Tour Operations Management: Analysis of Tour Operating Industry

This report provides a comprehensive overview of tour operations management, beginning with an analysis of recent trends in the tour operating industry, including the impact of a flourishing economy, digital technology, innovative customer satisfaction techniques, globalization, and reduced transportation costs. It explores the stages involved in developing holidays, such as destination research, negotiation, pricing, and marketing, along with the timescales associated with each stage. The report also examines the suitability of different contracting methods, like fixed contracts and sale-only contracts, for various holiday components and tour operator types. Furthermore, it delves into the importance of brochure design planning, covering aspects like purpose, target market, format, style, color theme, and paper quality, as well as alternatives to traditional brochures and methods of distribution. Finally, the report touches upon strategic and tactical decision-making processes within tour operations. Desklib offers a range of similar reports and study tools for students.

TOUR OPERATIONS MANAGEMENT

Contents
INTRODUCTION................................................................................................................................2
1.1 RECENT TRENDS IN TOUR OPERATING INDUSTRY...............................................................3
2.1 STAGES AND TIMESCALES INVOLVED IN DEVELOPING HOLIDAYS............................................5
2.2 SUITABILITY OF DIFFERENT METHODS OF CONTRACTING FOR DIFFERENT COMPONENTS OF
THE HOLIDAY AND DIFFERENT TYPES OF TOUR OPERATORS..........................................................6
2.3 SELLING PRICE OF HOLIDAY.......................................................................................................9
3.1 BROCHURE DESIGN PLANNING...............................................................................................10
3.2 SUITABILITY OF ALTERNATIVES TO A TRADITIONAL BROCHURE.............................................12
3.3 SUITABILITY OF DIFFERENT METHODS OF DISTRIBUTION USED TO SELL A HOLIDAY.............13
4.1 STRATEGIC DECISION MAKING................................................................................................15
4.2 TACTIC DECISIONS MAKING PROCESS.....................................................................................16
CONCLUSION.................................................................................................................................17
REFERENCES...................................................................................................................................18

INTRODUCTION
With changing lifestyles, holiday and vacationing have become a new trend. It is always a
peaceful experience to take a break from the routine work and experience some new places
and spend some time with your loved ones. Tour operators combine various components of
holidays like transportation, accommodation sightseeing entertainment into a combined
package. They are like wholesalers who buy tour components from different sources, add some
value to these components, and make a combined tour package in an organized fashion.
In the current assignment on tour operations management, we will study about recent trends
in tour management industry, and the steps involved in designing these holiday packages. The
study discovers different types of tour operators working in the industry, and an overview is
provided on the marketing strategy adopted to sell these holiday packages. The study will also
analyze, strategic and tactical decisions taken by tour operators in different situations.

Figure 1: The Holidays
Source: [http://goahotelsdeals.com/]

1.1 RECENT TRENDS IN TOUR OPERATING INDUSTRY
Tour operators industry is experiencing an increased demand for their products and services.
This increase in demand is due to increased standard of living of the population. Following are
the recent trends which are greatly contributing to the continuous growth of tour operator
industry (Lemelin and Dawson, 2013).
INCREASING DEMAND DUE TO FLOURISHING ECONOMY
The disposable income of people is constantly increasing, and the income level of a country has
a positive impact on tour operator industry. To expand the economy the governments of these
countries also support various travel and tourism activities. As economic condition of Asian and
European countries is flourishing continuously, the future of tourism industry is bright.
USING MODERN DIGITAL TECHNOLOGY
To increase their customer base, the tour operators are continuously upgrading their
advertisement and marketing methods. Facilities, like Booking through the internet and making
dedicated apps for smartphones, are providing great ease to the customers.
INNOVATIVE IDEAS TO INCREASE CUSTOMER SATISFACTION
By introducing new techniques and improving their quality of service, the industry is attracting
new customers (Erskine and Meyer, 2012). The growth of any industry can be ensured only by
achieving customer satisfaction. To achieve this, the tour operators are organizing activities
like-
 Adventure sports - Tour operators provide adventure sports facilities like boat riding,
rock climbing, paragliding, river rafting.
 Free Wi-Fi - Customers can stay always in touch with their near and dear ones with free
WI-Fi facility.

 Selecting the room of your choice - A hotel map will be provided from which you can
choose the room that is right for you.
 Pillow menu - You get a different pillow to choose from.
 Easy check-ins - Hassle free check-ins are provided round the clock.
 Hotels providing home cooked food - To provide local experience and give a home like
feeling.
GLOBALIZATION EFFECTS
Globalization has enhanced economic as well as social and cultural exchanges between
countries. The globalization phenomena have made a positive impact on travel and tourism
industry, it has provided ease of travel and increased awareness about travel destinations in the
world (Johnston, et al. 2010).
REDUCED TRANSPORTATION COST
With the introduction of Budget airlines that offer lower fares, customers can travel in an
affordable way around different corners of the world. Owing to competition between these
airlines, the customers have wider options to select from. If the early booking is done even
more discount can be availed.
PESTLE FACTORS
Pestle analysis is done to analyze various external factors that make an impact on the tourism
industry these include political, economic, social, technological, legal and environmental
factors.
The political instability in a country can make a negative impact on the tour operator industry.
Tourists generally avoid such countries where there is an atmosphere of conflict and terror,
such turmoil can affect the security and comfort of tourists. Other Pestle factors like social,
economic and environmental factors must be carefully examined while designing a tour
package.

2.1 STAGES AND TIMESCALES INVOLVED IN DEVELOPING HOLIDAYS
Following stages are involved in developing a holiday-
DESTINATION RESEARCH
In the research process, an investigation of travel destinations is performed based according to
the demand of the customers. While choosing a destination the social, cultural, economic and
environmental situations of a place are examined through pestle analysis. This research process
is completed within two to three months.
NEGOTIATION
To make the tour package cost effective to the customers, negotiation with the service
providers is very important (Pruitt, 2013). Various service providers like hotels, drivers, and
vendors. This stage is completed within four months.
PRICING OF THE TOUR PACKAGES
While doing the pricing of the tour packages some factors need to be analyzed like effective
foreign exchange rate, tax structure of the country, fuel rates. Pricing process takes around one
month time.
MARKETING
Marketing increases the brand awareness in the customers. The tour operators use various
marketing techniques like brochures, internet, print media, and telephones. In brochures, a
detailed explanation is provided about the pricing and other components of the package. This
process is completed in four to five months.

2.2 SUITABILITY OF DIFFERENT METHODS OF CONTRACTING FOR
DIFFERENT COMPONENTS OF THE HOLIDAY AND DIFFERENT TYPES OF
TOUR OPERATORS
DIFFERENT TYPES OF CONTRACT
There are two ways in which tour operators are given a contract. The two methods of ‘fixed
contract’ and ‘sale only’ contract are discussed below.
Fixed contract
In fixed contract bulk booking is done and tickets are offered at a much lower price. Price of the
package is almost similar for all the customers. Many types of discount and special offers are
given so that maximum number of customers can be attracted. More discounts are provided in
the off-season (Guo, et al. 2013).
Sale only contract
In sale only contract the prices are kept high. The packages are designed keeping in mind the
demand of the customers. During peak seasons higher prices are taken as the demand is very
high in these seasons, the operators earn good profits in sale only contract but the customers
are not provided with any discount in this type of contract.
COMPONENTS OF HOLIDAY
A tour package is designed by combining various components into a single package, these
various components are-
Transportation and air travel
Transportation facilities are provided according to the mode of transport like by air, road or rail.
Airplane boarding and lodging facilities are provided, for these purpose companies employ

travel agents and local tour operators. These tour operators provide better services as they
have good information about local food and culture.
Accommodation
Accommodation facilities are provided in hotels which are booked in advance these lodging
facilities cost less as bulk booking is done by tour operators (Papathanassis and Knolle, 2011).
Sightseeing and entertainment activities
According to the demand of customers, various sightseeing activities are organized like boat
racing, water show, boat riding, rock climbing, paragliding, river rafting.
Figure 2: [accommodation Facilities]
Source: [https://www.visitlondon.com/where-to-stay/place/2758615-imperial-college-london-
summer-accomodation#IVzUqaA7lFeTd9lZ.97]

DIFFERENT TYPES OF TOUR OPERATORS
Tour operators are like wholesalers who buy tour components from different sources, add
some value to these components, and make a combined tour package in an organized fashion.
Different types of tour operators are discussed below.
Inbound tour operators
These operators arrange trips within a country. the tourists visiting from other countries are
provided arrangements like airport pick and drop facilities, visit local attractions (Guo and He,
2012).
Outbound tour operators
These types of tour operators provide services around the globe.While Inbound tour operators
arrange tours for customers in their own country, the outbound tour operators arrange the
tour for the residents of one country, who want visit another country.
Domestic tour operators
They provide services to the residents of a country. They have better knowledge about local
market, seasons, food and culture. Domestic tours are generally same day visits. These types of
business encourage local entrepreneurship.
Direct sell tour operators
Direct sell tour operators sell their product and services directly to the customers, without any
travel agent, this type of tours cost less to the customers as the commission of travel agent is
reduced from the package.
Specialist tour operators
Specialist tour operators provide their services in a particular field only. Some operators
specialize themselves in scuba diving, some in adventure sports, boat riding etc. These
operators primarily provide their services to a niche market.

2.3 SELLING PRICE OF HOLIDAY
While designing a tour package, calculating the cost of the tour is an important strategic
decision. To provide the best value to the customers, and maintaining the competitive edge in
the market, a careful planning needs to be performed to decide the price of a holiday. Various
kinds of taxes imposed in different countries and foreign exchange also keep on fluctuating. The
cost should be calculated keeping these things in mind so that it can provide value to both
customers and tour operators (Levy, et al. 2010).
To understand this process better, we are taking here the example of a group tour to Bruges in
Belgium. Grand Casselberg Hotel is offering a trip with following particulars-
A room will cost £96 including breakfast; one room can be shared by two adults. Price of a 48-
seated luxury bus is around £11,200 including the driver, travel manager and taxes. The local
tour guide will cost £945 for the entire duration of the tour. Keeping these particulars in mind
we will calculate the selling price of the holiday per person.
Details Price (in £)
Accommodation charge (Tour members-42) 17,942
Transportation charge 11,200
Charges of tour guide 945
Total cost 30,087
Profit margin @33% 9,928.71
Sales price 952.75
Therefore, total selling price of the holiday package comes around 952 British pounds.

3.1 BROCHURE DESIGN PLANNING
The effective marketing of a product is very necessary in order to increase brand awareness.
The most effective method for this purpose is marketing through brochures. Brochures are a
very cost-effective method for promotion of travel services. Brochures gain the first attention of
the customers and effectively communicate the details of all the services provided by the tour
operator like transportation, accommodation, entertainment etc., in an informative manner.
Brochures can be distributed in both online and offline medium. With new digitization
techniques, a digital copy of brochures can also be circulated. While designing a brochure
following things must be kept in mind-
PURPOSE OF BROCHURE
In this stage strategic decision making is required to identify for which product we are making a
brochure and what are the requirements of the customer (Molina, et al. 2010). An analysis
must be done to determine what information about the tour is to be provided in the brochure
so that it is easy for the customer to understand the services to be provided by the company.
TARGET MARKET
The target audience for which we are designing the tour package and the needs and
requirements of the customer must be analyzed. The careful analysis of competitors is also
important for deciding the target market (Heslop and Nadeau, 2010).
FORMAT OF THE BROCHURE
The format of the brochure must be selected according to the need of the customer. Particulars
like travel schedule, accommodation and food facilities, mode of transportation, the price of
the tour and all terms and conditions and charges applicable must be clearly mentioned.