Operations Management and Strategic Decisions in Tour Operator Report

This report provides a comprehensive analysis of tour operator operations management, focusing on the development of tour packages, specifically for excursions to Bali. It examines the impact of current trends such as rising disposable incomes, technological advancements, and marketing techniques on the industry. The report details the stages and timescales involved in holiday development, including destination selection, itinerary planning, negotiation with vendors, price determination, and marketing strategies. It assesses different contracting methods, such as fixed contracts and sales-only contracts, and their suitability for various components of a holiday package. The report also includes a calculation of the selling price for a customized holiday package to Bali, Singapore, and Malaysia, considering accommodation costs and other expenses. Furthermore, it explores the strategic and tactical decisions made by tour operators, including decisions related to brochure design and marketing alternatives.

Tourism and hospitality operations management
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Operations management of tour and travel 1
Contents
Introduction......................................................................................................................................2
Background......................................................................................................................................2
Task 1...............................................................................................................................................3
1.1 The effects of current and recent trends and developments on the tour operators industry. .3
Task 2...............................................................................................................................................4
2.1 Assessment of the stages and timescales involved in developing holidays...........................4
2.2 The suitability of different methods of contracting for different components of the holiday
and different types of tour operator.............................................................................................6
2.3 Calculate the selling price of a holiday..................................................................................7
Task 3...............................................................................................................................................9
3.1 The planning decisions are taken for the design of a selected brochure...............................9
3.2 The suitability of alternatives to a traditional brochure for different types of tour operators
and recommend the most appropriate for your tour package....................................................11
Task 4.............................................................................................................................................12
4.1 Strategic decisions made by different types of tour operator..............................................12
4.2 Compare the tactical decisions that could be taken by a selected tour operator in different
situations....................................................................................................................................13
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

Operations management of tour and travel 2
Introduction
Tour operator industry is considered as an integrated towards the travel and tourism sector. This
unit 14 explores the trends and development that affect the tourism industry and the destination
that has been selected. Contemporary issues in the industry and their impact have been discussed.
Price determination and selling method have been analysed in the report with the objective of
strategic decision making. The study also includes the details related to the different types of
methods that are used for making the brochures and the facilities that offer the customization by
entering into the retail market which can bring the rise in the distribution channel. In addition to
this, the various types of analysis have been done which helps in understanding the effectiveness
of the industry in the market. The different strategies which are discussed which can be used to
enhance the demand of the products and services.
Background
The case scenario is based on the tour operator who is working for the large UK based company
as a Package tour development manager. The current experience is related to the account
manager for the 3 different holiday destination which is different from the previous work that
was to manage the PR and promotion for tours. The case reflects that there is need to develop a
package for the new type of clients who are concerned in excursions holiday at ancient heritage
sites and wildlife parks with the few days of beach outings in a hot destination. Bali is the place
that is selected as the destination which includes numerous sunny beaches and the heritage with
wildlife attractions in Asia.

Operations management of tour and travel 3
Task 1
1.1 The effects of current and recent trends and developments on the tour
operators industry
There is a rise in the tours leads to the rise in the industry that contributes in executing the
holidays. Along with this, there are numerous emergent trends and development that directly
impact the industry (MacIntyre, 2017). Similarly, there are some trends which create the direct
impact on destination Bali and these trends are
Rise in disposable income: - This has been witnessed that the rise in the GDP leads to the rise in
the income of the people. The year 2017, the Bali provincial and regional government find a rise
in the income of people by 13% with the rise in inflation rate by 2.7%. In addition, there is a rise
in the income by 9.5%with the inflation of 4% which is possible because people have started
investing their amount in visiting the place (Retalk Asia, 2017). This will bring the rise in the
disposable income of the people which will be utilized by them to visit the place.
Updated technology: - Tourism industry is totally depended on the technology like the use of
technology makes the rise in tourism of people. The technology contributes to improve the
quality and standards of the Bali which will lead to the rise in the number of tourists (Bowie,
Buttle, Brookes and Mariussen, 2016). In addition to this, up gradation in the technology affects
the tour industry as they need to adopt the same to remain in the market.
Marketing techniques: - The marketing is one of the effective sources which make the customer
aware about the destination that they should visit. The tour operator industry gets affected with
the market because the marketing of destinations will make the switch the needs and preference
of customers (Evans, 2015). Accordingly, the tour operators need to bring the changes in

Operations management of tour and travel 4
destination preferences. Thus, the rise in the preference of visitors towards Bali is possible
because of the effective marketing techniques.
Customized products: - The tour operators are offering customized products to the customers
which are the only way through which they can win the trust. Thus, this is found that a wide
range of products and service can lead to the success of the industry (Bowie, Buttle, Brookes and
Mariussen, 2016). The visitors and tourist like to visit the tour operators so that they can visit the
places in Bali where they want to go accordingly to their preference.
Competition: - The rise in the competition is one of the factors which affect the tour operators.
Increase in the competition leads to the rise in employment and equilibrium of demand and
supply. This will make the customers choose for the most suitable option which helps them to
deal with the competition. This is considered as the emerging problem which affects the tour
industry.
Task 2
Planning with the timescales is considered as the initial process of every activity which leads to
the overall framework of activities that support for the suitable decisions that contribute in
evaluating the viable options (Axelrod, 2015). This section includes the discussion related to the
different stages that contribute in developing the plans for the holidays.
2.1 Assessment of the stages and timescales involved in developing holidays
Selection of destination: - In the current era, there is a different destination which are still
present where most of the tourist likes to visit. The research related to the travel destination can
be done according to the willingness of the customers to visit the place. This has been found that

Operations management of tour and travel 5
tourists are majorly visiting places like Paris, New York, Rome, Sydney, Bali, China, Thailand,
Singapore and many others. It is essential to select the place out of which Bali has been selected
for which the research has been done with the use of PESTEL analysis and this research gets
complete in the two or three months.
Development of the tour itinerary: - Once the destination gets selected that it the time which
includes the summarizing the tour programs which include destinations, travel routes,
accommodation, transportations and the place which are required to be visited in Bali. The tour
operator takes the responsibility in which they finalize the places where they will take to the
visitors. This systematic flow will help them in conducting the operations effectively without any
barriers (Leanza, Porto, Sapienza and Cascone, 2016).
Negotiation: - Once the tour operators decided the places and accommodation then they proceed
with the negotiation with the vendor so that they can get the best price in Bali. The tour operator
needs to offer the services to the entire group for which it is must control the process. The tour
operators ask for the might discount from the vendors and it takes time to complete the stage as
the operator need to consider the alternatives and selecting the vendor which offer the services
and products at low prices.
Price determination: - The next stage after the negotiation there is price determination of the
packages. There are different factors that directly affect the pricing of the packages include the
cost of fuel, foreign exchange rates, taxes and many others. The tour operator needs to determine
the prices of packages which they charge from the visitor including their profit for the Bali tour.
Majorly, there are two types of methods that can be used for determining the prices of packages
which include cost-oriented and market-oriented.

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Marketing: - The tour operator needs to conduct the activity of marketing which helps them in
increasing the awareness among the market for the customers. This will not only contribute in
increasing the demand but also leads to profitability with goodwill. The marketing will help the
tour operator in getting the groups of customers.
Execution: - Execution is considered as the last stage of the tour operator in which they will
convert all their preparation and estimation into the reality. All the planning of the tour operators
gets implemented with the problem planning which helps in monitoring and controlling the
activities.
Milestones Timescale
Selection of the destination (Bali) 3 months
Development of the tour itinerary 2 months
Negotiation 4 months
Price determination 1 month
Marketing 5 months
Execution Time and days of the tour
2.2 The suitability of different methods of contracting for different
components of the holiday and different types of tour operator
Incurrent era, the tour operators generally enterprise the packages by allowing for the various
types of features and with the use of the two types of methods which include fixed contract and
sale only contract. The UK tour operator makes use of the two methods that remain suitable for

Operations management of tour and travel 7
contracting the different components of the holiday. These methods help in contracting with the
vendors and suppliers. These methods are: -
Fixed contract: - In this kind of contracts the major focus is on the collective and quantitates
approach with the motive of sales. The tour operators in the UK will bring the rise in their
capacity by enhancing the volume of sales. Majorly, the tour operator makes use of this method
for availing the benefit in offseason (Mason, 2015). This has been found that tour contractors get
the benefit from the fixed contract in terms of the cost-effectiveness by receiving the huge
amount of discount and benefits in terms of prices. Though, there might be the case in which the
tour operator remains with no profit because they won’t be able to unable to utilize the benefits
of the discount due to issues in tours.
Sales only contract: - In the sale the only contract of the tour operator the prices generally
remains high then the fixed contracts. The sale contract generally takes place at the time of
season considering the demand of the customers present in the market. The risk factor remains
less in the sale only contract because the tour operator doesn't remain liable (Smith, 2014). This
has been found that this type of contract remains beneficially for the UK tour operator when the
customers’ demands for customization in their packages.
In the addition, comparing both the methods, this has been found that high risk offers the high
profit to the tour operator which is possible with the fixed contract as it includes high risk
comparing it with sales only contract (Page, 2014).
2.3 Calculate the selling price of a holiday
In the case, the planning has been done for the three different destinations that are included in the
package that can be customized by the wants of customers. These destinations include Bali,

Operations management of tour and travel 8
Singapore and Malaysia (Irwana Omar, Ghapar Othman & Mohamed, 2014). The budget for the
trip is essential to be calculated for per person and per couple. The tour operators have the
contacts in Bali and Malaysia which help them in negotiation and getting the effective price for
the tour of 20 people with 3 couples. The hotels in the places are offering their services at
affordable prices.
Calculation of accommodation: - The twin room with a special rate of 60 euros and supplement
for BB is 10 euros for per person every night. Thus, the couples in the groups can avail the single
room which means 3 rooms= 60*3= 120 euros. In addition, the remaining 14 people 5 rooms
with 4 single beds that is equal to 60*5= 300+4*10= 340. For 6 nights, the amount will be
120*6= 720 euros and 340*6= 2040. In total it is equal to 2760 British pound.
Calculation of transportation cost: - The amount of transportation will be equal to 1200 British
pound with a 25-seater luxury coach that includes the cost of drivers and fuel.
Details Price
Transportation cost 1200
Accommodation cost 2760
Charges of tour guide 250
Total cost 4210
Add- Profit margin @ 12% 505.2
Sales price 4715.2
Thus, this has been found that the total price on which UK Tour Company will sell their
packages in 4715.2 British pounds.

Operations management of tour and travel 9
Task 3
In the travel industry, it is must for the company to make the customers aware of the products
and services. The brochure is an effective document that contains the required information for
the customers which helps them in taking the steps towards it.
3.1 The planning decisions are taken for the design of a selected brochure
This technique grabs the attention of the customers as it is low-cost marketing way which
extends the reach of customers. Brochures can be offered to the visitors by the UK tour operator
with the help of online and offline mode (Huertas‐Garcia, Laguna García and Consolación,
2014). Further, there is discussion related to the process and planning decisions for the proposed
brochure.
Issue identification for developing brochure: - It is essential for the UK tour operator to design
the issue before developing the brochure. This issue includes market segmentation, target
market, the format of the brochure and the information to be discussed with the time that is
involved in the execution of the brochure.

Operations management of tour and travel 10
The format of the brochure: - The brochure includes the systematic flow of the information
due to which it includes different sections and sub-sections in the brochure. This is the only way
through which these brochures become attractive (Zulkifli, Alnagrat and Mat, 2016). The format
is selected by the tour operator according to their target market. This mainly includes: -
 Name of the tour operator
 Mode of transportation
 Travel destination and itinerary of travel schedule
 Accommodation and meal facilities
 Price (with explanation related to distribution)
 Conditions and charges applicable
 Legal requirement
Budgeting and selecting target market: - Before issuing the brochure it is essential to
determine the budget and target market. The market segmentation can be done by analysing the
needs and demand of the different customers and accordingly selecting the most appropriate
market for products and services. The budget includes the spending power of the customers for
the services (Kaplan and Atkinson, 2015).
The timescale for completing this stage: - It is essential to design the brochure in the specific
time period. In this stage, the planning process will convert into execution with the strategic
method and decision making.

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3.2 The suitability of alternatives to a traditional brochure for different types
of tour operators and recommend the most appropriate for your tour package
In the current era, this has been found that traditional printed method is not an effective method
for the customers in attracting and retaining. Though, the new technology with the emerging
digitalization has brought new ways which include: -
 E-brochure: - E-brochure is one of the effective ways to reach towards the customers and
reduce the cost of preparing the brochures. The electronic brochure includes the different
pictures and video that contributes in developing the interest of the visitors.
 Social media: - Social media is considered as one of the effective manners which are
required to be accepted by the tour operator for generating the awareness among the large
audience for the products and services in the market (Lee and Kotler, 2015). The UK
tour operators can make use of Facebook, YouTube and many other channels for
promotion.
 Websites: - Website includes the information related to the products and services which
allow the customers to access each and every detail (West, Ford and Ibrahim, 2015).
This has been found that in today's world every industry expands and diversifies their
distribution channel which helps them to meet the demand with supply. The traditional method
of preparing the brochure is converting into the emerging methods which include the use of
technology. These sources include e-brochure, website, social media and many others and these
tools are effective to increase the profitability of the tourism industry. These tools offer different
benefits to the tour operators which include effective management of cost and time. Accordingly,
the tour operator can make use strategic directions while making the selection for tools of sales
and distributions that affect the growth of Tour Company.