Tour Operations Management Report: Strategic and Tactical Decisions

This report delves into the multifaceted world of tour operations management, examining the recent developments within the tourism industry and their impact on strategic and tactical decision-making. The report begins by exploring the significant growth and revenue generation of the tourism sector, highlighting the rise of virtual tours, technological advancements like iBeacons, and the evolving preferences of millennial travelers. It then outlines the stages and time scales involved in designing holiday packages, specifically focusing on a sightseeing tour from London to Paris for Chinese students, analyzing destination suitability, market research, negotiations with suppliers, and marketing strategies. Furthermore, the report evaluates the suitability of various destinations and attractions, emphasizing the importance of fixed contracts with suppliers. Finally, it assesses strategic and tactical decisions made by tour operators, comparing different approaches to address contrasting situations and market trends, providing a comprehensive overview of tour operations management.

TOUR
OPERATIONS
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 The recent development in tourism 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
TASK 3............................................................................................................................................9
3.1 Evaluating the planning decisions taken for the design of a selected brochure ....................9
3.2 Assessing the suitability of alternatives to a traditional brochure for various kinds of tour
operators.....................................................................................................................................10
3.3 Evaluate the suitability of different methods of distribution used to sell holiday for
different types of tour operators.................................................................................................11
TASK 4.........................................................................................................................................12
4.1 Evaluating the strategic decisions made by various types of tour operators.......................12
4.2 Comparing the tactical decisions that could be taken by chosen tour operator in contrasting
situations....................................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Travel and tourism is among the most prospering sector at present that have many fruitful
opportunities. The sector contributes to 10% of the overall GDP of the global economy. In
addition to this aspect, travel and tourism sector provide job opportunities to approximately 300
million individual. In the context of UK, 1 out of 11 job is created within travel and tourism
sector. Travel and tourism sector is progressing at fast pace and work as economic booster.
From the different reports and statistics by ONS (Office for National Statistics) it has been
identified that UK is the globes 8th biggest holiday destination. The statistics reveals that in 2015,
around 36.115 million travellers visited the country. Further, the expenditure done by
international tourist accounted for US$22.072 billion. The famous city of UK, London welcomes
15 million international and domestic tourist (Economic impact of travel and tourism, 2015).
Therefore, it can be stated that travel and tourism sector presents large number of advantages for
economy as well as organizations operating in it. In this respect, tour operations management is
concept that is used by organization to boost tourism and avail various opportunities. It is
important concept that help managers of travel entities to administer the tour and travel
components in order to develop effective tour packages for different travellers. In this report,
clear understanding will be shown about different aspect of tour operations management. Here,
the recent developments in tourism industry will be studied. The strategic and tactical decisions
taken by tour operators will be explained.
TASK 1
1.1 The recent development in tourism industry
Since its inception that travel and tourism industry is among the highest growing sector
and important source of generating revenue for the economy. The tourism industry at
international level is witnessing 4 -5% growth on constant basis. On the other hand, the tourism
industry of UK is showing growth indication of 1-2%. Further, the industry rendered US$7.6
trillion to the international economy. Therefore, it can be clearly witnessed that there are large
number of opportunities available in the industry (Fesenmaier and Tang-Taye, 2011). Along
with this, there are various developments that must be considered by tourism organization to
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attain the vast amount of opportunities available in the sector. The description of which is as
follows:
 Concept of virtual tour: In order to induce maximum number of customers to avail the
tour packages offered by company virtual tour concept is used. It help in simulation of a
current tourism destination with the help of various videos, images and other multimedia
elements (Xiang, Magnini and Fesenmaier, 2015).
 Technology beacons: There is increase in the use of technology for facilitating tourism.
Considering this aspect, leading mobile brand, Apple is making essential additions and
upgradations to its iBeacon application which will modify the processes and improve the
convenience for tourism company and individual travelers (Assaker, Vinzi and O'Connor,
2011). Hence, resorts and lodging company, airlines and other travel company can adopt
iBeacon technique in iOS7 (Development in Tourism industry. 2016). This will help them
service company in sharing information about new tour packages, offers etc and interact
with potential customers. It will increase the suitability and comfort to consumers and
increase their satisfaction level (Brotherton, 2012).
 Millennial seeking adventure: Those persons that are born between 1985-2004 and
thus reaching young adulthood near the year 2000 are refereed as millennial. It has been
identified from market research that near 20% of the international tourist will consist of
millennial group. In addition to this aspect, it has been identified that millennial group
will be taking 50% or more overseas journey till year 2020 (Crysta, 2011).
 Removal of barriers: There is increase in connectivity between different countries as
result of improved air services, removal of barriers by government etc. In addition to this
aspect, airline companies are also offering affordable service and tourism organization
provide various discounts and offers to attract maximum customers (Damonte, 2013).
Further, there are different mobile applications that offer facility of translating language
therefore barrier in overseas tourism is removed. This is further increasing convenience
for customers to travel in different parts of world and boost tourism.
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Other than this, there is increase in use of internet as a platform for providing travel
services, information about destinations etc. The tourism organization can use tailor made tour
packages so that customers can make choice of tourism product and services required by them.
The tourism industry further have various niche markets that can be focused to improve the
revenue of business (Wu and et.al., 2016). Such as, green, cultural, urban, sport, educational are
some examples of niche segments.
The major trends must be considered by tour operators so as to influence maximum customers.
Some of the trends are listed as follows:
 Technological advances: It has been identified from various market research that there is
increase in dependency of customers on mobile applications. The customers prefer
mobile applications for booking their tour package (Anderson, 2011). The statistics
states that 30% of holiday booking in country were made through mobile applications.
However, it is expected that these figures will rise in future. Therefore, tour operators are
required to offer holiday package via mobile applications.
 General direction of change: This aspect relates to prevailing trends in hospitality
industry. Such as, previously travelers preferred visit to sites that are popular and surfed
by maximum population. However now, the need of travelers is changing as they want to
discover unique place. There is increase in trend of travelers intending to visit different
destinations that are visited by limited kind of travelers. Such as those seeking adventure.
Therefore tourism company are coming up with new packages that cover such destination
like, dark tourism where individual visit places related with death and grief. Similarly,
slum tourism enable individual to visit slum areas (Conrady and Buck, 2011).
 World wide web: There is increase in use of internet among customers, tour operators
etc. before visiting a particular destination, travelers prefer taking review of such sites,
browsing picture of location and seeing the review of tour operator before selecting its
services. Therefore, it is important for tour operators to focus on its online marketing.
Further, more service can be offered through internet along with attractive offers to grab
maximum market share. It will also facilitate convenience to customers as they can do
advance booking of their holiday packages and transfer the payment.
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TASK 2
2.1 Determining the stages and time scale involved in designing the holiday packages
In the light of provided case study, it can be ascertained that sightseeing tour from London , UK
to Paris, France. must be provided to 15 students of China for minimum 5 days. Further, it is
proposed that tour will start from August 2018 (Graci and Dodds, 2010). This holiday package
will be offered by Thompson. To assure success of entire tour, it is important
for tour operators to do prior planning. The effective planning will help tour companies in
meeting the expectations of customers in best manner. Further, the satisfaction level of
customers will be improved and lead to word of mouth publicity of entity. The success of
holiday package will depend upon proper availability of resources, information about the
customers needs and preference etc (Holloway, 2009). The proper plan will consider all these
factors. Other than this, atleast 3-4 months time frame will be required by tour operators to
develop proper holiday package. Thereafter, different stages will be included in developing tour
package for Chinese customers. Such as,
 Analysing the destination: This is the basic step of designing tour package which help
tour operators in analysing the destination before planning to provide services their. It
will help in deciding it is profitable or not to select London and Paris as destination.
Further, it can be determined famous location of destination that will be covered in tour
package (Hudson and Thal, 2013). For example, Coca Cola eye of London, British
Museum, national Gallery etc. While in Paris, Eiffel Tower, the Arc de Triomphe, The
Louvre Museum etc can be covered. In this stage, scrutiny of extrinsic environment will
be done so as to determine the possible hindrance in holiday packages that can have
unfavourable affect on the experience of travellers. The destination analysis will require
at least time of 60 days.
 Market Research: With this step the detail enquiry is done of target destination London
and Paris by tour operator. This aspect help in identifying the present situation of selected
destination so that different decisions can be taken (Jayawardena, 2013). Therefore,
safety, security of passengers in particular destination, political stability, economic
factors, availability of infrastructure etc. can be known by doing proper research. Such as,
in case of political instability in the country the tour can be postponed or preponed to
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assure the safety of passengers. Also, the research will help in identifying the best
provider of services which can be chosen to design effective holiday package (Korstanje,
2012). For example, resorts that offer affordable and best quality lodgings and services
can be selected. The research process require at least 45 days.
 Negotiations: It is important aspect that help tour operators in bargaining with different
suppliers in particular destination. It will help in choosing the service provider that offer
best products of prime quality at appropriate price (Law, Qi and Buhalis, 2010). It is
viable for tourism company to choose the supplier having good image in market, having
proper license etc. The entire process of negotiation will need around 30 days.
 Marketing the tour package: It can be refereed as concluding stage of tour development
with the help of which tour package is marketed to target students. This whelp in
increasing brand awareness and informing about various services that can be availed by
guest. The marketing process will require 45 days atleast.
2.2 Evaluating the suitability, destinations and attractions involved in developing holiday
packages
In order to develop effective tour package, tour operators must pay consideration on
different aspect. It is important for them to provide holiday package to various destinations that
are suitable according to the needs of customers (Laws, 2011. The role of tour operators is to
pool the services offered by different suppliers and provide them in form of tour package to
customers. In this respect the tour operators can adopt different methods for contracting with
various suppliers. The explanation of which is as follows:
 Fixed contract: It is important method which help tour operators to contract with
suppliers according to volume based capacity. Therefore, services are obtained in bulk so
that it can be offered in small quantities to customers. This method is generally use in
peak season where tour operators reserve the maximum services offered by various
suppliers (Telfer, 2014). It is important concept that help in enhancing the profits by
covering the lack of sales in lean season. The customers booking services in bulk quantity
are also benefited as company is able to provide more discounts to them. Therefore,
Thomson can reserve the service beforehand and ascertain their revenue. In this respect,
the accommodation or hotel rooms can be booked with suppliers on fixed contract basis.
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Therefore, maximum rooms can be booked in a hotel by Thompson as they are the basic
requirement of all types of customers taking travel packages from it.
 Only for sale contract: It is type of contract in which tour operators obtain only those
services from the suppliers which are required by its customers (Lignau, 2013). This is
effective contracting method used in lean season. Further, Thomson can charge fair prices
from customers in this method. It will help in reducing the wastage of funds on facilities
that are not utilized. Such as, travel services like sightseeing, recreational facilities like,
theme park, water sports, spa or gymnasium facility must be selected for limited
customers who have special need regarding such services in their holiday package.
Other than this different methods that will be adopted by Thomson for rendering effective tour
package having lodgings, transport facility etc are as follows:
 Contracting with hotels: The lodgings must be selected wisely by Thomspon so that
best quality services can be offered to guest. The needs and preference of customers must
be considered before contracting with different suppliers. Such as for luxury services,
Hilton, Red Carnation hotel can be selected ( Meng, Turk and Altintas, 2012). Contracting with travel agency: The customers will be provided with sight seeing
services in their tour package. Therefore, best quality travel agency can be selected that
offer safe services to passengers. The written contract can be used in this respect.
Attractions covered in holiday package
The holiday package will cover all the leading and famous locations of London and Paris.
The prime concern of Chinese students is to have educational and cultural tour. Therefore,
Natural history Museum, British Museum, National Gallery of Arts etc can be covered within
London while in Paris, attraction points will be Eiffel Tower, The Louvre, Orsay museum can be
included ( Tsiotsou and Goldsmith, 2012).
2.3 Calculating the selling price of the holiday package
There are various aspects like, transportation, lodging, entertainment and different
charges that must be considered while developing holiday package. To ascertain the selling price
it is important for tour operators to consider total cost incurred on different services and
percentage of margin required by Thompson. There are various pricing strategies that can be
used by company to cover cost and enhance margin. For example, price skimming, cost plus
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leadership, competitive prices and penetration pricing etc can be used (Molz, 2012). In addition
to this aspect, pricing strategy can be selected according to the objective of business so as to
recover the cost. In the context of present case study, Thomson can use cost plus pricing strategy
which enable business to charge definite percentage of mark up on cost. As provided in case
study St Michelle Hotel will cost 60 euro for a twin room that will be in common for 2 students.
Since, total number of students is 15 therefore 8 rooms will be needed so that all target students
can be adjusted proper (Radford, 2012). The overall cost of 8 rooms will be 381.36 pound.
Thereafter, expenditure incurred on food and beverage will be 119.25 pound. Other than this
1000 pound will be incurred on surface transportation. The local guide will be hired to help
travellers in sight seeing will cost for 200 pound.
Services Selling price for 15 students
(£)
Reservation in St
Michelle
47.67x8= 381.36
Food and Beverage 7.95x15= 119.25
Surface transportation 1000
Local Guide 200
TOTAL 1700.61
Margin of 10 percent 170.61
Selling price 1870
Note: Value of euro has been converted into pound for calculating cost in an effective manner.
 10 euro=7.95
 60 euro=47.67 pound
The percentage of profit is 10% of overall cost which will help in recovering the production
cost. The overall price of holiday package will be reduced as as result of conversion into pound.
By providing affordable services, company will be able to enhance the satisfaction level of its
customers (Standing, Tang-Taye and Boyer, 2014). With the help of this pricing, company will
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not only able to recover overall cost but also obtain desired level of revenue. In addition to this
aspect, the direct and indirect cost incurred in developing tour package will be recovered.
Further, cost plus pricing will help in offering services at affordable prices.
TASK 3
3.1 Evaluating the planning decisions taken for the design of a selected brochure
Brochure can be simply refereed as the pamphlet that is designed by tourism entities to
transmit information about the product and services offered by them to various customers. It not
only comprise essential information about the holiday package but also help in inducing
customers to take such packages. At present there are traditional as well as modern brochure that
can be used by Thompson (Xiang, Magnini and Fesenmaier, 2015). The traditional brochure are
printed and published while modern brochure involve e-brochure which can be shared on official
page, social sites etc. Further, designing of brochure will involve different aspect that must be
considered by tour operators. The description of which is as follows: Determining the format:It is the basic step of brochure designing that help in
determining the format of pamphlet. It further consider factors like, quality of paper,
content that must be included, writing style, colours that must be used and overall
structure of brochure. By proper consideration on format, the entity will be able to design
attractive brochure which will help in inducing maximum number of customers to buy
holiday package offered by Thompson (Assaker, Vinzi and O'Connor, 2011). Pricing decision: It is important decision that enable tour operators to ensure proper price
is incurred on developing and designing brochure. Since, Chinese students will be offered
affordable tour package therefore too much expenditure must not be incurred on brochure
designing. Potential market: The needs of target market must be effectively considered before
designing the brochure. The target customers are students from China therefore, company
should provide information in Chinese language. There is high dependency of students on
digital technology, internet etc (Brotherton, 2012) Therefore, e- brochure can be
designed which can be downloaded on laptops or mobile phones by users. In addition to
this aspect, traditional methods of distribution of brochure should also be considered.
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 Determining print specification- It is important planning decision related to designing of
brochure. It involve decision related to print specification. This process will involve
designing of captivating cover page of the brochure having brand name, destination
image, graphics etc (Conrady and Buck, 2011) The effective brochure can be designed
and planned considering all the aforementioned steps. The overall time involved in
designing the brochure must not exceed than 2 months.
3.2 Assessing the suitability of alternatives to a traditional brochure for various kinds of tour
operators
To remain in competition it is important for Thompson to use latest tools and techniques.
Since, it has been identified that brochure play important role in marketing of holiday package to
tour operators are required to use latest techniques for designing brochure. Further, there are
various alternatives of traditional brochures that can be used by Thomson. The marketing needs
of customers are also technology driven these days (Wu and et.al., 2016). Therefore, it is
effective for company to use modern brochure. In this respect, e-brochure or online brochure can
be considered by entity. It is soft copy of brochure that can be shared on official website of
company. It is also cost effective method as involve less expense as compared to traditional
brochure (E-Brochure, 2011). Thereafter, the wide audience will be covered in e-brochure. The
online brochure is environment friendly as it will reduce the use of paper. Thereafter, e-brochure
can be distributed to large number of individuals without limit. Further, organization can use
mobile application where brochure can be directly downloaded by them on their cellphone. In
addition to this information in brochure can be modified or updated easily as per the needs of
business. Further, e-brochure will help Thompson in making its website highly interactive by
facilitating easy engraftment of brochure on brand page (Graci and Dodds, 2010).
Other than this, another option available for traditional brochure is use of video brochure.
With this aspect, visual and audio elements can be used by Thompson to boost the promotion of
target destination. The video brochure can have captivating pictures of London and Paris and
services that will be offered to guest. Such as pictures of hotel rooms, local market etc. it will
help in attracting large number of customers to visit these destination and purchase the holiday
package offered by company (Jayawardena, 2013). Further the video brochure can be shared on
social networking sites like, Twitter, Facebook etc to attract large number of customers. It can
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also be uploaded on Youtube to gain their visibility ratio. The video brochure is suitable as it will
help the tour operator in depicting the information related to tour package in effective and
impelling manner. It will stimulate the individuals to personally visit the destinations visualized
in video brochure (Korstanje, 2012).
3.3 Evaluate the suitability of different methods of distribution used to sell holiday for different
types of tour operators
It is important for Thompson to use appropriate distribution channel to provide holiday
package. The method of distribution must be such that, it help in attracting maximum number of
customers in limited period of time. the audiences. Fundamentally there are two kind of tour
operators that is specialised and mass tour operator. The specialized travel operator that
principally involve tour operator such as Cox and Kings. It is among the starring travel
organization of the globe that provide premium quality and luxurious services to wide range of
high end customers (Law, Qi and Buhalis, 2010). Further, the specialized tour operator are
skilled in planning and designing the comfortable and lavish holiday for the customers. On the
other hand, the mass tour operators are the one that render aggregated travel services among
with accommodation, recreation and other facilities to various customers belonging to different
segment. It further increases the convenience for customers as different services are covered in
entire tour package. Thompson is a kind of mass tour operator that concentrate on scheming and
developing holiday package to customers of all segment (Telfer, 2014).
The tour operators further use different methods for distributing the designed holiday package.
Such as, they can use online marketing, direct selling, through agencies, call centre etc.
Online marketing: The study reveals that 90 % of individual use internet facility. Therefore,
company should use online marketing to target maximum number of audience. Further,
specialized tour providing company, Cox and Kings can also use their official webpage which
provide facility to customers to make online payment and book the travel services offered by
company.
Direct selling: Being a mass tour operator, entity can emphasis on direct sales of the holiday
packages to various customers.
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