Tour Operations Management: TUI's Strategies and Functions Report

This report provides a comprehensive overview of tour operations management, focusing on the roles and functions of tour operators, with TUI (Tourism Union International) as a key example. It explores the structure and scale of the tour operating industry, emphasizing the importance of transportation, attractions, accommodation, and ancillary units. The report outlines the stages and components involved in creating a package holiday and discusses methods for forecasting changes in consumer demand through market research, demand forecasting, and planning and scheduling. Furthermore, it examines strategic and tactical decision-making in tour operations, including bulk purchasing, negotiation, and error correction. The report highlights the significance of understanding consumer needs and adapting to market trends to ensure success in the competitive tourism sector. It discusses the critical role of tour operators in providing travel details, booking accommodations, and preparing detailed itineraries, while also analyzing pricing strategies and the importance of effective cost management. The analysis underscores the need for tour operators to adapt to consumer demand changes and make strategic decisions to ensure long-term success.

TOUR OPERATIONS
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Various roles and functions of tour operators........................................................................1
P2 Scale and structure of tour operating industry.......................................................................3
LO2..................................................................................................................................................5
P3 Outline the different stages and components in the creation of a package holiday for a
range of different tour ................................................................................................................5
P4 Determine and forecast changes in consumer demand using different sources of research. .6
LO3..................................................................................................................................................7
P5 Review the content of a range of package tour programmes which serve a similar product.7
Market.........................................................................................................................................7
LO4..................................................................................................................................................8
P6 Explore examples of strategic and tactical decision-making in tour operations....................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Tour operations management refers to managing the travel agents, inventory, customers and
creating tour packages in order to provide best travel services to fulfil and understand the needs
and requirements of the customers that will result to growth in the tourism industry.
TUI (Tourism Union International)is a leading travel operator established in UK in the year
1965. It has its headquarter in Luton, England. The founder of TUI was Roy Thomson TUI was
known as Thomson holidays and it is subsidiary company of TUI group. On 18th October 2017
started its business as TUI UK. This travel agency provides products like packages for holidays,
provides hotels services, airline services in the travel industry. The report will cover the roles and
functions of the tour operators as well as it will help the tour operator to forecast change in
consumer needs using different sources as well as decision making by tour operators(Bruni and
et.al.,2015).
LO1
P1 Various roles and functions of tour operators
Tour operator is a person who manages multiple things for his clients. From preparing itineraries
to booking mode of transportation to accommodation, he does it all (Robinson and et.al., 2016).
The end motive of every tour operator is to provide maximum satisfaction and comfort to his
clients. Unlike a travel agent, tour operator starts from the scratch, he brainstorms the destination
as per the clients needs, searches for popular locations to explore and finally does all the
necessary bookings.
Tourism Union International, United Kingdom has around 70000 employees that deals with
tourism and travel operations.
Functions of Tour Operator-
 Travel details- Indeed, the most important function of a tour operator is to give necessary
details about the tour to his clients because at the end of the day, it's the opinion of client
that matters (Evans, 20160). Be it, international or domestic full disclosure of travel
details is requisite for the clients.
 Booking the accommodation- Accommodation booking is not as easy as it seems.
Although, TUI has its own chain of Resort and Hotels but before being owned by the TUI
group, the company used to book hotel and resorts as per the budget available to them.
The tour operators used to collaborate and partner up with different Hotel chains both bi
1

and small, so that they could make reservations at much less price (Pencarelli and Dini,
2016).
 Reservations and transportation booking- Depending on the client's budget and travel
destination, the tour operator needs to book necessary mode of transportation. It can be
through train, flight, cruise or in some cases through car. TUI group also owns an airline
company which makes it convenient for the company and its tour operators to book and
arrange flight services for its customers.
 Preparation of detailed itinerary- A detailed itinerary acts as a road map for the clients. A
perfect itinerary incubates the vibes within the clients. TUI's itinerary includes details
about accommodation, total duration of trip, day-wise segregation of activities, places to
explore and transportation details. At the end, the total cost for tour package is stated.
 Tour package pricing- The tour operators at TUI follow different statistical techniques in
order to price the tour packages. Majorly the company uses marginal pricing method, that
includes analysing the market trends and fixing the prices accordingly. Another simpler
approach followed by tour operators includes, addition of all the fixed and variable costs
incurred in preparation of tour package and then ultimately including their percentage of
profit in it (De Vita and Kyaw, 2017).
Role of tour operator-
 Bulk Purchasing- In order to maximize the profits and efficiency of not only tourism
business but in any business, bulk purchasing is mandatory. The company must analyse
the market and predict its future demand and accordingly make purchases. In context to
tourism sector, the tour operator must analyse the future clients and tourists expectation
and then accordingly make necessary reservations. This will not only save time but also
give cost benefits to the company in terms of cash discount or bulk discount.
 Negotiation- The ability to negotiate is rare and unique. Tour operator must have the
capability to bargain at time of hotel booking, local sight-seeing, restaurants etc. TUI
Group being a Multi national company, has a strong bargaining power because of its
name and reputation. This allows the company to raise additional profits because of the
discount received to them from its suppliers.
 Correcting the glitches and errors- TUI is a company made by humans, so mistakes are
bound to happen (Pulido-Fernández and et.al., 2015). In case some error is committed by
2

the company or operator, they must identify it and rectify it immediately. Errors could be
booking of wrong hotels, different date of flight reservation etc. These situations are quite
common and hence they must have a backup plan to follow in these situations.
P2 Scale and structure of tour operating industry
As of today, travel and tourism sector is undoubtedly one of the fastest growing industries in the
world. Especially, with the increase in use of social media, the current generation has become
more inclined towards spending their hard earned money on travelling and exploring. This has
expanded the growth of tour operating and hospitality industry by leaps and bounds.
In many European countries, travel and tourism sector contributes more than half their GDP and
this clearly depicts the scale of tourism sector all around the globe. Moreover, the travel and
tourism industry in 2016, contributed more than $7.6 trillion USD towards the global economy.
Most preferred travel destinations in the world are United States, France, Thailand, United
Kingdom, Italy and UAE (Pulido-Fernández and et.al., 2015). But knowing the curiosity of
today's generation, it has been observed that tourism has also grown in underdeveloped and small
countries in remote areas. The total number of tourists arrival have increased from 520 million
in 2005 to 1.20 Billion in 2015, which is more than 100%.
The structure of travel and tourism industry comprises-
1. Transportation- Transportation is the backbone of travel and tourism industry.
Transportation bridges the gap between two places and without the presence of suitable
transportation, the travel and tourism industry would collapse. TUI Group, is one of the
few tourism companies in the world that has its own transportation chain of Aeroplanes,
cruises and buses. It includes
 Transportation by air-Air travel is probably the fastest and most comfortable way of
travelling. TUI airways formerly known as Thomson Airways is a subsidiary of TUI
Group and owns several Boeing 737 and Airbus.
 Transportation through Cruise- TUI UK has its own line of luxurious cruises and ships
called Marella Cruises previously called as Thomson Cruises. Cruises are quite expensive
most of the times but they do offer the same level of royal and luxurious facilities to
tourists (Picazo and Moreno-Gil, 2018).
3

 Transportation by Train- This mode of transportation is quite popular in European and
Asian countries like Italy and India. It is considered as the most economical way of
travelling out of the three.
2. Tour Operator- Like stated before, tour operator perform various roles, that includes
contacting hoteliers. Airlines, preparation of itinerary and deciding the package cost.
Tour operators are also divided on the basis of tourism like-
1. Inbound tour operator- It includes those tour operators that assist foreigners or tourists
from foreign land arriving in their country.
2. Outbound tour operator- These are the international scouts that take people from their
home country to a foreign destination across the world.
3. Domestic tour operator- These are also called local guides as they tour people within their
country across different cities or states.
TUI Groups can arrange for any type of tour operator for their clients.
3. Attractions- Attractions, as the name states it attracts tourists. Attractions are the main reason
that motivates tourists to visit the particular destination. It appeals domestic and inbound tourism
the most. Attractions can either be man-made or natural(Moutinho and et.al., 2015). TUI group's
itinerary offers a list of exotic locations in various countries. The speciality of these locations is
that some of them are rarely known and hidden spots in the lap of nature and this further excites
the tourists.
4. Accommodation- TUI has its own chain of five star hotels that provide luxury stay to its
clients and customers. These hotels and resorts are mostly high priced but accommodation can be
a lot cheaper in Guest house, hostels, and Motels.
5. Ancillary units- Almost all the ancillary and support units are associated with public sector.
The alliance units monitor the working of tourism department and also deals with grievances of
the tourists. Visit Britain and other local government agencies takes care of the following areas-
 Supporting people
 Improved statistical facts
 Marketing and promoting tourism.
4

LO2
P3 Outline the different stages and components in the creation of a package holiday for a range
of different tour
By using different sources of research the assistant product manager of Tourism Union
International can forecast the changes in consumer demand that are market research, designing
and scheduling, demand forecasting,
 Market research:- It is the very important tool that can help TUI to forecast the changes
in the consumer demand in this upgrading market by conducting surveys as well as by
collecting feedback of the consumers. In order to increase the sales, market research can
help the company to assess the issues of the customer's, to understand the needs and
requirements of customers, to determine the upcoming business opportunities. By
conducting market research the company will find the new areas to expand and the new
demand of the customers where the company will have to make changes in travel plans to
meet the need and requirements of the customers that will result to company's growth
and success in the tourism industry(Moutinho and et.al., 2015).
 Demand forecasting:- For assessing the changes in the consumer demand this is the best
source through which the company can fulfil the changing needs and requirements of the
customers. Forecasting the demand in advance can help TUI group in assessing the risks
that can affect the company both internally and externally. This will also help the
company to protect against the future uncertainty regarding the inflation, changes in the
rules and regulations of the government, technological failures, competitive forces. This
will also help TUI group to survive in this competitive market for the long run by
assessing in advance sales of the products as well as services.
 Planning and scheduling:- This is the another source through which the company can
determine the changes in consumer demand. This approach can help TUI to plan and
schedule properly regarding the resources like deciding the various travel plans according
to demand of the consumer as well as managing and distributing cost according to the
travel plans. The tour operator should keep in mind the capacity constraints like
managing supply chain and transportation. In order to achieve the needs and requirements
of the consumer according to the competitive trends, the product mauknager of the
company should plan and schedule travel packages in advance for the optimum
5

utilization of resources in an effective and efficient manner(Pulido-Fernández and et.al.,
2015).
 Costing:- This is the another important aspect for determining the demand change among
the consumers. This includes fixed as well as variable costing. TUI group should provide
the tourism packages by determining the effective cost as per the needs and requirements
of the customers. The company must provide the packages according to the seasonal
change and should mention the rates and dates according to that. The company should
distribute the costing as per the child, youths and adults by providing the policies
regarding the free charges, cancellation fees, stay charges package charges, skimming
pricing company should also provide the facilities regarding currency exchange, discount
rates on the packages. The company should decide the commission for the distributors as
per retail rates as well as the company should have the record of the transactions as per
the up gradation, so that the company can manage the costing according to the
competitors to fulfil changing need of the consumers effectively and efficiently (Boz,
2016).
P4 Determine and forecast changes in consumer demand using different sources of research
Research means to collect the data, interpret the data and take the correct decision on the
basis of the data. In other words research is to gathering information about people's ideas,
behaviour, preference and attitude towards a selection of the concept for the purpose of givng
answers. Research help to get the expertise in the business. In tourism many different research
are take place. This is the another source which includes the contracts like allocation contract,
scheduled services etc. which refers to the contracts which is done for the certain period between
the tour operator and provider of travel services like with the hotels, airlines etc. for providing
the two or more packages to the individuals or to number of groups. TUI group can meet the
consumer demand by maintaining the good relation among the provider of travel services and
tour operators should maintain the sales realized in order to achieve the growth in the
competitive market (Fernández-Morales and et.al., 2016).
Sources of Research
 Primary research:- it is deal with the primary sources of data which is directly collect by
the researcher. This is a fresh data which is collect recently and this is not interpreted data
it is collected directly this data is known as primary data and collection of this data is
6

known as primary research. Primary research is done through the direct questionnaire and
personal investigation. This data help to evaluate the future trends of tourism industry. It
also help in to get customer needs and preference, it also assist to get the future demands
of the customers (Šuleić and et.al., 2015).
 Secondary research:- it is a type of data which is already available in the market. This
data is previously collected and this data is interpreted from the old data is called
secondary data and this type of research is known as secondary research. This research is
done through the interpretation of the old data available. This research help in to the get
the forecast the future trend by analyse the old data.
LO3
P5 Review the content of a range of package tour programmes which serve a similar product
Market
The tour operators are using so much various effective techniques and methods to
convince the customer to take package of tours from UK to Switzerland. There are wide range of
methods can be use by the entity to sale the products to the consumers. One of the most
convenient way is advertising it can be done through the travel magazine, ad in news paper,
television and social media marketing and pop up links. It also can use the virtual tour to give a
real experience for that it can take the help of the audio and visual elements for the
advertisements. Brochure is a effective method of can be adopt for the advertisement it gives the
information and it also help to get the details about the tour. There are so many aspect which are
considering while formatting a brochure. It also includes the modes of the distribution of the
brochure. Other than the above point following points should be taken:
 ascertaining the problems that can be affect the planning decisions:- there are various
issues which have direct impact on the selection of the brochure design for the company.
Before designing the brochure TUI have ton define the needs, objectives, target section
and the information that brochure will contain like dates of tour, venues and duration of
the tour (Moutinho and et.al., 2015).
 format of the brochure:- Formate of the brochure is according to the needs of the
customers and brand value of the company. It should be simple and attractive which
pulls the eyes of the customers format should contain the detailed information about the
7

project of the firm. In includes the prices, destination, Terms and conditions, services
provided.
 Time frame:- Time frame must be decided to design the brochure. It should not take
more than the 4 weeks to prepare a brochure. So it can be cost efficient for the firm.
 Budget :- brochure design must be in budget it will not so much costly which can reduce
the profit of the firm
 Distribution:- Channel of distribution must be easy and it can attract the more and more
numbers of customers in less time.
Methods of distribution
 direct sell: in direct sale operators go to the customers directly and sale there products or
the tour packages. The direct sale it is the most effective way to sale the tours packages.
But this is a time consuming and this method does not covers maximum area.
 Agencies:- hire the sales agencies for the selling of the tours and travel packages in this
company hire some agencies which are engaged in the work of selling of the tours and
travel packages. This method help to reach the maximum numbers of the customers by
the agents cause agencies have more customer base. But this is a costly for the company
TUI have to pay extra charges to the agencies (Picazo and Moreno-Gil, 2018).
 Call centres:- company can take the help of the call centres to sell the products which are
help to communicate to the customers and convince them to buy the packages.
 Internet:- Through the help of the internet company can sale there product by the social
media advertisement and pop op links to the frequently search sites which help to reach
to large number of customer base. This method is cost efficient and time saving.
LO4
P6 Explore examples of strategic and tactical decision-making in tour operations
Strategic decision:- this are those decision which are made on the basis of heavy thinking
and discussion. And this decision are related with the whole environment of which operates the
firm. It use the entire resources and this is done by the board people of the organisation. This
decision making is mainly related to following factors-
pricing strategies:- Setting pricing for tourist is not a easy task it needs a strong mix of the
marketing strategies and financial analysis. Thing should be consider while deciding price. It
must be incudes the rareness of the business and how unique business is and what are the
8

strategies for the selection of pricing strategies (Picazo and Moreno-Gil, 2018). It includes the
operating cost of the tour planner what will be the cost of the project. Using operative costing
organiser can find the break even point of the planned tour.
Price strategies also includes the demand of the package in the market price will be high
if demand is also high and it will low if the demand is less. Price decision are also depends on
the competitor pricing but organiser have to take care in this type of pricing on there financial
position, costing of the projects and quality of own product. Types of pricing- Rack rates,
Seasonal pricing, Last minute pricing. Per person or per unit pricing, discounting package deals
and commission.
Surcharge policy:- this is an extra fee or charge calculated on the cost of the project it nclude the
tax on the project which generally nor included in the stated price of the project. In simple words
surcharge is a price which consumer pay for the consumption of the services which are not club
with the stated price of the product. Surcharge is a additional fee, tax or cost added in the
already exist goods and services. Surcharge may includes fee, indirect tax, sales tax, value added
tax, and travelling tax. It is a extra burden on the consumer (Picazo and Moreno-Gil, 2018).
positioning and image/branding:- it means that the the new innovative positioning and branding
of the tours and package available for the customers. Branding means to attract the customers
towards the plan so that they come and take the opportunity available to them. Tours business
mainly focus on the branding and image of the products. Branding help in the getting the best
more and more selling of the tours and it also helps in the generate more profit. That's why
branding should be effective and attractive.
customer' choice:- choice of product in relation to customer
portfolio means to identify the customers and find out the what are the needs of the customers
and check that what are the market company is going to target. In this company have to decide
that the what type of customers they are targeting and what will be there needs and what are
there preferences. Components of customer portfolio- customers analysis and behaviour,
marketing audit, customers profitability and customer retention and loyalty.
investment decision:- after the evaluation of the pricing most important decision to take is
Investing decision:- How much should be invest and where should be invest (Papatheodorou,
2016). In other words to give best experience to the consumer establish new places of for there
enjoyment and satisfaction.
9

Cruise ships:- in current era of customers are going to visit cruise ships. To get more profit and
competitive advantage. TUI company can invest in the cruise ships to get more profit and more
market share from the others.
Tactical decision:-
in order to manage daily functions of business various number of tactical decisions are
taken. It will also further help in the smooth functioning of the operations and proper functioning
of the company. Some of tactical decision must be taken by the operations mangers are
managing transportation and accommodation facilities, contact to the suppliers for the various
services. It also includes association with various stakeholders of the company. In addition to this
firm also have to solve the complaints of the customers (Papatheodorou, 2016). And work on the
increase satisfaction of consumers. Further tour operators have to work on the quality of products
and services provided. it also includes-
 Discounting pricing:- discounting price means operators have to decide there prices first
and it can give discount on the prices which attract the customers
 Seasonal aspect:- tour and travel business mainly depended on the seasons. It decide
what will will be the sales and managing the off season and recover it in the high sales
season. In the off season they can use the discounting pricing to increase the sales of the
company (Moutinho and et.al., 2015).
CONCLUSION
From the above study of the TUI Group (Travel Union international) a leading travel operator in
UK. This study has helped TUI by explaining the roles as well as the functions of the range of
tour operators in providing the various services and it also stated about the scale and structure
regarding the tour operators. The study has helped TUI group to outline the different stages and
components in creating the different holiday packages as per the requirements of the different
tour operators and with the help of different approaches like market research, planning and
scheduling, demand forecasting, contracting it helped in forecasting the changes in the consumer
demand to achieve success in the competitive market. It assessed the range of tour programmes
or packages which helped TUI to serve in the similar product market, it also examined the
various strategic and tactical decision-making that occurs in tour operations by giving examples
of specific tour operators. Through this study it has helped TUI in overall management of
operations as well as to explore, grow and survive in the competitive market.
10