Tour Operations Management: Industry Analysis and Package Design

This report provides a comprehensive overview of tour operations management, examining the impact of recent developments in the tourism industry, particularly focusing on technological advancements and changing traveler preferences. It delves into the stages and time scales involved in designing holiday packages, using a case study of a sightseeing tour from London to Paris for Chinese students. The report evaluates the suitability of destinations and attractions, considering contracting methods with suppliers like fixed and only for sale contracts, and calculates the selling price of the holiday package. Furthermore, it assesses the planning decisions for brochure design and the suitability of alternatives. Strategic and tactical decisions made by tour operators are also evaluated, providing insights into effective tour operations management practices.

TOUR
OPERATIONS
MANAGEMENT

TABLE OF CONTENTS
Introduction .....................................................................................................................................3
1.1 Analyzing the impact of recent development on the tour operators industry .......................3
TASK 2............................................................................................................................................5
2.1 Determining the stages and time scale involved in designing the holiday packages.............5
2.2 Evaluating the suitability, destinations and attractions involved in developing holiday
packages.......................................................................................................................................6
2.3 Calculating the selling price of the holiday package ............................................................7
TASK 3............................................................................................................................................8
3.1 Evaluating the planning decisions taken for the design of a selected brochure.....................8
3.2 Assessing the suitability of alternatives to a traditional brochure for various kinds of tour
operators.......................................................................................................................................9
3.3 Evaluating the suitability of various methods of distribution used to sell a holiday
packages to various tour operators along with recommendation ..............................................10
TASK 4..........................................................................................................................................11
4.1 Evaluating the strategic decisions made by various types of tour operators ......................11
4.2 Comparing the tactical decisions that could be taken by chosen tour operator in contrasting
situations ...................................................................................................................................12
Conclusion ....................................................................................................................................13
REFERENCES..............................................................................................................................15
2

INTRODUCTION
Tour operations management is important function that refers to administration of
tourism practices to develop the extreme level of efficiency possible within a entity. This concept
also help the managers of tourism industry to manage the tour components to develop attractive
holiday package for various travelers. It will also help them in integrating contrasting activities
such as, accommodation, food and beverage, travel, recreation etc in a single package
customized as per the needs of customer.
At present travel and tourism industry is highest growing segment. It further contributes
to 10% to the GDP of UK and employment opportunities for 1 out of 11 individuals. Further, UK
is the world's 8th leading destination which recently welcomed 36.115 million travelers. The
international travelers further incurred expenditure of US$22.072 billion. Therefore, the tourism
generates ample number of fruitful opportunities to the economy. In this report, clear
understanding about the various aspect of tour operations management will be shown. The recent
development in the tourism industry will be highlighted. The different methods of contracting
with suppliers will be discussed. Further evaluation about the strategic and tactical decisions that
can be made by tour operators will be provided.
TASK 1
1.1 Analyzing the impact of recent development on the tour operators industry
Tourism industry is driven by technology at present so as to meet the increasing demand
among customers. It has been identified from the research that tourism sector is having average
growth of 4-5% every year. In order to continue enjoying the lucrative benefits generated by the
industry it is becoming a necessity for tour operators to emphasis on emerging technology and
trends (Sprague, 2007). The new and upgraded technology will also help tourism organization in
staying ahead of its rivals. Further, efficiency of business will be improved with the use of finer
technology and thus customer needs will be met in more better way. The recent trends witnessed
by the industry and their outcomes on the working of tour operators are detailed out as follows:
 Technical advances: The technical improvement are acting as boon for the industry and
improved the efficiency of business to provide reliable, prime quality and exclusive
services to its customers. It further involve the use of internet facility by customers to
book their travel packages (Blanke and Chiesa, 2013). The internet provide attractive
3

images of the destination that stimulate the interest of customer to actually visit the site.
The proper use of internet sources can help tourism business in yielding maximum
profits. Further, internet portals, online ordering, blogs, e-marketing, social sites and
information repositories etc are used by tour operators to assist in persuading the
customers to take tour packages or visit particular location (Simpson, Power and
Samson, 2007).
 Mobile Communication: There are various mobile communication device that are used
by travelers while their backpacking tours etc. Such as, cellular phone, tablet computer
etc are some devices that are used. Considering the increased use of mobile technology,
tour operators have started providing tour packages, offer deals, location based
advertising, tourism guidelines through cellular applications (Boniface, Cooper and
Cooper, 2016).
 Reservation system: There is increase in trend of booking engine that permit wide range
of customers to book their holiday package from specific operator and compare prices. It
also help in trimming down the cost for tourism company and provide more control over
the buying process (Chan and Tay, 2016). For instance, entity like, Expedia offers its
services through online interface. The sales can be increased with this aspect.
 General direction to change: It refers to prevalent trends in the travel and tourism
industry. For instance, earlier the maximum travelers preferred taking tour with their
families but now there is trend of backpacking tour where individuals prefer independent
travel. Along with this aspect, travelers prefer touring to new and unidentified places
(Evans, Stonehouse and Campbell, 2012).
 Millennial looking for adventure: The millennial group is predicted to hold the
approximate 20% of the tourism customer. The market research reveals that 50% of the
millennial group are likely to take international tour by 2020 (Trends in travel and
tourism. 2015). The studies show that they are more interested in taking adventure tours
like, volcano boarding, visiting dark destination etc.
 Few restrictions: In order to boast tourism the restrictions related to VISA and
international traveling are relaxing. In the support of this there is evolution of budget
airlines that stimulate the interest of travelers in positive manner. Therefore, advantage
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can be taken by tour operators by offering international holiday packages at attracting
rates etc (Gustavo, 2013).
TASK 2
2.1 Determining the stages and time scale involved in designing the holiday packages
With reference to provided case scenario, it has been identified that a sightseeing tour is
to be developed form Chinese students from London, UK to Paris, France. The tour will be
commenced from summer breaks in August 2018. It will be for 15 students for up to 5 days. In
order to enhance the satisfaction level of international tourist and improve their experience, it is
important for entity to focus on the effective design of holiday package. Expedia can offer this
tour by doing advance planning (Hudson and Thal, 2013). The planning will help entity in
fulfilling the expectations of customers in better way. The satisfied customers will help Expedia
in promotion through word of mouth publicity leading to brand building. The planning process
will require time of 5-6 months. With the help of prior planning, company can ensure it have
proper resources to meet the contrasting needs of customers etc (Kapiki, 2012). The various
stages involved in designing of holiday package are as follows:
 Market research: It is important aspect that will help tourism entity in studying the
target destination of which tour package will be provided to customers. Therefore,
analysis of market of London and Paris will be done so as to check, availability of
accommodation, restaurant, recreation facility etc that are desired by customers (Bajs,
2015). Further, the suitability of location can be judged with the help of market research
in terms of safety of tourist, favorable economic and political state, accessibility to
needed resources etc.
 Planning and scheduling: With this step, tour operators can plan which tourism sited
must be covered in holiday package. For instance, in London site seeing tour will cover
place like,London Eye, British Museum, Tower of London, National Gallery etc. While
in Paris, Louvre Museum, Eiffel Tower, Disney land, Montmartre will be of key interest.
The day in which the places will be covered will be decided (Oppewal, Huybers and
Crouch, 2015).
 Forecasting: The demand of customer will be forecast so that entity can assure it provide
them effective services.
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 Contracting: In order to meet the needs of customers, tour operators will contract with
various service providers. Such as hotels will be contracted, local guide, food units etc
The method of contracting will be decided (Hall and Page, 2014). In addition to this
aspect, negotiation will be done with various service providers so that best service can be
obtained at affordable prices.
 Pricing: The sale of holiday package depends extensively on the prices set by the
company. Expedia can consider the competitors pricing policy while determining its own
pricing strategy. The prices will be decided after considering the variable, fixed cost that
will be incurred on the holiday package (Pearce, 2013). Along with this aspect, seasonal
factor must be focused like high prices in peak season.
 Timescale: The tour operators will determine time scale for each activity. The duration
for which offer will be valid will be decided. The research should not take more than 2
months while contracting with supplier must be completed in 30 days. Thereafter, 45
days will be needed for pricing the package and rest time will be devoted on the
promotion of tour (Goodall and Ashworth, 2013).
2.2 Evaluating the suitability, destinations and attractions involved in developing holiday
packages
For the design of attractive tour package, tour operators are required to focus on various aspect.
Tour operators must ensure that holiday package are designed as per the emerging needs of
tourist. Since, its inception that company is offering tour operators to Chinese students, it must
consider there need to have budgeted tour package, visit to educational and cultural sites etc
(Hudson and Thal, 2013). Further, Expedia will contract with various suppliers so that there
services can be offered in package to potential customers. In this respect, following contracting
methods can be considered.
 Fixed contract: This contract method will help tour agent in contracting with suppliers
as per the quantity of services provided by them. This contract methods is suitable when
company obtain bulk services and provide the same in small quantity to customers. For
instance, in peak season, Expedia can use fixed contract method to book maximum
services like hotels, tickets of evening shows etc. that are demanded by maximum
customers (Jayawardena, 2013). The tour operators will have pay all the services
6

irrespective that are used by tourist or not. The bulk buying will help entity in giving
discount to customers.
 Only for sale contract: With this contracting method, Expedia will be able to reserve the
limited services that are needed by specific customers. This method is used in weak
season or for booking the services demanded by niche customer segment. This contract
method will be used by Expedia to reserve services like, theme park, spa, sauna bath,
sport activities like, bungee jumping that are needed by specific customers (Korstanje,
2012). Other than this the service of travel agency, local guide can be booked with the
help of this method.
2.3 Calculating the selling price of the holiday package
The success and sales of developed holiday package will depend upon the selling prices
determined by the company. The too high prices can refrain the price conscious customers and
too low prices can prevent status concerned customers to take holiday package. Here, 5 days tour
package is provided to 15 students from London to Paris. For this aspect,company will use its
corporate relationship with St Michelle hotel which will provide lodging facility. It will charge
60 Euros for twin room (Law, Qi and Buhalis, 2010). On the other hand, services of
transportation company will be reserved at 1000 Euro which will help in sight seeing. Along
with this aspect, services local tour guide will be booked. All these facilities will involve various
cost which must be considered while deciding the selling price. The company can use mark up
pricing policy which will enable it to add mark up on total incurred cost so as to recover the
expenditure and develop a revenue. Here, Expedia wants to earn margin of 10% on the total cost.
Therefore, the calculation of selling price is as follows:
Services Selling price for 15 students
(£)
Accommodation in St
Michelle
47.67x8= 381.36
Supplement for BB 7.95x15= 119.25
Transportation by 1000
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luxury coach
Local Guide 200
TOTAL 1700.61
Margin of 10 percent 170.61
Selling price 1870
Here, the value of Euro can be changed into Pound for effective calculation of Cost
 10 euro=7.95
 60 euro=47.67 pound
TASK 3
3.1 Evaluating the planning decisions taken for the design of a selected brochure
Brochure can be defined in simple terms as a pamphlet containing information that not
only create awareness among customers but also stimulate them to make purchase. The brochure
can be used by Expedia to transmit information about its services to wide number of customers.
It will also support the entity in ensuring sales of holiday package through online and offline
method (Laws, 2011). To assure effective design of brochure, company will pay emphasis on
various aspect like proper planning, research etc. Further, company can consider both modern
and traditional brochures for targeting customers. The different planning decision that will be
taken by Expedia are listed down as follows:
 Recognition of planning issue: The brochure designing will involve various issue that is
faced during brochure designing. Such as, determining the format, purpose of brochure,
target customers, time duration etc aspect must be focused for designing the brochure. In
addition to this, type of brochure must be decided (Lignau, 2013).
 Format: In order to develop captivating brochure and enhance its visibility it is
significant for Expedia to determine the format and align the format of brochure with
potential customers. Along with format company is required to decide quality of paper,
font size,colour combination, tag line etc that can be used by company (Sprague, 2007).
With the proper selection of these aspect, impelling brochure can be designed by
company.
 Deciding the print specification: With this aspect, company will determine quality of
print that can be used in designing the brochure. Such as,attractive cover page can be
8

developed having destination picture, brand name, tag lines,contact details of company
etc (Salmerón and Apte, 2010).
 Potential market and Budget: The brochure design depends upon the target segments
and its needs. Here, Chinese students are targeted so the brochure can be developed in
alternative language like Chinese. Further, to impact students company can take help of
technology like, e-brochure can be designed. Further, budget will be decided which will
ensure expenditure done of brochure designing does not exceed the probable benefits
from it (Lennon, 2003).
 Timescale: The planning decision of brochure must involve the suitable time that is
required for the design of entire brochure and when it must be launched among
customers. Such as brochure must be designed by Expedia within 60 days and will be
generated at least 1 month before the beginning of summer holidays to ensure maximum
booking by target customers.
3.2 Assessing the suitability of alternatives to a traditional brochure for various kinds of tour
operators
Since, its inception that tourism industry is heavily dependent upon the use of new
technology and processes. The development of new techniques have lead to the origination of
new mediums that can be used by tour operators to expand its business. In this respect, it is
appropriate for company to use modern brochures over traditional ones. The new brochure will
also help in amending the quality of brochure and attracting maximum customers (Martinich,
2008). Therefore, Expedia can use e-brochure which enable use of internet and other digital
techniques for designing the brochure and providing information to the customers. The internet
designed brochure will target more customers as it have wider reach. It will further help in
saving the additional cost incurred by entity on brochure designing and distribution. It can be
refereed as soft copy of brochure that can be directly downloaded by customers on their laptops,
smart phone,iPad etc. The online distribution will further trim down the postage and print cost
while enhancing the reading experience (Meredith and Mantel, 2011). They are user friendly as
they are accessible at click of a button at anytime at any place and thus facilitate information to
be accessed by outright number of people.
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Further, e-brochure are environment friendly as it minimize the use of paper and thus
save cutting of tree. Other than this, organization can also use visual brochure will have
affirmative affect on stimulating the interest of wide range of customers towards the service
offered by Expedia. The advantage of visual brochure is that it contain images, audio and other
graphical elements that attract the customers to take the holiday package (Morrison, 2013). The
advantage of visual brochure is that, it can be understood easily as it have both audio and video
elements. The pictures of destination that will be covered under the tour package can be
highlighted which will help in stimulating customers to personally visit the place. The images of
service like, hotel room, facilities in resort, local market etc. will be shown. The distribution of
video brochure is easy as it can be uploaded on social networking sites and mobile applications
like, Twitter, Facebook, YouTube, Instagram official web page of Expedia etc (Russell, and
Taylor-Iii, 2008). This will help in increasing awareness among market by enhancing the
visibility ratio.
In order to ensure maximum sales of developed holiday package, company can take help
of both e-brochure and video brochure.
3.3 Evaluating the suitability of various methods of distribution used to sell a holiday packages
to various tour operators along with recommendation
It is already identified that brochure is appropriate method that can be used by Expedia to
maximize the sales of its tour package. However, in the present dynamic environment the
method of designing and distribution of brochure is changed significantly. The development of
brochure is intensively become technology focused. Further, for the distribution of these
brochure, company can focus on the use of contrasting method like, online marketing, direct sale,
telecommunication sale, call centre etc (Sprague, 2007). Such as, online marketing will enable
the entity to use own website, social networking sites, blogs and information repositories where
e-brochure can be provided and shared among wide audience. Therefore, company will be able
to generate awareness among large number of customer regarding new holiday package, offers
provided by business. Thereafter, direct sales will enable tour operators to directly offer the
holiday package to customers personally visiting their offices (Blanke and Chiesa, 2013).
The direct email can also be used in this respect. In addition to this aspect, company can
take help of sales representatives that visit the educational institutes and provide details of
10

educational tour package offered by entity. Other than this aspect, telecommunication will enable
organization in contacting the past or new customers on their contact number and providing them
the details of tour package, offer price etc (Gustavo, 2013). in addition to this aspect, teletext
facility can be used by enterprise where information will be provided with the help of messaging
services . Furthermore, Expedia can also outsource the distribution function to call centre which
have database of customers interested in taking tour package. By outsourcing this function, entity
will be able to concentrate on other areas like marketing of the tour package, development of
strategies for expansion etc (Hudson and Thal, 2013). For determining the appropriate
distribution method, Expedia is required to focus on the cost and advantage. Therefore, the
distribution channel that provide maximum benefit with minimal cost will be selected. The
distribution channel that will also support the promotional campaign will be selected. Here,
Expedia can use integrated distribution channel which will help in reaching maximum
customers. It will further involve use of direct and internet based methods so as to enhance the
sales of developed tour package.
TASK 4
4.1 Evaluating the strategic decisions made by various types of tour operators
The strategic decision are long term, complex decisions that are taken by top executives
or senior tour operators generally. It will have direct impact on the entire tour package and
direction of the business. The mistake or inefficiency in taking these decision can result into
large amount of loss to business (Russell, and Taylor-Iii, 2008). These decision cannot be
reversed without having adverse affect on the operational activities of business. There are large
number of strategical decisions that must be taken by tour operators of Expedia. However, such
decisions must be taken in accordance with the business vision,mission and core objectives.
Some of them are described as follows:
 Volume: As per this aspect,company is required to determined the quantity of tour
package that must be offered to customers after considering the availability of resources.
Further, for the booking of services with suppliers, firm will ascertain the demand of
customers and on the basis of it services will be reserved with suppliers.
 Pricing strategy: The price is important component that determine the present and future
sales of holiday package. It is viable for company to select appropriate prices. In this
11

respect, there are contrasting strategy that can be considered (Law, Qi and Buhalis,
2010).. Such as, discount pricing strategy can be used which will enable business in pull
in maximum customer by providing them attractive customers. Along with this aspect,
competitive pricing can be used. With this strategy, firm can consider rival pricing policy
so aligned with its competitors (Gustavo, 2013)..
 Surcharge policy: It is important decision which enable company in adding extra fees on
the total price. This price is also charged for providing extra benefit to customer. For
instance for providing garden or sea facing room surcharge can be added.
 Positioning and branding: They are the important decision which help in building the
brand image in the market. In order to develop distinct image of its brand, company can
take help of various marketing channels (Evans, Stonehouse and Campbell, 2012). Such
as, promotion can be done on both online and offline sources. In addition to this aspect,
company can use its CSR practices sponsor charity etc. for developing positive image in
market.
 Distribution decision: It is important decision which help Expedia in choosing the
appropriate distribution channel. The wrong selection of distribution can result into poor
sales of holiday package etc. Such as use of door to door distribution in present hi-tech
world can adversely affect the business.
4.2 Comparing the tactical decisions that could be taken by chosen tour operator in contrasting
situations
The tactical decision are medium term decisions that support business in ensuring
smooth operations (Boniface, Cooper and Cooper, 2016). There are significant number of
tactical decisions that are taken by tour operators of Expedia to stay in competition. Some of
them are explained as follows:
 Decisions regarding seasonal aspect: The seasonality factor play crucial role in
enhancing and maintaining the profit position of tourism company. The demand of tour
package is interdependent upon the factors like, weak or peak season. Therefore, more
discount can be rendered in weak season so that inflow of customers remains consistent
to chosen destination and also assist in keeping profits of Expedia.
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 Price war: In order to sustain in present cut throat competitive world, it is important for
company to take various decisions that are triggered by competition (Lignau, 2013).
Such as, if the rival of Expedia, Thomas Cook provide heavy discount to its customers
than it becomes crucial for entity to follow the same practice to sustain for long run.
 Tactical marketing: It is important type of marketing that will help in boosting the
maximum sales of tour package. Such as, promotion via social media or niche marketing
can be done. With the help of this approach, company will be able to ensure maximum
occupancy of contracted services (Blanke and Chiesa, 2013). Further, organisation will
be able to use reserved coach and aircraft seats by ensuring their maximum sales of
holiday package.
 Conciliation with service provider: It is important decision which help the tour
operator of Expedia in entering into contract with appropriate service provider (Russell,
and Taylor-Iii, 2008). With this aspect, it assure the service provider with good
reputation, high quality input, proper market knowledge and better services is only
selected. The selection of best service provider will further help company in meeting the
expectations of customers.
CONCLUSION
In a nutshell, it can be concluded that tour operations management is important function
that ensure the maximum sales of tour packages. Tour operations business is viable part of
tourism industry that cater the needs of outbound, inbound and domestic travellers. There are
various trends in the industry can must be focused like, use of techniques, mobile application,
changing customer needs etc. Further, the report states that fixed contract and only for sale
method can be used to book the services offered by suppliers. Thereafter, holiday package to
Chinese students from London to France will be offered at selling price £ 1870. further, to ensure
the sales of this tour package,company can take help of both modern and traditional brochure.
Thereafter, company can use both direct and online method for ensuring the proper distribution
of the designed tour package. Other than this, report has identified that there are range of
strategic and tactical decisions that must be taken by tour operators such as, pricing strategies,
distribution decision, discounting decision etc.
13

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