Tour Operation Management Report: Industry Trends and Strategies

This report provides a comprehensive overview of tour operation management, focusing on the analysis of current and recent trends within the tour operator industry, specifically using Thomson Holiday as a case study. It assesses the stages and timescales involved in holiday development, including examining destinations, planning, research, forecasting, and negotiation. The report evaluates different methods of contracting, such as fixed and sale-only contracts, for various components of a holiday. It also delves into the planning decisions for brochure design, the suitability of alternatives, and distribution methods. Furthermore, the report explores strategic and tactical decisions made by different types of tour operators, providing insights into the complexities of the travel and tourism sector. The report concludes with a discussion of the key findings and implications for tour operators in the UK and beyond.

TOUR OPERATION
MANAGEMNT

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Analyzing the effects of current and recent trends and developments on the tour operators
industry........................................................................................................................................3
Task 2...............................................................................................................................................4
2.1 Assess the stages and timescales involved in developing holidays.......................................4
2.2 Evaluating the suitability of different methods of contracting for different components of
the holiday and different types of tour operator..........................................................................6
2.3 Calculating the selling price of a holiday from given information below.............................7
TASK 3............................................................................................................................................8
3.1 Evaluate the planning decisions taken for the design of the brochure..................................8
3.2 Assessment of suitability of alternatives to a traditional printed brochure.........................10
3.3 Evolution of the suitability of different methods of distribution used to sell a holiday......11
TASK 4..........................................................................................................................................12
4.1 Strategic decisions made by different types of tour operators.............................................12
4.2 Compare the tactical decisions that could be taken by a selected tour operators in different
situations....................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Tour operation industry is an important constituent of travel and tourism sector. Tour
operator plays a vital role in offering various services as a completed package to the customers.
Tour operation industry provides transportation, accommodation and other facilities to the
service users. (Morris and Kazi, 2016). Business of tour operation is engaged with many other
organizations with a motive to increase growth of the company. Management of the tour
operation is controlled and maintained by tour operator. Along with this, they offer wide range of
services and other ancillary facilities in a professional manner to the customers of UK and
outside the country. The present report is based on Thomson Holiday, a UK based travel operator
and subsidiary of TUI group (Thomson holiday. About us, 2016). In term of gross revenue and
foreign exchange earnings, Travel and tourism is the largest service industry globally. The aim of
the report is to gain understanding of tour operators industry, the stages involved in creating
holidays, brochures and methods of distribution used to sell holidays, strategic and tactical
decision making etc. Furthermore, the report explains the effect of current and recent trends as
well as developments on the tour operator industry. It will also focus on making calculations of
the selling price of a holiday along with the strategic and tactical decisions that are made by tour
operators
Task 1
1.1 Analyzing the effects of current and recent trends and developments on the tour operators
industry.
Tourism industries become one of the economic drivers for developed countries. As
compared with the growth rate in other sectors, the standard growth rate in tourism sector is quite
better (Swain, 2016). There are different factors and trends in tour industry which are driving
change in the whole sector.
Adoption of E-commerce Technology:
By adoption of e commerce in the business, tourism industry has been scattered
worldwide. To know about the various packages online, booking of the tickets or suitable
packages, it has become easier for the consumers (Yamane and et.al. 2015). By using of the
technology they get information through online portal in a much lesser time. Due to the e
commerce adoption by the tourism, it has become possible that there is an increase in the number
of foreign and domestic tourist in UK.
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Increase in spending habits:
With an increase in the economic growth, people of UK become capable for earning
more income, with this there is an increase in the spending habits (Khatwani and Srivastava,
2015). As to attract the customers, emergence of various opportunities are to be offered by the
tourism sectors.
Growth of the regional airports:
There is a growth of regional airport in the UK, this result in people are more interested
in making tour plans. Many of the airports company are charging lower prices for landing planes
which will increase the growth of aircraft industry.
Demographic pattern change:
Nowadays, various opportunities are offered to the tour and traveling sector because of
the changes in the demographic pattern (Ryan, 2015). The consumers prefer to go on tour with
their families and friends, to arrange tour, they hire tourism industry.
Focus on customer satisfaction:
The main motive of the tour operator is to increase the profitability as to offer good
services to the consumers this is fulfilled by focusing on the customers' satisfaction. This is done
by designing packages with utmost care, this result into growth of the industry.
Role of Government:
As to enhance the business into the growth of the nation, Government of UK provides
high support to travel and tourism sector (Tsang, Lee and Qu, 2015). In terms of easy availability
of VISA, relaxation in taxation norms etc. government provide supports and also involves
several other activities to support the local public.
Development of tourism Act, 1969:
The main aim of this act is to co-ordinate all the organizations which are involved in
tourism sector. Apart from this, it will also provide the financial help out of public funds which
assists the industry to grow. Through this, Thomson will be able to enhance their working
practices and business in the tourism sector.
Cost of travel:
Recently, cost of travel is increasing in the UK as country is in recession. People are
recently planning for holiday in abroad once in a year as families have less money to spend
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individually. Other than this, families are also given some discount on tour packages which also
attracts them to make planning for tour.
Flexibility of booking the tickets:
As online facility of booking tickets is available with the help of these people can easily
book their tickets anytime. This will enhance profits of the whole tourism industry. Thomson
Holiday is also providing online facility to their passengers so that they can make easy booking
of their tickets.
Task 2
2.1 Assess the stages and timescales involved in developing holidays
For developing an overall tour package and to fulfill the customer’s needs, planning is
considered as an integral part. The designing the tour packages in according to the expectation of
customers benefits travel operators to make customer satisfied and to gain loyalty (Blythe, 2013).
To develop a package for a selected destination, it will take almost 1 year time. Development of
the sightseeing tour packages in Paris, France is a quite complex process. For developing
holidays in France, there are different stages and timescales involved. These are as follows:
Examining the designation:
The 1st stage for developing a holiday is to examine the destinations. According to the
given scenario, as a sightseeing tour for Chinese students, Paris, France is selected. In context to
this, different sites, famous areas, hotels, cost factors should be examined. (Bernick and Boo,
2013). Examination of the destination should be done in prior and it may take time of 1 to 2
months to complete this step
Planning and scheduling:
To prepare a package in a proper way, Thomson needs to plan and schedule the tour in
the best manner. For planning and scheduling, set of activities are covered in this stage. It starts
with identification of target country for sight-seeing. After that, accommodation, transport,
breakfast, dinner and entry tickets etc. services are included which will be offered to students
(Fyall, and Morgan, 2009). To get the best services, they need to select the best tour operator
among the different service providers that offer wide range of services. Planning and scheduling
require the time-scale of around 2 to 3 months.
Research:
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After the above mentioned stages completed, the next stage involves the investigation of
various facilities which are to be offered to the students. Research is to be conducted for various
types of places for the students that can be offered to them for the purpose of tour. Time frame
for completing the research will be around 3 months.
Forecasting:
On the basis of trends going on in France, different components enable the stage of
forecasting. (Swain, 2016). For providing and offering various services along with the selected
places in France, estimation of cost by the tour operators is involved in forecasting stage. Time
frame to cover this stage involves about 15 days.
Negotiation
To provide different facilities like transportation, accommodation or lodging, food and other
facilities, negotiation with the suppliers or with the service providers is done (Morris and
Kazi, 2016). It will take around 15 to 20 days.
Tour Development:
After forecasting and negotiation, the next stage is of developing the tour in order to ensure
promotion which is done by conveying the features of package to the tourists. By fixing the
service provider and designing the tour, development of tour is undertaken. In this stage,
promotion of newly designed tour package for the student is done by offering the complete
package with the help of online portals, huge banners, pamphlet and advertisements
(Yamane and et.al., 2015). It may take time of 1 to 2 months to complete this step.
2.2 Evaluating the suitability of different methods of contracting for different components of the
holiday and different types of tour operator
For designing tour packages, there are only 2 methods which are adopted by tour operator
industry. The methods of contracting are fixed contract and sale only contract method. Different
types of tour operators which are selected are Thomson holidays and Flight centre. Among the
various service providers, these two tour operators will be compared. For tourist attraction,
different services will be arranged by tour operators like accommodation, transport, breakfast,
dinner and entry tickets. In context of Thomson Holiday and Flight centre, two methods of
contracting are discussed.
Fixed contract
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To maximize the revenue collection and to ensure the utilization of volume based
capacity, this type of contract is used by the company during the time of the off season.
Furthermore, by covering up the off season sale shortage, service providers charge for the
volume based capacity. By Thomson holiday, arrangements have been made, through fixed
contract which is also going to depend on the students' expectation. As per the utilized capacity,
pricing decision and the total capacity utilization decisions are to be made by Thomson holiday.
In this, tour operator enters into a fixed contract of tour package (Fyall and Morgan, 2009). If
there is non-utilization of the capacity then it contains a constant risk. According to this,
operators have to pay full amount as per the contract. In this type of contract, high volume of
discount is offered as number of the people availing the tour packages are high. Furthermore,
summer vacation is the peak time of travelling by the students as well as other people and in this
season, there are very little chances of non-utilization of capacity. For this, different packages are
designed by the tour operators. This results in fixed contract and thus, large number of people
will come to get benefit of discounted tour package.
Sale only contract
To design the tour package in France, tour operator Flight centre has selected sale only
contract. For lean season and for the niche consumer segment this packages is designed and they
are comparatively high from fixed contract (Khatwani and Srivastava, 2015). In which for highly
expensive tour, particular consumer segment who are interested for such travel packages are
targeted. Keeping in view the need of the targeted customers, the sale only contract is made. In
this sale only contract, Flight centre will pay money for the capacity which is utilized by the
client. Weak response for a particular tour package is the risk factor associated with this contract
(Ryan, 2015).
Allocation
This is another type of contract between the intermediaries and the operational managers
of the tour agency. According to the terms and conditions of this contract, within the
predetermined time frame the intermediaries and the suppliers are highly required to closely
accomplish the deadlines. Under such contract, there exist low strictness and the suppliers may
abide such process in the flexible manner.
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Commitment- Commitment is characterized to have different and unique features as
against sale only chart and allocation. To render the level of occupancy such kind of contracting,
requires the intermediaries such as accommodation, food services, entertainment etc. in the very
effective way.
After discussing the two methods which is used by tour operator, it has been concluded
that, for the different components of the summer holidays, fixed contract is more suitable. As this
offer high discounts, pre decided profits to the Chinese students.
2.3 Calculating the selling price of a holiday from given information below.
On the basis of the given scenario, Chinese students from London is planning for the
summer vacation in August 2018 and creating a sightseeing tour package for the students. The
proposed group size is 15 students and the tour should last for no more than 5 days.
Table 1: Selling price of tour
Facilities Costing
Hotel 60 euros for a twin room (2 adults sharing) on room-only basis
Supplement 10 euros per person/per night
Transportation The price is £1000 for a 20-seater luxury coach
Attraction Local tour guide who will charge you a flat sum of £200 for the
duration of your stay in Paris
Pricing structure is done according to the above presented manner, for the sightseeing
tour package for the Chinese students. Thomson has arranged the transportation, hotels, guide
facility services. This cover transportation service for £1000, local guide for flat sum of £200.
Table 1: Calculation the selling price for Chinese students
Facilities Costing Total costing for 5 days (£)
St Michelle Hotel 60 Euros for a twin room 4800
Supplement for BB 10 Euros per person/per night 750
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20 seater luxury coach £1000 1000
local tour guide £200 200
Total 6750
10% profit margin 675
Total costing 7425
The above calculation is of the selling price of the students. The supplement for BB per
student is 10 Euros, for 15 students it covers £750. The profit margin for the Thomson is £625
that is 10% of the total. The total cost for the students for Italy, France tour covers £7425.
TASK 3
3.1 Evaluate the planning decisions taken for the design of the brochure
Within travel and tourism industry, brochure is a tools used for conveying information to
target audience and to sell holiday packages via using on-line as well as off-line method. The
major aspect of business is to design brochures that may lead to low cost and high reach.
However, at the time of making planning decisions related with the design of the brochure,
number of things are to be considered (Crysta and Law, 2011). Thomson Holiday always try to
reach larding number of customers by designing an effective brochure. Reaching to huge target
market in low cost a basic advantage of distributing brochure for tourism package. Nonetheless
proper planning, research, implementing and organizing process is to be carried out at the time of
designing brochures for current package. Here, the following points show planning decisions
when to design of a new brochure for adventure holidays Thomson Holiday:
Recognition of planning issue
The foremost consideration related to designing of brochure is the issue which might be
faced in planning issues. The organization must be faced various issue in relation to format,
objectives of brochure, target segment, and timescale which are required to be considered.
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Including this, the issues may be of content, structure, style, paper quality, size that are vital to
the brochure. As to design a broacher for an adventurous holiday package, it is needed to focus
on content and format of brochure (Santana, 2011).
Format and content
The major focus area of an organization is to design and effective format and content
through which target audience can be attracted towards business. The attractiveness of brochure
attractive increases its visibility, hence, it is vital for tour operators to pre-decide the format and
to match such format of the brochure along with a target segment, needs of target audience etc
(Kasavana, Nusair and Teodosic, 2010).
Target market and Budget
The brochures must be depends on target market and should be designed in accordance
with specific niche segment like adventure tour which is going to be designed by Thomson
Holiday. Additionally, budget is a major factor affecting designing of brochures as it is to be
designed in accordance with the spending power of the consumer (Pender and Sharpley, 2012).
So, at the time of budget designing, it is important to look forward towards target market needs
and their budget.
Timescale and the stages involved in the brochure design
At the time of planning for a brochure designing, it becomes important to consider the
overall time for designing the entire brochure and the various stages involved in brochure
designing. These two aspect are the major considered area during planning decision of the
brochure (Dwyer, Edwards and Scott, 2009). All the stages of brochure designing such as
creative brief, copywriting, proofing, colour proof, printing; brochure launch are to be considered
and will also be involved in the planning decision.
Recognition of legal implications
Designing a brochure requires various legal laws to be considered which are designed in
respect with communication and information sharing with customers in regard to product and
service offerings (Holloway, 2009).
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3.2 Assessment of suitability of alternatives to a traditional printed brochure
In today’s competitive scenario, customers want to have special and unique offerings for
designed tour packages therefore, tour operators are now looking for various alternatives for
target market for the purpose of changing traditional brochure for Thomson Holidays for
adventure trip. The alternative methods are used so as to improve the quality of brochure as
well as to attract a large number of customers. However, traditional brochure are really some
important medium for conveying information to targeted audience, but, the rapid increase in new
technologies and development of such has enabled the tour operator to adopt new mediums of
effectively communicating which target market (Swarbrooke and Horner, 2012.). Today, E-
brochure has become an efficient method for designing brochure and to convey information to
consumers. The information is transmitted to the customers by the means of online which is a
cost effective way. In addition to that, on-line designed brochure reach to a wider level in
comparison to a physical brochure, hence, this is going to be profitable and beneficial for
Thomson holidays to design an E-brochure.
This will be a cost effective and less time consuming method to reach target audience
even to create an awareness of new tour packages of adventure holidays. Thompson Holidays is
suggested to use e-brochure to reach target audience and to convey about new tour package
(Page, 2011). In addition to that, visual medium of brochure is an alternative method which is
suggested to Thompson Holidays for attracting a large number of people towards adventure
holidays. Using this medium, important information regarding tour packages and the visual
beauty of the tourism destination is to be conveyed to target audience via putting visual effects.
This method is helpful in increasing the revenues generated from adventure holidays tourism
packages which are designed by tourism companies. However, this is to be noticed that video
brochure can only be utilized in a line with available social media platforms such as Facebook,
You Tube and other tools to create promotions (Law, Qi and Buhalis, 2010).
The analysis of above alternative methods, Thomson Holiday is recommended with
designing its brochures an integration with e-brochure and video brochure. These two will be the
effective methods that allows business entity to reach to the targeted audience and to convey
information to the consumer that will help in promoting new adventure holiday packages among
wide target audience with efficient implementation (Hudson and Thal, 2013).
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E brochure for London to Paris
5 days trip to Paris
Contact : @ Thompson Holidays
3.3 Evolution of the suitability of different methods of distribution used to sell a holiday
Previously, traditional broacher was evident as an effective method to sell tour packages
that were designed by the tour operators. Nonetheless, in the present time, the offering of tourism
packages have been changed along with this, there is also seen a change in the system of
designing and developing brochures. The travel and tourism business has become highly
technology oriented and all the service and packages are offered to customers while considering
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