Analysis of Tour Operations Management (TOM 2.1-2.3) - HND Hospitality

This report, prepared for the HND in Hospitality, analyzes tour operations management from the perspective of a Tour Coordinator at LCB Tours. It begins by outlining the stages and timescales involved in holiday development, including market research, planning, contracting, cost calculation, financial evaluation, brochure creation, advertisement, operation, and post-tour management. The report then examines the suitability of different contracting methods for inbound and outbound tour operators, discussing fixed contracts, allocation, and ad-hoc approaches. Finally, it calculates the selling price for a holiday package, detailing variable, fixed, direct, indirect, and special costs, along with markup, and also identifies regulatory bodies like the Federation of Tour Operators (FTO) and the Association of British Travel Agents (ABTA), and different pricing strategies. The report provides a comprehensive overview of tour operations, from planning to execution and post-tour management, with a focus on pricing, contracting, and industry regulations.

TOM

2.1 Stages and time scale that are involved in development of Holidays
• Market Research-: The Market research reports must provide a detailed and extensive overview of the
destination including all the information on holidays and market size and share of that holidays. The travel and
tourism industry market research reports can help in gaining further knowledge for the holidays and all market
trends of that destination and it also helps in gaining valuable holidays and also the consumer data of tourists
(Li, Hou, Chenand Li, 2016). The market analysis can help in making informed and good business decisions as
its provides up – to – the - minute holidays and also travel industry intelligence.
• Planning and Scheduling-: After the market research had been undertaken the tour operators must determine
the destination, category of hotels, no. of tourists for any package, and the suitable dates for that packages.
• Contracting-: After all the planning and scheduling had been completed now its time for tour operators to
negotiate different hotels through which they can get best packages and also transport that are cost effective for
that tour.

Continued….
• Calculation of Cost for the package-: Now the time has came to calculate the price of tour
packages after all dealings had been done with contractors. The maximum discount that can be
given must be calculated in this stage (Zeng, Dasgupta and Weinberg, 2016).
• Financial Evaluation and Pricing-: the financial evaluation of the package must be done by
comparing same packages with the other tour operators and then fix price for tour package.
• Creation of Brochure-: Now its high time for creation of brochure as all the price, destination
discount, dates had been fixed.
• Advertisement-: After creation of brochure the advertisement must be done about the tour packages
with the help of different sources of advertisement which includes Social Media, Leaflet in
newspaper etc.

Continued….
• Operation and Execution-: after everything is finalised and analysed now its time to take booking
of the package and also to execute the package.
• Post Tour Management-: This is the last and very important as to take feedback from the travellers
and must check if they had any problem in the tour which in future can be corrected. This helps in
providing repeated customer base to them (Spann, Fischer and Tellis, 2014).

Timescale
Activities Timescales
Market Research 1 week
Planning and Scheduling 1 week 3 days
Contracting 5 days
Calculation of Cost for the package 5 days
Financial Evaluation and Pricing 1 week
Advertisement 1-2 weeks
Operation and Execution 2 weeks
Post Tour Management 1 week

2.2 The Suitability of methods of contracting by different types of Tour Operators
Types of Methods Inbound Tour Operators Outbound Tour Operators
Fixed Contract This method can be suitable for inbound tour
operators as they had to manage locally and the
cost of inbound packages are also not so high.
So, it is better to apply fixed contract method
by inbound tour operators.
The Outbound tour operators must also apply
this type of method when the package is fixed
and there will no changes according to choice
of customers but if packages are as per choice
of traveller then it must not be fixed as it had
to be changed accordingly.
Allocation This method must not be used here as packages
are very small and it can create chaos amongst
tour operators.
This method is to be used here as the packages
can be made as per the specifications of
customers and can be altered (Mills and Wiser,
2015).
Ad-hoc The adhoc itself means in this situation the
inbound tour operators may change
accordingly the situation whenever required
Same will be case with the out bound operators
as they also can make changes according to the
situation.

2.3 Calculation of Selling Price for any Holiday for per person in pounds
Type of Costs Amount in Pounds
Variable Costs includes electricity gas 100
Fixed Costs includes Rent 55
Direct Costs include cost related in development and execution of tour
package
20
Indirect Costs includes Administration 40
Special Offers Cost to company 10
Loss in Currency exchange to company 5
Total Cost 230
Mark Up @ 10% 23
Total Cost to tourists 253

Regulatory bodies
• Federation of Tour Operators (FTO): This helps in bringing a change and improvement in
all areas affecting overseas holidays, from the UK departure point, through the journey, to the
accommodation and standards of safety, health and hygiene overseas. This also helps
governments on all UK outbound tour operating related issues.
• Association of British Travel Agents (ABTA): This helps in offering advice and guidance to
the tour organization, the travelling public, as well as leading the travel industry in supporting
high service standards, working with our Members on health and safety, and promoting
responsible tourism at home and abroad.

Different Strategies for setting right price of any holiday-:
The following are the pricing strategy for setting up right pricing of holiday packages-:
Rack Rates
CommissionsDiscountingLast Minute PricingSeasonal pricing

REFERENCES
Long, Y. and Shi, P., 2017. Pricing strategies of tour operator and online travel agency based on
cooperation to achieve O2O model. Tourism Management. 62. pp.302-311.
Nagle, T.T. and Müller, G., 2017. The strategy and tactics of pricing: A guide to growing more
profitably. Routledge.
Mills, A.D. and Wiser, R.H., 2015. Strategies to mitigate declines in the economic value of wind and
solar at high penetration in California. Applied Energy. 147. pp.269-278.
Spann, M., Fischer, M. and Tellis, G.J., 2014. Skimming or penetration? Strategic dynamic pricing for
new products. Marketing Science. 34(2). pp.235-249.

Continued….
Zeng, X., Dasgupta, S. and Weinberg, C.B., 2016. The competitive implications of a “no-haggle”
pricing strategy when others negotiate: Findings from a natural experiment. International Journal of
Research in Marketing. 33(4). pp.907-923.
Li, B. and et.al., 2016. Pricing strategy and coordination in a dual channel supply chain with a risk-
averse retailer. International Journal of Production Economics. 178. pp.154-168.