Tour Operations Management Report: Unit 14, Semester 1, BTEC HND, UK

This report delves into the realm of tour operations management, focusing on the UK tourism sector and the practices of major players like Thomas Cook. It begins by outlining the stages and timescales involved in holiday development, including market research, cost estimation, pricing strategies, and legal requirements. The report then examines various methods of contracting for different holiday components, emphasizing the importance of clear agreements to avoid future disputes. A key aspect covered is the calculation of a holiday's selling price, including overheads, profit margins, and the impact of discounts and currency exchange rates. The report also evaluates planning decisions for brochure design and explores alternative distribution methods. Strategic and tactical decisions by tour operators are also examined. The report concludes by highlighting the impact of global trends and consumer preferences on the industry, emphasizing the role of trade bodies in tourism. The report is written based on the assignment brief for a BTEC HND in Travel and Tourism Management.

Tour Operations
Management

Table of Content
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Covered in Poster..................................................................................................................1
TASK 2............................................................................................................................................1
2.1 The stages and timescales involved in developing holidays.................................................1
2.2 Suitability of methods of contracting for different components of the holiday...................2
2.3 Calculation of the selling price of a holiday........................................................................4
TASK 3............................................................................................................................................4
3.1 Evaluation of the planning decisions taken for brochure......................................................4
3.2 Suitability of alternatives to a traditional brochure for different types of tour operators ....5
3.3 Evaluate the suitability of different methods of distribution used to sell a holiday..............6
Task 4...............................................................................................................................................8
4.1 Strategic decisions made by different types of tour operator...............................................8
4.2 Tactical decisions that could be taken by Thomas cook......................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Tour industry is one of most growing sector in current time and most revenue generating
all over world. In following report, effect of recent trends and developments on tour operators
industry especially in United Kingdom will be discussed. As a lot of people make their holidays
to several places in world, this leads to more complication for tour companies. To understand
holiday better, there are some stages and timescales involved in developing holidays. To avoid
any disputes in future, there are many different methods of contracting related to holidays and
tour operators. Calculation of selling price pays a vital role in providing travel packages by
tourism agencies or operators. Tour operator take various tactical decisions to gain maximum
customer satisfaction and make profit out of it. This industry is vast as it has different category of
tours operators. There is a positive huge impact of integration of global and European travel
sectors. Today, consumers taste and preference change related to tourist destinations as well as
operators. Some major trade bodies play a vital role in tourism like the UK Civil Aviation
Authority (CAA), The Travel Association (ABTA), Association of Independent Tour Operators
(AITO), Federation of Tour Operators (FTO) and UK inbound.
TASK 1
1.1 Covered in Poster
TASK 2
2.1 The stages and timescales involved in developing holidays
Thomas cook is one of leading firm in tourism sector of United Kingdom which offers
different holidays package to consumers (Mak, 2011).There are some stages and timescales in
process of holidays development as following.
1. Market Research-This is first step of holiday package process offered by tour operator.
Company conducts a detailed market research so that it can forecast current demand of
visitors at local as well as international level (Dodds and Kuehnel, 2010). There are two
forms of market research in tourism sector as qualitative and quantitative. Through
survey and personal interview, operator can gain information about what types of holiday
is in demand and make their package as per it. This stage will take four to five days for
detailed market research.
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2. Cost Estimation and set targets-This is second stage of developing holidays in which
different cost of elements used in making holiday for customers. It helps in estimating
which package will cost and commission to suppliers. The company tries to identify its
potential customers and plan a customised holiday for them to gain maximum revenue.
There are different types of costs which will occur like fixed and variable. Fixed costs do
not fluctuate with number of passenger or duration of trip (Witt, Brooke and Buckley,
2013). For this stage, two to three days will be taken.
3. Pricing of holiday-On third stage, tour operator like Thomas cook set price of holiday
package which is reasonable and satisfactory for customer. In this competitor price has to
be considered as it can affect sales of holiday in future. Skimming process is also used by
operator. Along with this,currency exchange rate play vital role especially with foreign
visitors. So keeping profit margin and industry situation, pricing of holiday will be set.
4. Legal requirements-This is fourth stage in holiday development package to visitors. In
this different rules and regulation are obeyed by tour operators so that no disturbance in
further process (Baddeley and Font, 2011). Season of tourism also an important factor as
peak time uplifts the price of holiday. On other hand, if there is off season the operator
will have to decrease its rate for trips offered to customers. This stage takes almost three
to four days to fulfil all legal requirements.
5. Final holiday package making- This is fifth stage of this process in which developed
holiday is prepared with accommodation, duration of trip and destination to be visited
(Tsiotsou and Goldsmith, 2012). In this, business organisation provides all details with
final price like type of other services which will be delivered to clients.
6. Advertisement-When a holiday package is made completely, tour operator starts to use
most suitable methods to promote and advertise its package. There are different types of
advertisements through which tour operator can use. One of best medium is online
marketing as most of people are available on it and maximum customers can be
connected. Others are television, news paper, brochure, posters, hoarding and word of
mouth.
2.2 Suitability of methods of contracting for different components of the holiday
As tourism is one most most growing an vast industry, there are many issues which can
occurred in future between tour operator and visitors. To avoid any dispute, there should be clear
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agreements about all aspects related to holidays for all types of tour operators (Chand and Katou,
2012). Followings are some types of contracting which play a vital role for different components
of the holiday.
 Allocation- In holiday contract, different types of allocations must be included so that
there will be no confusion in future. For example, number of room and seats in
transportation should be mentioned in contract. Another element which must be
mentioned clearly in agreements between tour operator and clients is that pricing per
head which can vary from season to season (Evans, Stonehouse and Campbell, 2012).
Direct sell tour operator needs to allocate every facility in contract to avoid any
vagueness.
 Commitment-This includes promise or authenticity of offering in tourism which must be
fulfilled as per contract. For example, if Thomas cook has offered 3 rooms and two
sightseer to clients then it has to provide what has been promised, otherwise it will be
considered as breach of contract (Chonand Yu, 2012). Whether it is inbound or outbound
tour operator, there must be clarity about every single service of package.
 Ad hoc- It a unplanned document which is prepared by tour operator and mention all
small elements which can affect Holiday. If any problem or situation arises, there should
be clear role and responsibilities mentioned on part of tour operator and client.
 Split charters-This elements includes conditions related to any split or division of
contribution of passengers while tour in local or international. Another thing which must
be mentioned in contract is that how much money will be split among all number of
visitors (Guo and He, 2012). Fir example, outbound tour operators can split cost among
visitors to minimize the price and attract maximum customers.
 Ad hoc chartering-This element is important for outbound tour operator as it includes
conditions related to hire of aircraft or any other transportation to travel. To increase
number of sales of holiday package, Thomas cook has to make attractive chartering and
provide clients s that maximum revenue can be generated in future. This is necessary
especially in outbound tour operations. Thus there are many different components Which
must be considered while making agreements or contracting in holiday package.
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2.3 Calculation of the selling price of a holiday
For making a holiday package by Thomas cook, it must calculate some crucial aspects
which are included in cost of holiday and consequently final selling price of it (Buckley, 2010).
While calculating holiday, some important element should be evaluated with accuracy to offer
most reasonable price to customers. For an example, following is a calculation of holiday
package and its selling price.
Cost for group Cost for person
Accommodation = 84*46*7/ £ 115 84*7/115 = 588/115 = 5.1130 £
= 27,048 £
Breakfast = £ 1150 * 46 * 7/ £ 115 Breakfast = £ 1150 * 7/115 = 80.5 £
= 3,703
Transport = £ 10,800 Transport= 10,800/48 = 234.78 £
Tour Guide = £ 1200 Tour guide= 1200/46 = 26.08 £
Mark up = 25%
Total cost = 42, 751 £
Followings are few components to set selling price of holiday.
 First of all, all overheads and wages are calculated. Profit margin is added to total cost
and on basis of it, a raw calculation id made. For example, £ 120 overhead is occurred per
head and hourly wages are £ 220.All fixed costs are not changeable and variable costs are
dependent upon number of passengers, demand of accommodation. Directs cost are
implied in holiday and have huge impact on cost of package (Page, 2014). While indirect
cost are implied indirectly like agents or intermediaries.
 Different discounting strategies are adopted by tour operators like Thomas cook. For
example, customer loyalty discount is provided and cost of over all holiday package can
be minimized. It helps in maximizing sales and revenue in tourism sector. After applying
discount, some contingencies percentage is implied by 10 percent on cost.
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 After that, currency exchange rates are calculated to estimate over all price of holiday
package and if there is any margin to reduce cost, must be considered (Moutinho, 2011).
In this, buy of foreign currency is included in case of outbound tour operator. Another
thing to calculate is interest earning which will uplift revenue of Thomas cook and
amount of cash inflow or outflow helps in evaluating selling price of holiday deal. Thus
after calculating all these above elements in holiday, a final selling price is offered to
clients.
TASK 3
3.1 Evaluation of the planning decisions taken for brochure
Among various methods of distribution to sell a holiday designing a brochure is one the
essential component. Travel and tourism industry uses brochures in providing information about
the packages to the clients. Brochure provides a very effective and cheaper way to give
information to the people about the tour packages (Conze, Bieger and Riklin, 2010). While
designing the brochure the it is important to develop planning, implementing activities with care.
Brochure provide hand to hand advertisements to the people. Thomas cook being a big company
must have larger chain of distributors of the brochure. Some of the things that needs to checked
and taken care of while designing a brochure are:
Identifying issues regarding the brochure design: there are certain issues that need to
be taken care of while designing a brochure like the format, target section, clearly specified
package contents, time duration under which the brochure should be ready. The environment of
the market and the target section always needs to taken into consideration. Thomas cook being a
big company must have larger chain of distributors of the brochure. Thomas cook is a well
established company so its name give a bigger brand value and it need to be highlighted more
clearly.
Brochure format: Formatting a brochure is an important task like using the format must
be according to the target customer segment, the size of things that need to be highlighted and
not highlighted must be in proper manner (Senders, Govers and Neuts, 2013). A brochure must
contain informations like price, duration of the holiday package, extra charges, mentioning about
the places that is to be visited, modes of transportation, health related issues and company norms
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has to be mentioned, booking conditions and status. Thomas cook must highlight his name as it
will satisfy the customer about hospitality issues.
Budget consideration: Different target segments needs different kind of budget
considerations. Like a budget consideration in packages for students must be less than those of
the working class people. Any offers or for any certain section of the society must be mentioned
on the brochure. In budget consideration for target section has to be formatted in the highlighted
manner. Being a larger company as Thomas cook it can provide larger discounts to the customer
so as to attracts larger section of the society (Assaf, 2012). So that the other newer arrivals must
not get chance to enter into the market and can posses threat to this company. Budget
consideration should be according to season.
Comparison between brochures of Thomson and Thomas cook
Basis of difference Thomas cook Thomson
Colour The business organisation uses
bright colours which make its
brochure more lively than any
other firms.
This company applies some
dark and light colour in
combination to attract
maximum customer's eye.
Image There are many natural
destination in brochure if the
firm.
On other hand, this company
uses some historical images in
its brochure to target audience.
On basis of these above difference, Thomas cook is better than other firms in tourism
sector like Thomson.
3.2 Suitability of alternatives to a traditional brochure for different types of tour operators
Being in the era of innovative technology and digital marketing a company has to shift
from the traditional methods of selling a tour and travel packages like brochures. Growing
influence of technology in day to day life has made a compulsion for a company to sell their
packages online. The E- brochers has made it easier to communicate with the customers a large
amount of information in a very small spaces via links. It has made the communication easier
and faster. Moving towards the newer methods of selling a package attract more people. As
compared to traditional brochures the e-brochure is much cheaper and a company like Thomas
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cook can go to a larger section of the society (Wearing, Wearing and McDonald, 2010). Physical
brochure system was heavier to manage and instant changes to the brochure cannot be made.
One of the best way apart from brochure is word of mouth in which the customer
provides positive opinion about company, so that new customer will prefer Thomas cook to plan
a holiday. It will benefit the firm in term of image building and revenue generating. On other
hand, its disadvantage is that if the current consumer is biased about services of company. Then
he will only give negative opinion n matter how goof the firm provide its holiday packages.
The e-brochures are highly efficient, more attractive. The impacts on the mind of the
people are more than what is through traditional brochures. pictures, embedded videos of the
advertisements previously satisfied customers make the brochure more attractive. Apart from e-
brochures the newer methods of selling a products can be online advertisements on different
sites. Some reference sites where the people have searched for any query regarding travelling the
link could be given on them. The reach of social media now a days are very high people using
different social networking sites ranges from all the section of the society. Large target groups
can reached out by just placing advertisements on these social sites. Thomas cook company can
create web pages that looks more attractive. Travel stories of good experiences by the previous
customers of Thomas cook must be video graphed and shown. Beautiful pictures of the places
that is offered in the package can be shown on the websites (Anderson, Mastrangelo and
Kolodinsky, 2013). UK has a beautiful history so the company can use the name of the events
associated with the places that is mentioned in the travel packages. Television can be one of the
most suitable places for advertisements. Television has a very large number of viewer in all
sections of the society that too across the globe. Thomas cook can hire the superstars or famous
personalities in endorsing their travel packages and showing it on television can attract a large
number of people. Conventional methods like brochure can be replaced in more smarter way of
selling products. Innovative ideas like making the animated ads can save the money of the
company on hiring people for selling their products.
3.3 Evaluate the suitability of different methods of distribution used to sell a holiday
Britain being a large attraction for travellers from in and around the world, hospitality
and travel industry growth is very certain. People coming to spend holidays in UK needs a
hospitality that could satisfy their needs. Company like Thomas cook its important to have a
good distribution method to sell a holiday.
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Distribution methods generally refers to as how a travel company reach out to customers.
It is variety of channels used to promote and extend a product (Novelli and Hellwig, 2011). To
sell a holiday it is important to communicate well with the planners so they could choose
company plans over many others in the market. In a distribution method it is more important to
be clear with the plans. Companies like Thomas cook has its name in the market so establishing a
name is not a challenge for the company now although there is a need of continuous evaluation
of the market and customer changing demands. This would need a thorough study of the recent
trends. Establishing a link with distributors needs some cost but effective product distribution
helps in facilitating advance sale of product before its actual use.
Distribution methods generally depends on the target market and reaching out to new
targets needs newer methods of distribution.
Various kinds of distribution methods are:-
Direct sales
Telephone
Social networking sites
Agencies
call centers
Direct sales: Direct sales refers to as the reaching out to the customers through e-
commerce market. Use of internet in the selling a holiday could be the best way as the trends
show that people generally go for an online option to search for the holiday packages and
options. Online selling provides customers with much choices as the selecting options are more.
Telephone: Telephonic selling of holiday is one of the options that a company implies to
the travel aspirants. In connecting with telephone the customers gets better service as they can
ask for their queries till the time not fully satisfied.
Social networking sites: In the modern era there are a large number of people that are
connected to social networking sites so to use this as a distribution method can be a good method
(Prideaux and Coghlan, 2010). Linking and connecting to people via social sites can be very
useful in advertising of new products or services that an company is providing.
Agencies: For selling of the products companies like Thomas cook hiring an agencies
can be a better method of reaching out the customers that do not know about this company.
These agencies insist customers to make travel plan with these bigger companies .
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Travel brochure- This is an useful distribution method to sell the holiday package to
customer. It is best option in comparison to other methods. The cost to cmpnay while using this
method, will occur 30 £ per travel brochure. Benefit of the travel brochure is that it helps in
attracting maximum customers to take interest in company's products and service through
images and lively color.But on other hand, its one disadvantage is that it requires more time to
reach target market.
Call centers: call centers set up by the bigger companies reach out to large number of
customers. The travelers who is planning for an holiday vacation can call up to the call centers
and can clear all heir doubts. Thomas cook from their large data of customers who traveled
earlier may reach out to them with newer plans. There are certain other methods of distribution
used to sell a holiday like News papers, television giving ads on them.
Task 4
4.1 Strategic decisions made by different types of tour operator
As there is cut throat competition in tourism sector of United Kingdom, all tour operators
implement different strategic decisions to gain maximum competitive advantages in comparison
to other firms. Inbound tour operators makes customised decisions with consideration of how
mush passengers will be visiting (Anderson and Xie, 2010). Being a inbound and outbound tour
operator, Thomas cook uses price skimming strategy in which first it offers lower price to make
new customer and uplift in future when demand is high in surcharge policy differs from firm to
firm. For example, outbound tour operator apply higher surcharge then inbound and domestic
tour operator. Different well established brands in tourism sector uses branding strategy to attract
new customers and gain high profit margin fro holiday package. All tour operator try to
maximise their position in market through various attractive and differentiated offers to tourist.
Domestic and international tourists firms offer their different holiday package depending upon
customer income, age, gender and health.
There are many strategies which are follow by tour operators like niche marketing and
mass marketing. Niche marketing is one of best strategies which Thomas cook applies to gain
maximum profit and revenue generating. It provides specialized holiday package for particular
group of customers. It adopts eco friendly strategy in this marketing which help in building
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image among consumers. Family tourism is one of kind in which tour operators deals in and
provides holiday package.
There are different distribution channels which are used by tour operator to promote
holiday like brochure, television, internet and word of mouth. Mostly outbound tour operator
prefer internet so that maximum public can be covered across the world. Invest is also an
important part of strategic decision for tour operator (Watkins, 2017). So capitalisation is used to
get maximum investment to expand business in future. For example, if a holiday is made for
cruise ships which are mostly exclusive and high profit generating packages. Another type of
transportation is aircraft which has considerable profit margin for tour operators. So these all
above aspects must be considered while making strategic decisions for tour operations. Thus
different tour operators like inbound, outbound, domestic and specialist take their own specific
strategic decisions to gain maximum profit out of tour.
4.2 Tactical decisions that could be taken by Thomas cook
Being a leading brand in tourism industry of United Kingdom, the mentioned tour
operator takes major tactical decisions to deal with different situations. These are short term
solution to problems which tour operators face while providing holiday packages. First decision
is related to passenger response about transport marketing which are affected by factors like
vehicle technology, information technology, price of fuel (Rønningen, 2010). To gain profit from
this situation, company concentrates in daily basis pricing. Competitors and their price affect
business and Thomas cook makes sure that it offers reasonable price .It tries to utilize all coach
and aircraft seats so that no waste and loss occurs. The company uses tactical marketing
techniques like word of mouth so that it can establish a good image in sight of customers and
attract new visitors in future. By providing discount, tour operator maximize its sales in short
term and gain maximum profit in comparison to other competitors. Late sales is also used by this
firm to capture maximum u market share in tourism industry and expand its business in long
term. Thus these above different tactical decisions are taken by Thomas cook to uplift its
business in future through maximum customer satisfaction.
As per mass marketing, a huge target market is focused by tourism company. A mass tour
operator who plans a package for group of people and bulk selling of holiday. They offer
reasonable package to customers and deal in various kind of tourist destinations .For example, in
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