Tour Operations Management: A Comprehensive Report

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Tour Operations Management

Table of Contents
Introduction...................................................................................................................... 2
Part 1- Exploring the tour operating sector (LO1)............................................................2
Part 2 – The process of creating and costing a package holiday (LO2)...........................6
Part 3 – A review of package tour programmes (LO3)...................................................12
Part 4 – Strategic and tactical decisions review (LO4)...................................................13
Conclusion..................................................................................................................... 16
References.....................................................................................................................17
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Introduction
The present study demonstrates an in-depth understanding of various aspects of tour
operating sector. This includes tour operation management that highlights different
elements in this particular industry. The given scenario assesses the case of TUI that
involves supporting the growth and profitability of the company within the highly
competitive market. Thus, this study will evaluate the appealing aspects of the company
to grab the attention of the customers. It includes an article, step by step guide and a
report that help in exploring the sector as a whole.
Part 1- Exploring the tour operating sector (LO1)
The tour operating sector is the integration of almost all industries that directly offer
goods or assistance to promote its business, entertainment and holiday activities far
from the home atmosphere. The article highlights the different roles and functions of the
tour operators, scale and the structure of the tour operating industry
Roles and functions of a range of tour operators
A tour operator is someone who connects different tour and travel segments in order to
plan a vacation (Cetin and Yarcan, 2017). Moreover, a tour operator can also be
defined as the person who plans for a vacation or trip which is customarily made for
entertainment or for business purposes. The main purpose of the tour operator is to
guide people to visit various places. There are various roles and responsibilities of the
tour operators are discussed below:
● Presenting comprehensive as well as precise information regarding various tour
destinations
● In order to serve the people in a proper way, make arrangements for
transportation, accommodation, trips and other activities
● Maintain a proper communication channel with the airlines, ground transports,
hotels for making proper arrangements
● Notifying the consumer regarding the travel and tourism-related difficulties such
as documentation and financial issues, money exchange charges
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● Maintain a proper database in order to examine information regarding different
accommodation charges and the ratings of the hotels
● Handle customer regarding various payments related operations
● Completing common management responsibilities
● Promote different planning activities and packages
● Make another plan for the consumers who have encountered any issue
previously
● In order to provide knowledge regarding the tour destinations make attractive
presentations for the travel groups
● Planning and setting up exhibitions at business programs
Functions of the tour operator include the following:
● planning a tour
● Proper promotion
● marketing and sales
● Planning a tour
● Advice on sightseeing
● Check whether the visitors are encountering any difficulties or not
● Search for different options for the visitors
Scale and the structure of the tour operating industry
Structure or framework of the travel & tourism industry can be explained efficiently by
recognizing its various features, elements and purposes (Goffi et al., 2018). For
recognizing the structure of the industry, it is necessary to estimate all components from
the suppliers to consumers that can be prepared by evaluating its various features
separately (Long and Shi, 2017). Structure in the tourism industry is divided into the
private sector, public sector and voluntary sector. On the other hand, the scale in the
tour operating industry can be classified as small, medium and large.
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Generally, the business operators perform all the functions in the private sector of the
tourism department. Functions include travel insurance, travel press, travel marketing,
private colleges, tour operators and others. In the case of public sectors, that are made
of different groups who make strategy and leadership goals for the overall enhancement
of the tourism industry (Bandara and Silva, 2016). This is operated and controlled by the
government. The main motto of the public sector organisations is to support the tourism
industry. Voluntary organizations are managed and operated by volunteers. These
organizations do not want to make a profit. This produces some business advantages
such as decreased prices and VAT, the revenue tax exclusion for investments, bonds
and bank security deposits.
Compare and contrast the scale and structure of large mass market operations
and independent specialist operations
Mass tourism means that it involves tens and thousands of travellers at one time who
will go at the same place all together. It is obviously comes cheap and is an important
part of tourism business. This offers package deals and requires great service delivery
from the tour operator (Fountoulaki et al., 2015).
Large mass market tour operators such as TUI operates in a global basis and so there
mode of operation is higher and bigger than others. Mass market operators sell a great
number of holidays to the travellers and they have pre planned tour system ( Cetin and
Yarcan, 2017). They cater to the traveller about various packages that is offered for
throughout time of the year considering different factors that have a wide role in
exploring a particular area of the globe. They perform major operations while tying up
with transport service providers, hotels and local sightseeing managers so that the
travellers do not have to complain or go through any unwanted experience that can
hamper the good brand image of the company (Goffi et al., 2018). These travel
agencies create thousands of holiday plan and people can choose any one of them as
per their suitability of budget and preference of place. They are specialist about
destination travelling. Thomas cook, first choice holidays and Thompson holidays are
the names of large mass market tour operators (Mason, 2015).
An independent specialist tour operator makes customized holiday package for a small
group of traveller as per their demand and need. They have specialty in particular
destination, or type of travelling as they operate in a small scale and therefore makes
perfection in their dealings (Schuckert, et al., 2015). They make contract with local
transport providers and hotel managers and opt for different locations to give every
possible facility to the tourists. When an interested tourist party comes to them, they first
help them by giving assistance and analyses all the terms and conditions and focus on
the wants and demands for the traveller to suit him a plan.
Evaluate the impacts of integration on the scale and structure of large mass-
market and independent specialist tour operations
As from the existing practices in the tourism industry, it is evident that there are
requirement of hotels, transport operators, airlines, area managers to run the whole
operation of services. Therefore some operators build their own chain to give these
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facilities to the travellers whereas others tie up with other service providers and arrange
the same for the travellers on request (Robinson et al., 2016). Therefore large mass
tour operators create two or more sub companies to make the process easier to handle.
This creates two types of integration system, namely Horizontal Integration and Vertical
Integration. When the parent organization own distribution chains that takes care of the
other services, creates horizontal integration. TUI has this kind of horizontal integration
as they have their own airline services and cruise services named Marella cruise
service (Tui.co.uk. 2019). On the other hand when an organization own different
companies of the buying chain creates vertically integrated tourism. Virgin Trains is a
good example of it owned by Virgin Group and it also has a partnership with
stagecoach.
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Part 2 – The process of creating and costing a package holiday (LO2)
Step-by-step’ guide on ‘How to create a package holiday
Different stages and components in the creation of a package holiday for a range
of different tour operator requirements
There are different stages and components that a tour operator has to keep in mind
while making a package plan for a holiday. A flow chart is given below to make a quick
understanding of that.
Figure 1: Plan for packaged tour
Source: (Created by author)
Key stages and components in the creation of a package holiday to differentiate
between a range of tour operator requirements
As can be seen from the above, when a group of travellers approach a tour operator for
giving a tour package, the operator gives them cost breaks for the different operations
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regarding that tour (Medlik, 2016). This all includes different types of operations, which
could be categorized under three heads, such as:
STAGES ROLE FUNCTION TIMESCALE
Pre trip
costs
Holiday money These are special types of travel
money that are available as
international debit card that helps the
traveller to pre foreign currencies
prior to travelling
Within 2 days of
application
Conversion cost This is important as different
countries have different currency
system and therefore, the traveller
should be ready to make any type of
monetary exchange through the
destination currency. Through
currency conversion, the traveller
converts their amount with the
present rate and obtains the desired
form of cash
One day
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Travel insurance This covers all the health related
risks that may come up during
travelling in a foreign country. A
small amount is required to buy such
insurance and therefore all losses
which may occur while travelling is
covered up
Within 2 days of
application
Costs
during
travel
Outbound
transportation
This transportation is done through
airports and harbours as there is no
other mode of long distance
travelling
1 hour 10
minutes in each
trip of the round
trip (London ↔
Brussels)
Accommodation This is required to stay at night
during the travel period
7 days
Local transport This is required to travel from one
place to another and see the whole
area of interest
6-7 hours per
day
Local
sightseeing
This makes the travel interesting by
exploring different interesting places
of that place.
6-7 hours per
day
Travel guide This is an important person, who
helps to understand the local history
and heritage to make the trip
interesting
3-4 hours per
day
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Company
profit cost
Mark up cost To cover selling and administration
costs and profit, the company needs
to add this chare to make profit out of
the business
1 day
Table 1: Components in the creation of a package holiday
Source: (Created by author)
Here is a brief tour planning regarding the Ghent, Brugge, Ostend, Antwerp, and
Brussels trip:
 Day 1: Pick up from Airport in luxury coach and tour to Airstream caravan.
Nearby tourists’ attractions, such as Grand Place, the Galeries Royales Saint-
Hubert and all three peeing statues will be seen. Visit of museums MAS by The
Red Star Line services. Overnight stay in the Hotel.
 Day 2: Visit of Plantin Moretus Museum in Ghent through cruise journey. Visit of
Gothic Saint-Bavo’s Cathedral to see The Adoration of the Mystic Lamb
 Day 3: Explore Ghent Market Hall, contemporary art museum S.M.A.K and the
Design Museum. Move to Bruges to see panoramic view from Belfry, Minnewater
Bridge and departure to Bruut to enjoy its countryside beauty.
 Day 4: Visit of Groeninge museum and Michelangelo’s Madonna with Child in the
Church of Our Lady. Drive to Blankenberghe and boom to see ‘Queen of the
Bath Cities,’ Arne Quinze’s outdoor art installation.
 Day 5: Drive over to Ypres. Visit to Essex Farm Cemetery, In Flanders Fields
Museum and City Hall
 Day 6: Visit to Museum François Duesberg. Travel to Duruy and banks of the
river Ourthe.
 Day 7: Visit to Confiturerie Saint-Amour and Topiary Park, Liège in the first half
of the day and return to London by flight.
Determination and forecast changes in consumer demand using different sources
of research
As per the experience of TUI, there are a lot of changed behaviours seen in the
travellers. These are generally travel oriented and the travellers now want full
information, and checks for their full satisfaction of services. Earlier, travellers use to
fully depend on the tour operators, as they were unaware of a new location and
therefore preferred to act as per the guidelines of the travel operator ( Patterson, 2015).
But now in this age of mobile technology, the customers know about the services that
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they can get from the other service providers, they have a wide idea about the
destinations and prime tourist attractions, possible list of hotels that suits their budgets.
Therefore a smart approach has been seen from the travellers. Therefore, the tour
operators try to give them a top notch service and information within a standard budget,
so that the traveller finalizes the deal with them (del Alonso-Almeida, et al., 2015). The
changes that could be seen in the travellers approach could be for many reasons, as:
 Travellers come to know about any place or destination from different
advertisements and articles published in travel guide books and magazines.
 Now, different travel groups are trending on different social media platforms,
through which travellers also get to know about different virgin places and related
information.
 There is a big role of friends, relatives, colleagues to grow interest in other
person so that the person can talk with tour operators about the property of
interest.
 The traveller’s searches different hotel websites to check the prices, so that they
can find their best match related to their expected location, services, and budget.
 They then talk to the travel operators to justify their findings and make a possible
deal with the operators through negotiation.
 Sometimes, the personal good experience of a traveller with a tour operator
helps to make a good relation and so the travels comes back to the tour operator
for further trips and personally advocates about a place or that service providers
to others.
Step-by-step’ guide on ‘How to cost a package holiday
Critically analyse the key stages and components in the creation of a package
holiday in meeting different business objectives for a range of tour operators
For TUI, it is a good opportunity to cater 50 students from London who wishes to travel
to Ghent, Brugge, Ostend, Antwerp, and Brussels in summer 2021. They wish to spend
a good holiday there for seven nights to complete an educational tour. They need an
escorted luxury coach and other facilities, so the company has given the Van der Valk
Hotel Nazareth-Ghent, to serve these students. The package cost will be like the
following:
Item Cost (per
head /night
Cost for 7
nights
Converted price (€1.09
per £1)
Air fare £100 (round trip) €109
Accommodation € (125/2) * 25 €3125 €3125
Luxury coach £7, 800= €8502
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Visitor attractions charge €54 £2700= €2943
Local tour guide €960 €960
Holiday money £127 £6350 €6922
travel insurance £31 £1550 €1690
Core cost €24251
selling and administration
costs
@ 25% €6063
Total package cost €30314
Table 2: Package holiday in meeting different business objectives
Source: (Created by author)
This proposed tour package starts with round airfare from London to Brussels and
includes accommodation on twin share basis in a standard room for 7 nights, which
includes free breakfast facility. The travelling will be done by luxury coach which
includes the charge of two drivers, a tour manager, fuel and all road and ferry taxes.
This package includes all Visitor attractions charges and so the students do not have to
care for that while travelling. This also includes the charge of local guide so the
experience of students will be easy and good./ T give a hassle free and secured
experience of travelling, TUI is taking care of all the formalities regarding holiday money
and travel insurance and the charges are also included. The conversion rate is also
calculated on today’s rate which is €1.09 per £1 on 1 July 2019. Finally the mark up cost
has also been added to make a final total cost of €30314.
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