Tour Operation Management: Comparing Contract Methods and Pricing

This report examines tour operation management, focusing on the suitability of different contract methods and pricing strategies. The assignment analyzes two main contract types: fixed contracts and sale-only contracts, considering their advantages and disadvantages for a tour operator. A case study is presented, where LCB, a tour operator, plans a five-day trip from London to Paris for a group of 15 people. The report includes a detailed budget plan, calculating costs for accommodation, transportation, and tour guides. The pricing strategy involves a 10% profit margin to determine the selling price per person, which is calculated to be £2171. The analysis concludes that a fixed contract is more suitable for LCB, considering the potential for higher returns and group discounts. The report emphasizes the importance of understanding contract types and pricing to maximize profitability and manage risks in tour operations. The report provides a detailed breakdown of the costs and the rationale behind the chosen contract method.

Tour Operation Management
Within the respect of tour operators plan packages in order to consider several
features and methods such as fixed contract as well as sale only contract. These
are used by all tour operators like airline, flight etc. for contracting with
suppliers after considering both methods and select one of them which is more
suitable for them.
Fixed contract method: This is referring to the quantitative or collective
methods towards the sale as it helps to tour operators in order to raising capacity
along with increasing sales. This kind of contractual method is more suitable to
gain an advantage of off season as well as it gives advantages of cost
effectiveness as acquiring immense profit and discounts of group value. In this
tour operator taking a risk of un-utilization in which they are responsible to pay
balance sum of contractual money to the services suppliers.
Sale only contract: This is defined as method which deals in high prices as
compared to fixed contract as these are considered as a seasonal contract that
are made by focusing on customer’s demand as well as market potentiality. In
this method tour operator is not liable to pay balance amount as it considered as
a less risky and no scope of discounts as well.
After analysing the above both methods it can say that fixed contract is
more suitable for LCB as it has high risk and discounts along with huge returns.
In this report the management of LCB are thinking their own tour from London to
Paris. In order to that prepare a budget plan of trip on the basis of per person or
couple. Travel agency has already its network in France that leads negotiation as
well as supplied lower rates. There are total 15 members in a team and tour is for
maximum five days. St. Michelle hotel providing special amount for two adults
sharing room that is £60 as well as supplement is only £10 for per person, per night
basis. As per that the manager of LCB calculate different costs that are considered
as follows:
Total estimation cost is:
Details Price (in £)
Accommodation cost 1090
Transportation cost 990
Charges of tour guide 210
Total cost 2290
Add: Profit margin @10% 229
Sales price 2171
In order to estimating all expenses LCB manager calculate total sales amount of
entire package that is 2171 British pounds.
TASK 2
Suitability of different methods of contracting for different components of the
holiday and different types of tour operator Calculate the selling price of a holiday