Report on Tour Operations Management: Analysis of Thomas Cook

This report provides a detailed analysis of tour operations management, focusing on the current trends and developments within the industry. It examines the impact of these trends on tour operators, with a specific focus on Thomas Cook. The report assesses the stages and time scales involved in creating holidays, evaluates different methods of contracting for holiday components, and calculates the selling price of a holiday. Furthermore, it evaluates the planning decisions for brochure design, alternative distribution methods, and strategic and tactical decisions made by tour operators. The report covers market research, planning, forecasting, and contracting processes, providing insights into the complexities of tour operations and the decisions made by tour operators to maintain profitability and market share. The analysis includes the impact of online sales, changing consumer behavior, and regulations on the industry. It also includes the evaluation of contracts and costing, providing a comprehensive overview of the sector.

Tour Operations
Management

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
1.1 Analyzing the effect of current and recent trends and development of on the tour operators
industry........................................................................................................................................3
TASK 2 ...........................................................................................................................................5
2.1 Assessing the stages and time-scale involved in creating holidays.......................................5
2.2 Evaluating the suitability of different methods of contracting for different components of
holidays ......................................................................................................................................6
2.3 Calculating the selling price of a holiday .............................................................................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 traditional brochure and recommending the most
appropriate of Thomas Cook tour packages................................................................................9
3.3 Evaluation of the suitability of different methods of distribution used to sell a holiday and
recommending the most appropriate of Thomas Cook tour packages.......................................10
TASK 4..........................................................................................................................................11
4.1 Evaluating the strategic decisions made by different kind of tour operator........................11
4.2 Comparing the tactical decision could be taken by Thomas Cook ....................................12
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14
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INTRODUCTION
The term “Tour Operations” is the definition of combining different elements of Travel
and Tourism (from products of an airline, transfer from/to an airport, accommodation provider
and services of a local representative) by a tour operator into a package offered for a combined
price. Tour Operations are regulated by laws and policies and constantly faces external
influences and challenges. Customers, who do not have time to arrange DIY holidays, will seek
the products of a tour operator as they possess contracts with several airlines, hotels, etc., and
might also, have influence over other organizations such as tourism boards and other government
authorities (Zhao, 2010). Due to these connections, tour operators are able to create packages for
destinations which otherwise might be difficult and expensive to visit.
Tour operators can maintain profitability only if they operate on high levels of capacity as
package holidays loses all its values if unsold before the departure date. As a result of the above,
tour operators have to constantly analyze the demand of the market as such enable their suppliers
to plan ahead so tour operators can obtain a low enough price to attract customers.
Thomas Cook Limited is a British charter airline based in Manchester, England. It serves
leisure destinations worldwide from its main bases at Manchester and London Gatwick Airport.
It also operates services from eight other bases around the United Kingdom (Thomas Cook
Group Key industry trends: December 2013, 2016). Thomas Cook arranges transport,
accommodation, activities and any extra services that might be needed. They need to understand
the tourism industry really well, know which are the most affordable routes and modes of
transport, destinations where tourists get most of the adventure and what services can be offered
for free. A holiday comprises at least one overnight stay and consists of a pre-arranged
combination of elements - typically a flight plus accommodation or car rental - that is sold at an
inclusive price. The present study evaluates different aspects of tour management process.
TASK 1
1.1 Analyzing the effect of current and recent trends and development of on the tour operators
industry
There are several changes in travel and tourism business that are creating huge impact on
business operations of tour operators. On the basis of different report it has been identified that,
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travel tourism sector reflects positive trends in growth of industry in 2014 as compared to 2013.
This factor also leads a positive impact on hotel. The emergence of new budget hotels along with
low cost 4-star accommodation services has created huge effect on selection on accommodation
services of price sensitive consumers (Kyriakidou, 2005). Online travel sales has been addressed
continue growth in overall sales of companies in travel and tourism business. Furthermore,
Consumers are increasingly taking in account the internet and online services to assess wide
range of information through which consumers are able to take appropriate purchase decisions.
In order to achieve good return from online services, a strong digital strategy is essential for
handling various operations of tour management to increase profitability and reduction
(Grimwade and Carter, 2010).
As per the evaluation of different tourism statics, it has found that inbound tourism in UK
is increased by 6%. In this context, the number of travelers has been raised by 2m to 34.8m in
2014. These figures are showing that tour operators are having good opportunity to increase sales
and profit along with market share in UK. In addition to that it has been evaluated that the
spending of international visitors is also enhanced by 3% to £21.7bn (Travel and Tourism in the
United Kingdom, 2014). Therefore, travel agencies have earned appropriate profit from overseas
bookings of different services. In this context, it is evaluated that 40% of total tour bookings are
made through wide range of online booking channels that results internet travel booking revenue
has been grown by more than 73% within last five years. The growth of social provides an
opportunity to service user to examine the views of other individuals.
The number of visitors in 2014 has been reached to 34.4 million since after 2010. On the
other hand, the average expenditure made by travels was £636 in 2014. It has shown positive
trends during the peak of £650 that is reflecting negative trends in peak season of 2013. Thomas
Cook is one of the leading travel and tourism organizations that has maintained strong position
into market for providing quality of tourism facility and offers to its tourists at the compatible
price (Sharpley, 2003). For rendering the low cost, cost management and service management is
identified as most crucial part of business management for tour operators companies. In this
regard, Thomas Cook has to take care about proper planning, forecasting, allocation of elements
and data present with help of time- series, and ad hoc charting strategies for maintaining the
balance between quality and cost against other tour operators who are present in UK market.
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In UK, there are around 600 organizations managing businesses as tour operator for attain
distinct needs of consumers. Therefore, it is addressed as a crucial task for Thomas Cook and
other companies for maintaining current market position by ensuring the proper balance between
quality and cost in a proper way (Travel Statistics for Tour Operators, 2016). The public
authority of UK has formulated a range of regulations and policies to support travel and tourism
sector such as making easy license policy for them along with reduction in tax rates. This
strategy helps the tourist operators to survive in the very tough competitive market and increase
their profit margin also.
TASK 2
2.1 Assessing the stages and time-scale involved in creating holidays
For development of holiday package, the administration of Thomas Cook carries out
detail evaluation about the needs and requirement of consumers. For creation of Holidays
package related to educational tour of HND TTM students to Europe, the managers of Thomas
Cooks should follow below mentioned stages: Market research: In this stage, management of Thomas Cook organizes a detail market
research about several factors that are associated with holiday creation. As per the case,
the Thomas Cook wants to create holiday packages for students for the educational tour
of Europe (Boniface, B.C. and Cooper, 2009). In this regard, business entity has to carry
out detail market about the present market conditions, peak season, assessment of
educational places, cost of accommodation and food services for children, special
discounts provided by hotel and transportation organization of government and private
sector for students, identification of key destination, and expectations of students and
willingness of student for making payments of special services. Planning and scheduling: It is second and most important stage of Holidays development
process in which, the tour operator determines all information about tour such as time
duration of holidays, number of services provided by firm, number of tourist destination,
route chart, and medium of transportation on different dates (Page and Connell, 2006). It
contains all kind of information about the assembling point, departure point and place,
date of departure as well as time of tour, legal procedures and requirements requirement
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for tour, features of destinations, optional activities and services, meals etc. It can be
considered as a most important section for development of tour packages. Forecasting: In this section, management schedules detail assessment about costing of
tour package by considering different elements such as air travel cost, accommodation
cost, local arrangement and transportation cost, payroll cost, research cost, marketing cost
and other expenditures. Contracting: This stage can be considered as a last stage of tour package creation. In this
section, Thomas Cook carries out business practices associated with negotiation and
contracting with other business partners associated with hotel, transportation,
accommodation, catering etc (Boo and Bernick, 2013). This process is carried out with
reference to number of tourists and total budget of whole tour. In this process, tour
operator develops several contracts associated with airlines firm, lodging companies,
transport operators of particular destinations, car rentals, ground operators, sightseeing
vendors etc.
Stage Time duration
Market research 2 Month
Planning and scheduling 1 Month
Forecasting 1 Month
Contracting 1.5 Month
2.2 Evaluating the suitability of different methods of contracting for different components of
holidays
In the tour operation business, several kinds of contracts used by different tour operators
for different business operations. In this regards, two different kinds of contracts such sale only
contract and fixed contract have been considered by tour operator as per the requirement. These
contracts are very beneficial for management of transportation; accommodation services etc. that
are provided tour operators: Fixed Contract: This kind of contract is providing several benefits to management for
ensuring about the proper utilization of volume based capacity and maximization of the
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revenue collection in the situation peak or off season (Fyall and Morgan, 2009). In the
process, the total capacity transportation services have been booked by Air tours. In the
contrary, payment will be made as per the utilized capacity. By keeping this situation,
Airtours companies develops wide range of holiday packages for peak so as there are
very little chances of non-utilization of capacity. It saves cost and expenditures of firm.
 Sale only Contract: It is an important type of contract approach which is used by tour
operators like Flight centers have considered the sale only contract method for designing
and facilitation of wide range holiday packages (Hall, 2008). These types of contracts
have been found very effective for company during the lean session that would reduce the
risk of weak response of other packages.
As per the above assessment, it can be stated that Thomas Cook needs to select both approaches
of contracts by considering detail evaluation of different business conditions along with the
needs of consumers. These contracts also help organization in evaluation of cost of services
along with reduction in different kinds of expenditures.
2.3 Calculating the selling price of a holiday
Tour Operators combine various elements of a holiday and sell them as package holidays.
They market their packages directly to the public and/or use travel agents to advertise and sell
these packages.
As Tour Operators work with different providers and use different marketing techniques,
the cost of a holiday varies between them. If they contract travel agents to sell their holiday, they
pay a commission (usually a percentage of the holiday price) to the agent. Most people are
familiar with the large tour operators such as Airtours, Thomson and JMC (Mason, 2008). Tour
Operators like the ones above, offer a great range of holidays to a vast range of destinations for
reasonable prices. Many small operators, specializing in specific markets or specific destinations
can offer very competitive prices, too.
Tour Operators offering their products directly to the public can offer good value as they
don't pay commission to travel agents and this allows them to sell their holidays at a better price.
The costs of e.g. the airline seat and most of the accommodation and catering are the biggest
elements of the total costs, as such large discount can be applied to clear unsold products if
necessary (Jones, Moriarty and Rowley, 2008). Reductions of up to 25% can be available on
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some last minute holidays however this might mean inflexibility in the choice of the hotel or
resort, accommodation type, etc.
The Tour Operator’s decisions on volume and average price levels are strategic decisions.
If the initial estimates are proved to be wrong along the way, different marketing tactics can be
used to correct the issues.
A common method for accommodation suppliers to fill the gaps in their inventory is the
last minute pricing. This basically means the discounting of daily prices and is promoted on last
minute booking websites. This could be Price per Person (set price per person such as Adult and
Children) or Price per Unit (a set price for 1 unit of the product such as Price per night)
(Pesonen, 2013). These are the standard way to price accommodation; usually the advertised
price is for 2 people so if the accommodation fits more than 2 guests it can have a mix of the per
person pricing with extra adult or extra child rates.
For the present case, the calculation of cost of tour package for HND TTM students to
Europe is carried out below:
The selling price of current holiday package is mentioned below:
Services Selling price for per
student
(in £)
Selling price for per Adult Guest
with 40% extra charges
(in £)
Air ticketing 150 210
Hotel booking 70 98
Breakfast and dinner 40 56
Surface transportation 50 70
Entry tickets of tourist
destination
30 42
TOTAL 340 476
TASK 3
3.1 Evaluating the planning decisions taken for the design of a selected brochure
There are wide range of brochure are used by organization associated with tour
operations business for conveying different kinds of information related to different holiday
packages by using wide range of on-line and off-line method. In this regards, Tour companies
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consider wide range of brochures that are having low cost and high reach. In the context of
current tour packages for students, tour need to develop an efficient design of brochure for
UKCBC students that is required proper planning, systematic research, implementing etc. There
are several elements recognized by management in designing of brochure such as format,
objectives of brochure, target segment, and timescale.
Brochures are an important part of the marketing as they are directly available to
customers at the decision making process. For example, the Thomas Cook brochure includes
sections and sub-sections while the cover shows generic information such as the title, name, date
and a theme cover picture (Zhao, 2010). Inside, the brochure highlights the tour information,
provides a brief itinerary, lists the modes of transportation, types of accommodation,
destinations, payments and its conditions, insurance, information on currency, documents and
also information about where can the customers sign up for the tour.
Most brochures are printed on a glossy, colored paper. It seems to be the tendency that
more delicate paper is used for bigger brochures, to keep production costs low and to make the
brochure less heavy. Some brochures have thicker cover pages so it protects them in transit and
on the shelves and it also creates a better image (Kyriakidou, 2005). To save printing costs, a full
color brochure might include some pages with fewer colors or even some black and white
pictures. It is safe to say that companies with bright colors brochures offer cheaper tours while
pale and dark colors are used by companies offering pricier tours.
Sometimes they send their brochures directly to existing clients or also to people who
have been found by direct marketing techniques. Tour operators however need to make a very
weighted decision as half of these brochures ends up being thrown away. As an addition to their
brochures, tour operators use other promotional techniques to advertise their products, such as
personal selling, sales promotion and advertising campaigns.
3.2 Assessing the suitability of alternatives to traditional brochure and recommending the most
appropriate of Thomas Cook tour packages
To meet service objectives as per the requirement of 7 days holiday packages for
students, the management of Thomas Cook uses several kinds of alternatives for traditional
method brochure. The traditional brochure has played as a most important medium for conveying
appropriate information associated with different kinds of holiday packages and other services
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(Grimwade and Carter, 2010). Along with the traditional brochure, the management of Thomas
Cook can use different kinds of internet based brochure.
The on-line designed brochure has provided better information in comparison of
traditional paper print brochure. The E-brochure is also considered as a very cost effective
manner. This is because expenditure made on designing and developing of e-brochure will be
become much less in the comparison physical brochure that would save expenditure of firm.
By adopting internet based brochure method, business entity is able to convey wide range
of important information about features, uniqueness of particular tourist destination with an
appropriate manner in whole holiday package (Sharpley, 2003). This will increase the chances of
the sale of specific tourism packages. In addition to that Video brochures are considered by firm
that are playing important for promotion of the purpose with the help of different types of social
media tools like Facebook as well as online video platform such as You Tube.
As per the above assessment, Thomas Cook should select E-brochure in the context of
current holiday packages for UKCBC students in order to convey detail information about tour
packages.
3.3 Evaluation of the suitability of different methods of distribution used to sell a holiday and
recommending the most appropriate of Thomas Cook tour packages
Brochure has been considered as a most effective tool for the selling of the tour packages
that are designed by different tour operator for different packages. In the current travel and
tourism sector, technology has played vital role in order to attract large number of consumers of
business. In the current holiday package of UKCBC students, there are several tools available for
Thomas Cook that include online marketing, direct sales, telephonic sales as well as call center
etc (Boniface, B.C. and Cooper, 2009). Direct sale method has been found very online sales in
which brochure will be become more profitable for the tour operators. In addition to that Thomas
Cook can target a large number of buyers and potential consumers with the help of on line
marketing in which firm can provide data with the help of the internet based source only. For the
purpose, e-mail marketing tools can be used. In addition to that call center can be considered as
very effective to sell holiday packages.
Research into the development of online sales and distribution channels has shown that:
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 An increasing number of visitors are using the internet for all of their travel planning
needs, including information seeking, holiday / route planning and booking transport,
accommodation and tourism-related products;
 The use of 'new media' such as Customer Relationship Management systems, email
marketing, IT systems and real-time web reservation services are becoming an
increasingly important aspect of marketing and sales;
 Search engine optimisation and paid online marketing campaigns, website linkages and
distribution providers can all help in increasing the exposure of a website;
 Online booking and reservations systems such as the Discover Tasmania online
reservation system, can increase overall bookings if a website is user friendly, regularly
updated and search engine optimised;
 Evaluating the success of online sales and distribution techniques is important in
developing future marketing strategies (Boo and Bernick, 2013).”
In the context of current holiday package for students, the managers of Thomas Cook
should use direct selling tool by sending brochure on emails and etc. In addition to that business
entity is also carrying out regular conversation with UKCBC students for assessing their
different requirement and interests.
TASK 4
4.1 Evaluating the strategic decisions made by different kind of tour operator
Each Tour Operator must reach the company’s goals based on the market they are
targeting and the competition they are facing. A Mass Tour Operator such as Thomas Cook has a
variety of products and services to offer and due to the fact that they developed so much and they
have their own airline means that it is much easier to re arrange a flight for their customers
should there be a delay or a cancellation and the same applies with shuttle transfers, However a
Domestic Tour Operator although in most cases, doesn’t own its own airline or shuttle transfer
service, knowing the customer’s requirements/needs and assuring a high level of service in the
country where they run their activity ensures a good flow of business (Fyall and Morgan, 2009).
The focus being only on one country makes their activity simpler as long as they advertise it
accordingly on the right markets. A good example would be a Domestic Tour Operator from UK
should focus on markets in countries with good economy such as France, Germany, China,
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Japan, Dubai because based on the life standards in those countries customers are actually able to
afford such a holiday in the UK. In comparison if an UK Domestic Tour Operator should
advertise the products in countries such as Greece, Ukraine, Slovenia, Albania, Angola it is very
likely that the input would not match the results as life standard in the UK is high compared to
the countries listed above and the percentage of people that would be able to afford holiday pack
to UK is likely to be small.
Although the market is similar to the Domestic Tour Operators, the Inbound Tour
Operator must have in mind the budgets for the packs they offer, contracting with airlines and
negotiating competitive prices by either booking in advance or booking large amount at once
(Hall, 2008). They also need to include in their holiday packs shuttle services, translators and
tour guides in order to ensure full profitability.
Finally an Outbound Tour operator’s focus is the market of country they are based in and
the markets requirements. Should we consider UK again, based on the weather mostly and the
high living standard most people chose to spend their holidays outside the UK. Therefore a
careful analysis should be made in order to offer the appropriate holiday packs such as Family
packs, Beach or Mountain packs, Couples etc (Mason, 2008). In short due the fact the market
exists the main focus is on the “what” they can offer at a competitive price.
4.2 Comparing the tactical decision could be taken by Thomas Cook
Tour Operators must combine the above elements with their marketing tactics and
strategies in order to ensure a viable operation. The strategic decision-making process is dealt
with the Top Management in cooperation with the Middle Management, based on the feedback
from the Operational staff. The senior managers of each SBU must manipulate their resources
(operations capacity, manpower, financial capabilities, etc (Fyall and Morgan, 2009). In such a
fashion that allows them to best attain the desired corporate goals.
Michael E. Porter proposes in his book Competitive Strategy, the model of the ‘Five
Forces’ for investigating the competitive environment. These forces, as he calls them, are the
threat of the new entrants, the power of suppliers, the power of consumers, the threats of
substitutes and Competitive rivalry.
Thomas cook merged with MyTravel which brought an estimated £ 75 million saving per
year and means successful competition with low cost airlines and also web based travel agents.
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