Tour Operations Management Report: Analysis of TUI and Package Tours

This report provides a detailed analysis of tour operations management, focusing on the roles and functions of tour operators, the structure of the tour operating industry, and the process of creating package holidays. The report uses TUI AG as a case study to illustrate key concepts, including product development, marketing and sales, and customer advising. It examines the stages of holiday package creation, from market research to brochure production and marketing, along with the critical path analysis. The report also explores the impact of economic and social factors on customer demand and evaluates strategic and tactical decision-making in tour operations, including external factors and the decisions made by TUI. The report covers the integration of mass market and specialist tour operators, assessing their impact on the tourism market and the economy. A review of package tour programmes is also included, comparing and contrasting various offerings and evaluating their effectiveness. The conclusion summarizes the key findings and insights gained throughout the analysis.

Tour Operations
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
Roles and functions of a range of tour operators....................................................................3
Scale and structure of tour operating industry........................................................................5
Evaluation of impact of integration........................................................................................5
PART 2............................................................................................................................................6
Different stages and components for creating package holiday.............................................6
Holiday package for educational tour.....................................................................................8
PART 3............................................................................................................................................9
Review of a range of package tour programmes....................................................................9
Comparison and contrast of package tour programmes.......................................................12
Evaluation of a range of package tour programmes.............................................................14
PART 4..........................................................................................................................................14
Exploration of strategic and tactical decision-making in tour operations............................14
Assessment of external factors affecting decisions..............................................................16
Evaluation of strategic and tactical decisions made by TUI................................................17
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19

INTRODUCTION
A tour operator combines tour and travel components so as to create a holiday package.
Tour operator management is related to managing the operations related to travel and tourism so
that customers can be given quality services meeting all of their requirements (Dodaro and et. al.,
2015). Tour operators play an important role in strengthening the travel and tourism industry by
attracting customers through their captivating packages. In this report TUI AG which is an
Anglo-German multinational travel and tourism company headquartered in Hannover, Germany
is taken to understand aspects of tour operation management. It is one of the largest company
which deals in travel and tourism and it owns various travel agencies, hotels, airlines, cruise
ships etc. so that its customers can have a world class experience of travelling. In this report
details about the roles and functions of a range of tour operators, scale and structure of tour-
operator-industry, stages of developing holiday package etc. will be discussed. Further strategic
and tactical decisions taken by tour operators will also be discussed. There will also a be a
review about a package tour programmes so that the decisions that are made while making
decisions regarding deciding price of tour package can be analysed.
PART 1
'Exploring the tour operating sector'
Roles and functions of a range of tour operators
Tour operators are businesses who combines tour and travel components so that a holiday
package can be created. These types of businesses organise tours for people by giving them an
organised itinerary and making arrangements for them related to accommodation, conveyance,
food and beverages etc. so that a complete holiday packager can be formed. TUI is a tour
operating company which plan holidays for its customers and give them quality services so that
high value can be created (Ghaderi, Mat Som and Henderson, 2015). Tour operators also advice
customers different travel destinations, transportation facility available, best season of visiting a
place etc.
Types of tour operators: Mass market operators: These operators design holiday packages for a group of people
at a time which involves a good knowledge about the tourism industry so that tours can
be designed at most affordable prices. For example TUI which is well known for

designing tour packages for mass population at a time, at affordable prices and with
highest quality of services (Goffi, Masiero and Pencarelli, 2018). Independent operators: These are the operators who work in their individual capacity to
organise tour packages for people and making arrangements regarding travelling,
accommodation, food etc. They make customer specific tour packages which are in
accordance with affordability of customers. Domestic operators: These are the tour operators who manage holiday packages within
national boundaries which means that they play an important role in promotion of local
tourism. Incoming operators: These are the operators who make arrangements for travellers who
travel from different locations. The services given by them includes car rentals, tourist
guides, sightseeing etc.
 Outbound operators: These operators make travel packages for customers so that they
can travel from one country to another of their choice. They help in promotion of
international tourism (Ivanova, Klimova and Rozanova, 2018).
Roles of tour operators
The various roles that are performed by tour operators in the context of TUI are: Product development: This function is related to developing the products in accordance
with their needs an wants of travellers so that their services can be customised as per their
budget and their preference. TUI develops the products and services as per the needs of
its customers so that maximum value can be created for its customers. Marketing and sales: It is also the role of tour operators to market the services and
products related to travel and tourism so that their sales can be increased. TUI markets its
packages and travelling services through advertising on social media, print media,
through internet etc. so as to attract customers and increase its sales. Advising customers: Tour operators also advise customers regarding places to visit,
seasons that are suitable to visit a location, budget that will be required etc. so that
detailed information can be given to customers (Manente, Minghetti and Mingotto,
2015).

 Travel information: Tour operators gives information to customers regarding the
itinerary, destinations, accommodations, travelling modes etc. so that customers can
travel safely and happily to their desired destinations.
 Operations support: Various operations are also handled by the tour operators like
accommodation, hospitality, travel and transportation etc. so that the these supporting
services can help customers in having a comfortable travel experience.
Scale and structure of tour operating industry
With the increase in scope of travel and tourism industry, role of tour operators is
increasing and there can be seen an annual growth of 2.3% in the number of tour operator
businesses in UK. The estimated worth of tour operator industry is about £14.9bn with the
increase in holiday packages that are purchased by travellers in UK. The number of employees
working in the industry are 29,038 (How is the Industry Trending in the UK? .2020). There are
various tour operators which provide services related to tourism like Thomas Cook, TUI, AITO
etc. which operate in UK. A comparison of mass market and independent specialist operators:
TUI company: TUI is a well known mass market tour operator which form holiday
packages for a group of people at a time and is able to provide holiday packages at low costs as
all the products and services are bought in bulk. The company has an operating income of more
than £297 million and the products offered by it range from passenger transport, travel agency,
accommodation etc. so that travel of customers can be made highly convenient and comfortable.
Tourism Information Board is the authority that operates the structure of tourism industry. TUI
employs more than 70000 employees and operates in more than 100 nations.
AITO: Association of Independent Tour Operators is a trade group which represents
around 120 specialist and independent tour operators and its members operates in more than 170
countries. AITO agents provide specialist products to their customers tailor made as per their
needs and budget so that their experience can be enhanced. The main focus of this group of
independent and specialist travel agents is to promote choice and quality by giving customers a
variety of choices of travel destinations and giving them special services with their knowledge,
experience and expertise.
Evaluation of impact of integration
The scale and structure of specialist tour operators and large mass-market tour operators
are governed by the tourism information board which determine the way in which they work

ethically and legally. Specialist tour operators cater for niche market holidays and specialise in
particular destinations or particular product. Mass market tour operators on the other hand cater
to the needs of a group of people at a time so that a holiday package can be made at best prices
giving the best quality of services. Integration of mass market and specialist tour operators can
help in increasing the scope of tourism and also best quality of services can be provided to
customers (Snyman, 2015). It can also help in expanding the tourism market in UK which will
also help in economic development of the country with increased employment opportunities.
PART 2
Different stages and components for creating package holiday
Creation of holiday package involves following steps so that customers can be given
satisfactory services and products and high value can be created for them:
 Market research: Market research is done so that the requirement of tour package can be
determined along with understanding the key elements associated with tourist
destinations and markets. This stage help in analysing the requirement that are to be
fulfilled by tour operator like tour for students, couples, pilgrimage etc. will have
different requirements (Allahyari, Salari and Vigo, 2015) Tour itinerary development: It includes the sequences of various activities during the trip
from point of assembling to the point of departure so that a well planned tour can be
designed. This itinerary will help customers in getting informed about the places they will
visit and time required. Contracting suppliers: Negotiation of prices is done with many vendors depending on
the nature and size of tour like airlines, lodging facilities, car rentals, hotel etc. This stage
will determine the total cost of tour package which will be different depending on their
requirements. Costing of tour package: It is the cost of all the individual ingredients involved in tour
package after adding profit margins by company. This help in determining the total cost
of tour package so that customers can purchase them based on their affordability. Brochure production: After finalising the cost of tour package brochures are formed that
help in marketing the brochures to target customers. The brochure will help in making
tour package look attractive so that sales can be increased.

 Marketing and sale: With the help of advertisements and other marketing strategies
target customers are attracted to purchase tour packages so that sales can increase. This
will help in attracting a large number of customers and increasing company profits.
 Critical path analysis: It involves identification of time for finishing all activities along
with their dependencies on each other. This help in determining the time required to
complete each of the stage so that best services are offered to customers.
Timescale of each of the above activities is given below:
Activities 1 to 10
Day
10 to
14
Day
15 to
30 Day
30 to
38 Day
39 to
52Day
52 to
65 Day
65 to
78 Day
78 to
90 Day
Market research
Capacities
Contracting supplier
and pricing
Brochure production
and marketing with sales
Critical path analysis
Forecasting change in customer demand
With the changing market conditions the needs and wants of customers change over the
course of time. It is important that the needs and wants of customers are well traced so that a
demand forecast can be done which will help in satisfying the needs of customers in an efficient
manner. Forecasting can be done based on a close study of the past patterns of customers needs
so that their future needs can be predicted. Following are factors which can change customer
demands: Economic factors: These are the changing economic conditions of nations which also
affect the purchasing power of customers which create an affect on the travel and tourism
business. If the economic conditions are strong then people can afford to travel to various
destinations which help in the growth of tour operator businesses. It also help in
determining the cost of holiday package which the company must offer to its customers.

The companies must monitor the economic conditions prevailing in the country so that
profitable holiday packages can be designed (Bazargan, 2016).
 Social factors: These factors are related with the demographics of a country like age, sex,
caste etc. which also determine their standard of living and affect their preference to
spend their money on leisure and tourism activities. The increasing trend of travel and
tourism can create a positive impact on the sales of tour operators as many people are
spending on getting leisure and tourism activities. These trends must be closely followed
by TUI so that the demand of tourism can be forecasted.
The other ways in which customer demand can change depends on the following factors:
 Capacity and contracting: The ability of tour operator to manage contracts with suppliers
so that best quality of services can be provided to customers based on their budget and
requirement affects the demand of customer. Also the capacity of making arrangements
for a group of travellers also affects the demand of customers for tour operators.
 Pricing: It is important that the tour packages are priced based on the quality of services,
number of days for which tour is planned, number of people etc. so that they can be given
with services which can help in enhancing the satisfaction and also building their trust in
the company (Guo and He, 2012).
Holiday package for educational tour
Package name: Educational tour package
Target audience: Adult student market (over 18 age group)
Target places: Students from London, UK to Belgium
Number of students targeted: 50
Inclusions: Tour for 7 nights in Ghent at Van der Valk Hotel, Nazareth-Ghent
Price:
Particulars Cost
Luxury coach (includes cost of two drivers, a
tour manager, fuel and ferry taxes) £7,600
Visitor attraction charges £2500
Cost of local tour guide £860

Total £10960
Profit margin of 25%
Total £13700
Marketing and sales: The marketing will be done by company on social media websites, in
schools and colleges through brochures and through advertisements on TV and radio.
PART 3
Review of a range of package tour programmes
Package tours are holidays which are a combination of variety of services that are offered
during the tour to the customers like accommodation, transport, food and beverages etc. These
package tours are a combination of all the components related with travel and tour so that
complete holidays of customers can be well planned and organized. These tour packages are
formed based on the requirements of the customers that are involved in tour and are tailor made
so as to suite to the needs and requirements of customers (B. DiPietro, Cao and Partlow, 2013).
TUI is a mass market tour operator which means that it makes holiday packages for a group of
people at a time so that customers can be given quality products and services during their tour.
Following are the ways in which TUI can focus on the same target market i.e. a group of students
above 18 years of age and the package tour programme is for educational tour: Traditional brochures: A brochure is a printed document which is designed in such a
way that it can help in attracting customers towards the information that is contained in
the brochures. These are designed in such a way that they can be folded and kept in
pocket sized folders. These are distributed by the company at various locations free of
cost by the way of newspaper inserts, distributed manually at high traffic locations etc.
so that a large number of people can be reached. A brochure contains summary of the
information which can be written in an attractive style by highlighting the main content

so that customers attention can be gained. TUI can use traditional brochures and
distribute them manually outside colleges so that their target audience i.e. students above
18 years of age can be reached (Luis, Dolinskaya and Smilowitz, 2012). E-brochures: These are digital version of traditional brochures which can be made more
attractive and can be circulated to a large number of target customers with the use of
internet. These are more interactive and can be made more creative so as to seek the
attention of target customers by the way of 3D printing and usage of multimedia. These
brochures are more effective as they are both time and cost effective and can reach to a
large number of prospects who can further be converted into actual customers. TUI can
use e-brochures so as to attract students who are more involved in usage of internet and
can be attracted easily towards the tour package programme of company regarding
educational tour.

The above brochure is designed to attract students above 18 years of age by TUI by
forming a tour package programme which will help in giving information to them about the
activities that will be involved during tour. The above brochure is a 4 page leaflet which give
detailed information top students so that they can know about the activities that will be done
while tour, the places which will be visited along with the costing of tour to students. This
brochure has a detailed content relating to the complete time that will be involved in completing
the tour. This brochure is though expensive as it involves costing of paper and designing which
can increase the advertising cost of company (Naji-Azimi and et. al., 2012). However, TUI can
attract students to buy its holiday package as detailed information is included along with utilising
the space of brochure in an attractive manner.

The above brochure is a 3-fold brochure which is circulated by Trailfinders which is a
British travel company based in UK and Ireland. In its brochure most of the space is covered by
images which wastes the space of brochure and also makes the brochure unnecessarily big. This
brochure although is attractive and interactive by the use of images it can affect the quality of
message that is to be delivered to students. The students might not take the package tour
seriously which might affect the sales of company and will also waste the number of brochures
created. However it contains almost all the information that are required by students it lacks the
information about the cost that will be involved in complete tour. This might affect the decision-
making of students. Also as the target market is students above 18 years of age the brochure must
be made in a way that is more serious in nature.
Comparison and contrast of package tour programmes
It can be seen from the above tour packages that when they are created to attract a similar
target market there are many similarities in the tour packages. As the above brochures are created