100 Thomas Cook Airline Tickets500 Transportation service;Airline services150 Lunch and Dinner250 Total cost of Holiday Package for South Africa 2000 Further, by considering the cost of tour package; 2000 £ the tour operator can determine its selling price. Therefore it can add % of margin it wants to earn on cost and determine the selling price of tour package . For instance, it want earn 15% margin s its peak season therefore it can adopt price skimming strategy by charging more price. In addition to this aspect, it can provide tour in 2300 £. Here, 300 £ will be the selling price of tour package for Thomas Cook. 2.3 Cost of components and package and determining the selling price The determination of cost of tour package is not an easy task as the travel agency have to ascertain the gross total cost of tour along with the consideration on profit margin and commission. In addition to this, the fringe benefits that will be provided to customer are also 9
included. Thereafter, the expenses on traveling, accommodation and food are also kept in mind while framing the pricing of holiday package (Zhang and et.al., 2009). The cost component involve costing related services like, cost of reserving flight, booking cost at different destinations, service other tax that will be paid to government, cost of booking lodge etc. Thereafter, it also involves the amount that will be incurred on food and beverages of customers. Furthermore, the selling prices are charged as per the tour package chosen by the customer (Berkoune, and et.al., 2012). However, it also depends on the seasonal variations and competitions. Prices are generally high in peak seasons and completive selling price can be used as per the competition. The tour operator can also adapt price skimming method for providing luxury accommodation and travel service. Hence, it is required for tour operator to consider all the expenses while deciding the price of package. Computing the cost of tour package of South Africa, the package begins with £3,900 per head which can be altered with the change in package and number of days. Thereafter, it will involve the cost of food and beverages, entrance fees of different parks and travel and internal flights. Further, by computing the overall cost of 15 days to South Africa, it will involve £50 per person per night for accommodation in hotel. Thereafter, the internal flight tickets will be costing £2000. The extra expenditure that will be incurred in visiting different places will cost £1150 per individual approximately. ActivityCost Flight ticket (including return)£2000 per person Visit to different destinations£ 1150 per person Accommodation per night for 15 days£50 per person Total2000+1150+ 50*15 =£ 3900 TASK 3 3.1&3.2 designing and planning a brochure and various methods of communication The tour operator can use various attractive tools to induce customers like digital marketing, advertising on television and travel magazine. Marketing on social networking sites 10
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can be used to attract more and more customers (Heriot, and et.al., 2008). Thereafter, travel agents can be used to distribute tour packages. Further, designing the tour package is an important decision which must be taken after proper planning on various aspects. The cost consideration of designing brochure should be considered; the cost of designing one brochure would be£2.2. Thereafter, the decision is to be made about the quantity of brochure that should be designed (Salmerón and Apte, 2010).For instance, the company can place a order of 500 brochures that will be distributed to target consumers. The time scale should also be considered for production of brochure; 1 month will be required. Thereafter, the decision should be made for finalizing the locations where brochures will be distributed (Morrison, 2013). However, the travel agent can distribute brochures where major number of customers are concentrated. 11
3.1 & 3.2 Knysna Port The Knysna Garden Route is considered as one of the most popular tourist place in South Africa. However, it is generally though to strethc from Mossel Bay to St Francis along with the Indian ocean and also consist of some part of the Inland. However, it is located between lush forests and the shores of peaceful lagoon. Tourist are always attracted about its outdoor adventurealongwiththeauthenticdiningandshopping venues. It is considered as one of the second largest canyon in Africa along with the Fish River Canyon. Blyde River Canyon is quit greener because of lush subtropical foliage. Furthermore, there are several magnificent escarpments, waterfalls and ancient geological phenomenon. The tourist are attracted towards this place is because of its all five Primates available. Along with this, Hippos and Crocodiles around the wetlands of Swadini Dam. Blyde River Canyon Durban Beaches They are most beautiful beaches of South Africa, surrounded by golden sand. Here, the visitors can enjoy water sports, and have relaxing time. There aredifferent restaurants which provide food and beverages on beach. 12
3.1 Furthermore, while planning and designing the brochure its important for company to consider following points which are as follows: Format:The format of brochure should be according to the travel plan to be offered to customers. Thereafter, it should include all the information about the services, places to be covered, packages etc. Content:Thebrochureshouldnotinvolveanyirrelevantinformationthatisnot beneficial for customers. Further, the information should be true and reliable otherwise it can cause dissatisfaction among tourist. For instance, brochure says that Knysna Port park can be visited in one day howeverthere too many tourist destinations there and to visit them properly it takes more than 1 day. Style:The style and design of preparing brochure should be eye catching and attractive. The information provided in brochure should be in proper manner so that it could be easily understood by prospective customer. Planning:Thepreparationofbrochureinvolvessignificantcosttherefore,proper planning should be done before designing the brochure. However, Thomas Cook can consider the brochures provided by its rivals and make strategy to provide more facilities that are not offered by its competitors. 3.2 Non-traditional ways of providing tour packages e- Brochure:With the increasing use of digital technology, the concept of e- brochure is more appropriate. With this aspect, Thomas Cook can design a digital brochure. The e- brochures can designed using web designing technique which makes brochure more attractive and informative. The use of technology builds a perception in the minds of customers that company is innovative and will be competent to provide them unique experience as per the latest trends. Further, it will also help in doing online marketing. In addition to this aspect, brochure can be used while doing marketing through banners etc. CDs: Thomas Cook can provide a compact disk to customers containing information about the services that will be provided by tour operators. Thereafter, Cds will have pictures of destinations that tourist can visit, extra facilities that will be offered to tourist. The tourist can get these Cds from the tour operator’s office. 13
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ï‚·Mobile applications:With the increasing use of smartphones for purchasing products and services among customers, it is feasible for company to make best use of available opportunity. In this respect, Thomas Cook can design a software application that will containalltheinformationabouttourpackages,traveloptions,destinations, accommodation, restaurants etc. The target customer can get regular updates of new tour packages, discounts etc. offered by tour operators. 3.3 Non-traditional ways of selling tour packages Other than designing traditional brochures there are many effective and new ways that will be used for providing attractive tour packages to customers. With the increasing use of internet media among customers, the tour operator should use online marketing. This will also helpintargetingwiderangeofcustomersatlowestprice(Anderssonandet.al.2010) Furthermore, the social networking sites is another platform that can be used to share necessary information and brochures designed by company.. Apart from this, main facility can be used for furnishing different information about tourist destinations, tour packages, discounts of packages etc. to existing as well as new customers. Along with this, the travel agency can use its official website to share important information. However, it is also cheapest medium to distribute information to wide range of customers. Therefore, the alternative non-traditional methods that can be used for communication and promotion are as follows: ï‚·E- mail booking:The email booking can be used by customers, for direct booking of hotels and other facilities like, cruise, safari etc. There is increasing trend of e mail booking which help the customers to book tourism packages (Boudia and Prins, 2009). ï‚·Mobile applications:With the increasing use of smartphones among customers, the use of mobile applications for communication and promotion is also increased. For instance, the individuals can download the application of Thomas Cook and book their package and destination. ï‚·Call centre:The travel companies provide 24*7 customer services through their call centres. Therefore, customer can call on the telephone number of call centres to avail information about tour packages, destination options (Boyer and Verma, 2009). These centre also provide information about, hotels, other services etc. 14
ï‚·Social media marketing:Social media are most attractive platform that can be used for communication and promotion(Goel, 2007).This is most effective and efficient method that can be used to reach wide range of customers by using attractive offers, discounts and promotional scheme. TASK 4 4.1 Emerging trends in the tour operations sector UK tour industry is consider as the most developing industries that grows at the faster pace and it directly contribute in enhancing the growth of economy (Bazargan, 2012). UK governmenthastakendifferentinitiativestowiththeemergenceofrecenttrendsand development in the tour industry.ï‚·Building new emerging destinations:With the decrease in cost of travel and increase in interest of customers in tourism sector have led to launching of new and enchanting places in UK with enhanced opportunities for growth of the entire tour operator industry. Whereas, it immediately benefits entire economy along with tour operators at the time of developing enchanting packages (Dornier and et.al. 2008). Therefore, enhancing the emergence destination will assists in encouraging the operations of tour operator thus result in enhancing their profitability ï‚·Increasing eco-tourism and adventure:Another emerging trend in the tour operation sector include increasing adventurous destination and eco-tourism activities. As, now a days customers mainly prefer to visits the places that focuses on visiting the places that mainly possess natural resources and attract the customers (Font and et.al., 2008). One of the most important decision taken by the tour operator is pricing where it has to be definite at what monetary value services can be offered to the ultimate customers Therefore, with the high level of competition in the marketplace is very broad due to which prices have to be defined under the moderate range and in this range more destinations are offered along with accommodation and other expenses.. Strategic decisions taken by Thomas Cook can be better understood by adopting Ansoff matrix (Heriot, and et.al., 2008). Market penetration is one of the most impressive growth strategy where Thomas cook seeks to achieve development with their existing services in the current market segment with the motive to gain high market share. 15
4.2 Difference between tactical and strategic decisions Decision making is crucial part of organization because it directly affects scope of profitability and growth of the company. All organizations are required to make viable decisions by analyzing business information in appropriate manner.. In present era, decision making system is decentralized in order to make better decision for the business (Russell and Taylor-Iii, 2008). However, organization is required to make strategically as well as tactical decisions. The difference between these two types of decision making are as follows: Strategical DecisionTactical Decision The main objective of strategically decision making is regarding determining the market portfolios,marketimageofthebrandand ensuring its successful positioning. It involves different planning decisions that assistinsuccessfulimplementationof strategies. The tour operator is required to take strategic decisions in the areas like, product and market development,marketpenetration,and diversification (Martinis, 2008). Here, the tour operators are required to take different decisions that will help in managing the impact of external factors on the operations of company. The example of strategic decision making is such that, estimating the demand of product in future. Theexampleoftacticaldecisionmaking involve, decision on the % of discount that must be given to customers in order to increase the sales. Thesedecisionsareassociatedwiththe management of 4Ps of marketing. These decisions are linked with the deciding thedemandofproductsandpricestosell (Sprague, 2007). Further, various tactics are used by tour operators to combat with dynamic situations. They can be further explained as follows: ï‚·Price war:To beat the price war with the competitors, Thomas Cook can adopt various tactics. For instance, Expedia a major competitor of company is providing high quality services at low cost than Thomas Cook can also reduce its prices. Further, company can provide affordable and low priced tour packages . Thereafter, organization can do social media marketing which is cheap yet effective. This will help Thomas Cook in sustaining price war (Font and et.al., 2008). ï‚·Yield management:Thomas Cook can use yield management for allocating right type of resource to the right type of customer at the appropriate price so as to increase the profit. 16
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This further enable the use of differential pricing by Thomas Cook. For instance, for providing a special room facing beach or honeymoon suite in peak season, the tour operator can charge more prices from its high end customers. ï‚·Consolidation:In order to sustain competition, Thomas Cook can consolidate with other industry to serve the needs of customers in best possible manner. For instance, with the emerging demand of cruise ships among tourists, the tour operator can merge with best cruise line of South Africa(Boyer and Verma, 2009). This consolidation will enhance the mutual benefit of both the parties. The cruise company can get directly improve their customer base by providing services to customers of Thomas cook. Thereafter, cited company can improve its margin by providing cruise services that are highly demanded. ï‚·Discounting:It is a tactic used by Thomas Cook to boost its sales. Therefore, the company provides 5% discounts for making group bookings. This increases the sales and improve the profitability of company (Martinis, 2008). For instance, if a college tour of 50 students is booked through Thomas Cook than company will offer discount of 5%. CONCLUSION From the aforementioned report, it can be concluded that tourism industry is most growing segment. The report is helpful in understanding the vital changes taking place in tourism industry. The tour-operators design attractive tour packages for different customers who want to visit new destinations and avail unique experiences. However, it is important for tour operators to consider needs and preferences of customers. South Africa is beautiful place with rich heritage culture therefore, it is major tourist attraction these days.The brochures designed by travel agents help in attracting large number of customers. Thereafter, different strategical and tactical decisions are taken by tour operators to facilitate viable decision making. 17
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