Tour Operators Management: Strategies, Tactics, and Trends in the Tourism Industry

This report delves into the dynamic world of tour operators, exploring the impact of current trends, the stages involved in developing holiday packages, and the effectiveness of different marketing and distribution strategies. It analyzes the strategic and tactical decisions made by leading tour operators like Trailfinders and Thomas Cook, providing insights into their success. The report also examines the evolution of promotional methods, moving from traditional brochures to digital platforms, and evaluates the suitability of various distribution channels for different types of tour operators.

tour operators management

1

INTRODUCTION
There has been tremendous growth in tour operator industry across the globe. Furthermore, with
an availability of different kind of services provided by them to their customers, there has been
the surge in their revenue generation resulting in its development worldwide to a high extent.
The tour operator provides different packages which are promoted in the market via different
strategies in order to attract the maximum number of customers. In recent times, it has become
possible for the customers to purchase the tour packages from any places using a new medium
such as offline stores, online websites and web applications. Various services such as
accommodation, travelling lodging facilities have been provided by tour operators so as to satisfy
the needs of the customers. The customers could choose from among various tour operators
which fulfil their requirements. In this report, several aspects of tour operators along with their
strategies would be thoroughly discussed.
2

TASK1
1.1 IMPACT OF CURRENT AND RECENT TRENDS AND
DEVELOPMENTS ON THE TOUR OPERATORS INDUSTRY
Figure 1: Trailfinder Logo
Source: [Dannen, 2014]
Product development team of Trailfinders
Ltd has evaluated recent trends and
developments on the tour operator industry
across the world. It has been also analysed
that their tourism industry across the globe
is going in a transition phase and various
business enterprises have been affected by
it. As per the EU Package Travel Directive,
tour operator could be defined as a
combination of tour and travel parts so as to
produce a complete holiday package for the
tourism (Goretti, 2013). To promote the
products, travel brochures are produced via
advertisement. There are various recent
trends and development which have
significantly affected the tour operation
industry. These trends are:
 Globalisation
 Marketing Techniques
 Developed Technology
 Customer Satisfaction
 Environmental Awareness
 Budget Airlines (Nikraftar and
Hosseini, 2016)
Impact of Globalisation
 Ease of Travelling
 Increase awareness about a new
destination
 Terrorism
Trailfinder has gained from globalisation as
it has been able to provide tour package of
unknown places have become quite popular
among people.
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Impact of Marketing Techniques
 Discounts
 Collaboration with other markets
 Funding of advertisement by the
government
Trailfinder has been able to successfully
persuade UK Government to provide
funding for advertising of its tour package
among the people.
Impact of Developed Technology
 Online Booking
 Better Infrastructure
 Effective Promotion
Trailfinder has been able to provide better
promotion methods via internet so that
people would be able to know better tour
packages offered by the company.
Impact of Customer Satisfaction
 Maintaining Brand Loyalty
 Customer Retention
 Improvement in quality services
Trailfinder has been able to improve its
services by scheduling tour programs as per
the needs of customers thus satisfying them
with ease.
Impact of Environmental Awareness
 Conservation of natural resources
 Restriction in travelling to unspoiled
areas
Trailfinder has been severely impacted as it
has been unable to schedule tours for those
areas where travelling has been either
banned or restricted in order to protect their
natural environment.
Impact of Budget Airlines
 Increase in tourist volume
 Increased opportunities for middle-
income groups for travelling
Trailfinder has provided tour packages in
affordable price so that middle-class family
could also enjoy travelling tours.
There are various types of tour operators
prevailing in the tourism industry. These
are:
Inbound Tour Operators
These operators fulfil the needs of tourism
for foreign tourists visiting the host country.
Various services from accommodation to
entertainment are provided to them which
start from their arrival until their departure.
They help in increasing the revenue for the
government (Jacobsen and Munar, 2012).
Outbound Tour Operators
These operators fulfil the tourism needs of
tourist belonging to the host country. They
conduct the marketing and selling of tourism
services for those host tourists who are
visiting other countries. They have a
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negligible contribution to the government
revenue.
Domestic Tour Operators
These operators operate tourism services for
those people who want to travel within the
country borders. Due to their efforts, various
new packages for domestic tourism has been
developed which has enhanced nation
integrity of that country (Goodall and
Ashworth, 2013).
Specialist Tour Operators
They organise tours for those group of
people as per their choices. They are most
knowledgeable operators who have a wide
range of providing services for different
tourist destinations.
Major Tour Operators in the UK
Thomas Cook AG
 Origin: Germany
 Revenue/ Year: 8.2 billion Euros
 Areas of Operating: Germany, UK,
France, India, Egypt, Central
European Countries, Canada
 No. of Tour Operators: 30
TUI AG
 Origin: Germany
 Revenue/ Year: 24 billion Euros
 Areas of Operating: European
countries
 No. of Tour Operators: 81
My Travel PLC
 Origin: UK
 Revenue/ Year: 8 billion Euros
 Areas of Operating: UK, Northern
Europe, North America
 No. of Tour Operators: 39
Vertical Integration
For the tourism industry, it could be referred
to as a collaboration of tour operators with
transport companies or hotels to provide
services to the users. In the UK, TUI uses
vertical integration in its business (Khairat
and Maher, 2012).
Horizontal Integration
In the tourism industry, it could be defined
as merging of two tour agencies to minimise
competition. In UK Thomas Cook and
Sunworld merged together to increase their
market share and decrease the competition.
Role of Different Trade Bodies
AITO: Association of independent tour
operators which specialises in providing
independent tours.
ABTA: One of the largest tour operator in
the UK providing advice about their tour
packages to holiday planners.
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UK CAA: A public organisation of UK
government to frame a policy for the
aviation industry.
6

TASK 2
2.1: ASSESSMENT OF THE STAGES AND TIMESCALES
INVOLVED IN DEVELOPING HOLIDAYS
In the tourism industry, planning is an important part. Tour operators develop tour packages in
an orderly basis so as to catch the attention of the customers. There are various stages involved in
developing and planning holidays:
Market Research
It is an overall research done about a given industry and their environments to find out that its
product has the capability to sustain in the given market or not. It also works on the current
trends so as to satisfy the needs of the customers. It includes economic research which includes
economical studies of the host country from which tourist are travelling to the destination
country towards which they are travelling. It also includes other researches such as product
research, competitor research, customer research, sales research and so on (Kozak and Baloglu,
2010).
Negotiation
For proper holiday planning, it has been necessary to have a good negotiation with service
providers such as hotels, vendors and travel operator for a well-planned tour. It is basically done
to maintain an affordable price for tour packages.
Assessment of Cost
Cost assessment would help in finding out total expense which would be incurred for
development of tour package by tour operators. This assessment would be important to manage
and control expenses such as travelling, accommodation, research cost and so on.
Planning and Scheduling
The management of tour and operator agency would conduct a proper planning to provide a
schedule for tour travelling. In the given case study, the tour would be conducted for five nights
so that the adult students would be able to enjoy the trip in an appropriate way (Mak, 2011).
Managerial Staff
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To provide a proper holiday package, the management of tour operator should recruit staff
having experience and knowledge about working in this industry. The staff should have
knowledge regarding destination, decision making, customer services and proper handling of
problems.
Analysis and Evaluation
For providing better tour packages, the tour agencies should analyse and evaluate these packages
by collecting customer feedbacks and developing effective marketing techniques to make this
tour successful. The analysis section displayed that it would take at least five months for
developing an effective tour package and this could be done through utilising service of
timescale using Gantt Chart (Mariani, et al. 2014).
TIME
SCALE
MONTHS ONE TWO THREE FOUR FIVE
RESEARCH
NEGOTIATION
COST ASSESSMENT
PLANNING AND
SCHEDULING
MANAGERIAL
STAFF
ANALYSES AND
EVALUATION OF
TOUR
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2.2: EVALUATE THE SUITABILITY OF DIFFERENT
METHODS OF CONTRACTING FOR DIFFERENT
COMPONENTS OF THE HOLIDAY AND DIFFERENT TYPES
OF TOUR OPERATOR
Contracts could be defined as an agreement signed between two parties after agreeing on certain
aspects related to the contracts. When tourism industry is considered, the contract is made
between tour operators, tourists and service providers which are very much essential as it helps
to safeguard their rights and provide a protective shield from any issues (Zaei and Zaei, 2013).
There are different methods of contracting for different components of the holiday and could be
explained as follows:
Fixed Contract
This contract prescribes fixed prices for packages offered to the customers by tour operators. As
the price of tour package is fixed, each customer is provided with similar services. However, in
case of a large group, the option of modifying package is available. This type of contract is
effective during bulk booking when a large number of people books tour at the same time for
which they receive discounts an offers.
Sales Only Contract
These types of contracts have higher prices when compared to a fixed contract. Their demand is
higher during peak season as there is a higher requirement during that period and thus provides
opportunities for service users to earn a large amount of profit. The aim of such type of contract
is providing high-quality services to the customers albeit at high prices. The only drawback for
this contract is that when there is an increase in prices for tour packages, the interest among
customers becomes low (Kärcher, 2013).
Ad-hoc Contracts
It deals with the extra arrangement of seats which are usually done by operators; so as to arrange
better services for their customers in advance.
In the given case study, the services of fixed contract method have been utilised for prior
booking of flights and hotels.
9

2.3: SELLING PRICE OF A HOLIDAY
The Grand Casselbergh in Bruges is providing their services at the special rate to Trailfinders
Ltd. A room for two is 92 euros for each person which also includes the breakfast. A travel bus
with the full facility of 42 people capacity is under £7,350. The local guide will cost £1020 for
the entire duration of the tour (Swarbrooke and Page, 2012). In addition, Trailfinders Ltd. adds a
markup of 25% to the overall cost. The tour package price has been given below:
Cost Calculation Amount
Cost of rooms and BB 92*42*5 € 19,320.00
Total variable cost € 19,320.00
1 euro = 0.89 pounds
Variable cost in pounds 19,320.00*0.89 £ 17,194.80
Bus Cost £ 11,200.00
Guide Cost £ 1,020.00
The total cost of the tour is £ 29,414.80
Mark up of 25% = £ 7353.70
Total Tour Price = 36,768.50
Number of Tour Members is 42
Then Tour Price of Single Person is £ 875.440
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TASK 3
EXECUTIVE SUMMARY
In the given report, different decisions regarding the planning of a good brochure for the
promotion of product would be discussed. Furthermore, various alternatives to the brochure have
also been discussed in the given report.
3.1: EVALUATING THE PLANNING DECISIONS TAKEN FOR
THE DESIGN OF A SELECTED BROCHURE
A brochure is a template which is designed by the tour operators so that people would look for it
and choose that tour package. As brochure provides the first impression of the tour operators in
front of the tourists, it is advisable for them to make effective planning decisions before
designing it. There are various benefits associated with a brochure. These are:
 Conveying tour package
 Building image of the company in the market
 Informing about the position of the company (Kozak and Baloglu, 2010)
Figure 2: Brochure Format for Trailfinder
Source: [Bronner and de Hoog, 2011]
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Figure 3: Brochure Format for Thomas Cook
Source: [Baddeley and Font, 2011]
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The company should consider various factors for making planning decisions for designing a
brochure. These factors are:
 Format decision
 Cost
 Budget and target market
 Determining specification of print
 Timescale and production stages
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3.2: ASSESS THE SUITABILITY OF ALTERNATIVES TO A
TRADITIONAL BROCHURE FOR DIFFERENT TYPES OF
TOUR OPERATOR
Brochures could still be useful in the promotion of products. However, in the present scenario,
brochures are losing their sheen due to various advancements occurring in the technology.
Nevertheless, various methods of advertisements have arrived in the market and are ready to
replace the brochures (Mason, 2015). Some of them are:
Press:
Press is a part of print media and is accessible to large number of the population via magazines
and newspapers. Thus it is the relatively easy medium of sharing information to a large number
of people.
E-brochures:
E-Brochures are the electronic brochures which are available online. With the easy availability of
the internet, it is one of the easiest ways to convey information about the tour packages to the
customers.
Social media:
It has been found to be one of the methods which are swiftly replacing the traditional brochures
technique. It is a promotional tool that has taken over the position of direct marketing and serves
the purpose of providing special offers to the people. Using various social media platforms such
as Facebook, LinkedIn and Twitter have allowed the company to promote their product in a best
effective manner (Nyaruwata, et al. 2016).
Leaflets/flyers:
These are the single page advertisement which provides important information about the tour
package in brief yet precise form to the people.
Business events/ Exhibitions:
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This method of advertising is used to target the potential customers of the tour agencies in large
numbers. These events provide opportunities to make business contacts that can help in framing
good relationship and image in the market.
Outdoor media:
This type of advertising is conducted using buses, walls and public places so that the message
about the company could be easily delivered to the large section of the people. One disadvantage
of this method is that it is relatively expensive when compared to other methods.
Mobile applications:
The way of advertising is changed using this method. It is one of the easiest and inexpensive
methods to express information about tour packages to the consumers. It also allows the
company to update about any modification in the tour packages to the people (Potgieter, et al.
2013).
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3.3: EVALUATION OF THE SUITABILITY OF DIFFERENT
METHODS OF DISTRIBUTION USED TO SELL A HOLIDAY
FOR DIFFERENT TYPES OF TOUR OPERATOR
Distribution is the procedure where the products transfer from a producer who produces it to the
consumer who consumes it. It is reflected directly on the sales of the tour operator. There are
different methods used by tour agencies to distribute their services. These are:
Direct Distribution System:
It involves selling the product directly to the consumers without taking the help of any
intermediates. This method is utilised by Trailfinders because it is flexible enough and provides
direct communication to the consumers. It also helps the company to collect feedbacks during
the selling of services to the consumers.
Indirect Distribution System:
In this method, intermediates get involved where tour operator ties up with a travel agent and
payment is done on the number of booking performed. It increases the sales and attracts tourist
from different countries. The only drawback is that it is costly and sometimes less profit is
obtained by the companies (Papathanassis and Knolle, 2011).
Online Travel Agencies:
The agents working in these agencies provide a description of tour packages on their websites
and allow the customer to book holidays via it. Trailfinder could use this service to sell its
holiday packages to the customers.
Websites and Social Media
A company could create its own website and could use it to sell its tour packages as conducted
by Trailfinders as well as Thomas Cook. Furthermore, social media platforms could also be used
to sell holiday packages. It is found to be effective for tourism as well as for the consumers
(Novelli and Hellwig, 2011).
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CONCLUSION
It has been concluded that brochures are found to be the first step to attract the consumers and
the company should utilise effective designing methods to present it in an appropriate way. Also,
various alternatives have arrived which could be adopted by tour companies in place of
brochures. Furthermore, different methods of distribution have been discussed and which could
be adopted for selling their packages to the customers.
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TASK 4
Executive Summary
In order to achieve success in operating a business, tour companies should consider using
strategic as well as tactic decisions. With the help of such type of decisions, it would be easy for
the company for the smooth functioning of their business. In the given case study, the strategic
and tactical decisions of two tour operating company namely Trailfinder and Thomas Cook are
taken into consideration to assess the strategic and tactical decisions taken by them.
4.1: EVALUATION THE STRATEGIC DECISIONS MADE BY
DIFFERENT TYPES OF TOUR OPERATOR
In order to achieve the goals effectively, strategic decision plays an important part. The tour
agencies adopt various strategic management procedures so that it would result in an increase in
their sales of product and in turn profitability. There is an immense requirement of adoption of
strategies by tour operators in different areas such as designing and development of brochures,
price setting for tour packages, understanding the needs of customers coming from different
backgrounds and selection of suitable distribution medium. A good strategy would help a tour
company for the smooth functioning of business (Slivar and Pavlović, 2012). There are various
strategic decisions which are taken by tour companies to increase the efficiency of their tour
packages and attract the customers. These are:
Demand Forecasting
This type of strategy is utilised by Thomas Cook and Trailfinder as a futuristic approach for
estimating the demand required in future for travel services. It helps in providing certainty and
helps in minimising the gap between demand and supply.
STP (Segmentation, Targeting and Positioning)
Tour operators utilise this strategy to identify the target audience and thus develop tour packages
revolving around their needs and requirements. The market segmentation is done by utilising
various factors such as demographic, behavioural, geographic and psychographic. Tour operators
analyse the current trends in the tourism sector, estimate the budget and assess that on which
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target they have to give more focus. After that, they prepare packages and then deliver the
services to its customer in an appropriate manner. For Thomas Cook target customers are a
middle-income group, couples and businessman, and for Trailfinder; target customers include
elder people and family couples (Swarbrooke and Page, 2012).
Pricing Strategy
Pricing strategy is an important component on which to tourist select tour packages. So, it is
important for tour agencies to develop an effective pricing strategy so as to attract more and
more people for travelling via their tour packages. In order to provide an affordable price for
their packages, tour companies should ponder on factors such as a number of tourist travelling,
their demands and the places which they are going to travel. Thomas Cook has adopted market
penetration as a pricing strategy whereas Trailfinder utilises the services of bundle pricing as
well as economic pricing to attract customers towards their services.
Promotional Strategy
A tour agency must utilise an effective promotional strategy so as to have a wide appeal towards
the people. To promote their services, the tour agency could adopt different platforms such as
print, electronic and social media to effectively promote their services. The company could also
use the brochure to effectively promote their tour packages so that people would get to know
about their tour packages. The Thomas Cook promotes its business by launching several
advertisements on television, in newspapers and magazines and on the internet. Besides, it also
has its own social media profile where it posts and gets engaged actively with its customers. In
case of Trailfinder, it promotes its products and services via print media in the form of
newspapers and social media where various articles and packages are posted for the customers
(Walton, 2011).
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4.2: COMPARE THE TACTICAL DECISIONS THAT COULD BE
TAKEN BY A SELECTED TOUR OPERATOR IN DIFFERENT
SITUATIONS
In order to achieve their goals and objectives, management of the organisations undertook some
decisions so as to accomplish them in an effective manner. The decisions are taken at different
levels and include strategic, tactical and operational decisions. Tactical decisions are the
medium- term decisions that deal with where different strategies are implemented in an
appropriate manner (Evans, et al. 2012). These are taken by the head of the departments and
affects a particular area where there is functioning of their services. There are various tactical
decisions that are needed to be taken by the tour operators:
Tactical responses
Internal and external factors act as the stimuli for the organisation and thus to have a bridge
between them, tactical decisions are required. In order to respond well to the competitors and to
take decisions for the welfare of the company, it is required for the tour operators to make
decisions.
Tactical pricing
In order to survive in this strict changing market, the change in the prices of the product and
services as per the economy is mandatory. For such type of changes, tactic prices are the most
useful decisions. Some examples of tactical pricing are early bird pricing, seasonal pricing, fluid
pricing and so on. This type of pricing is used for selling a particular number of packages at
cheap prices afterwards increase the prices with the passage of time. One such example of
tactical pricing was utilised by Thomas Cook when there was an increase in the prices of the oil,
the company increased the surcharge pricing to comprise the charges of increased fuel (De Jager
and Ezeuduji, 2015).
Tactical marketing
When marketing strategies are implemented on decisions made on market conditions, tactical
marketing is mostly utilised. One of the most important aspects used for this type of marketing is
internet which is used for targeting its customer. This is because, in the present era, most of the
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people check the services provided to them via online surfing rather than offline information
gathering. Therefore both Thomas Cook and Trailfinder have their official web pages which
provide information about their all tour packages.
Tactical planning
The tactical planning should be organised by the tour operators. In this planning, decisions are
taken on implementing the strategies to achieve the short-term objectives of any given company
(Mak, 2011).
CONCLUSION
The given task concluded by giving reasons behind the success of tactic and strategic decisions.
It illustrated that in order to achieve the goals and objectives, the company have to take some
decisions so as to travel in a right direction. Thus, the study was able to provide exact
information about various decision procedures which have proved to be beneficial for tour
operators.
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CONCLUSION
In the present scenario, tour operation has expanded across the globe and is turning into golden
hen for travel and tourism industry. By utilising various strategies, the tour agencies could turn
the condition to their advantage and earn profits. Numerous stages have been considered for
effective development of tour packages and some of them are marketing research, financial
evaluation, estimating the cost and many more. It has been also revealed that Trailfinder could
adopt fixed contract method for operating its tour packages. Besides, various alternatives to the
promotion of services via brochures have been identified and have been proved to be quite
successful for the company. At last the tour company should adopt various effective tactical
decisions so as to increase its profitability and in turn sales.
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