Tour Operations Management: Strategic Decision Making Report

This report delves into the multifaceted world of tour operations management, focusing on the analysis of TUI as a case study. It begins by outlining the fundamental roles and functions of tour operators, differentiating between inbound, outbound, and domestic operators, and then explores the complex structure of the tour operating industry. A comparison between mass-market and independent operators is provided, followed by an evaluation of the impact of integration within the industry. The report then details the steps involved in creating a successful holiday package, including identifying business needs, target markets, and the importance of starting small and monitoring the package's performance. It also provides a critical analysis of each stage in the package creation process. The report then moves on to the costing of holiday packages, providing a detailed example for a trip to Belgium, and concludes with a review of package tour programs, including a comparison and evaluation of various tour programs, and examples of strategic and tactical decision-making, considering external factors that influence these decisions. Overall, the report provides a comprehensive overview of tour operations management, with a focus on TUI and holiday package development.

TOUR OPERATIONS
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part 1................................................................................................................................................3
Roles and functions of tour operators.........................................................................................3
Structure of tour operating industry............................................................................................4
Comparison between mass-market operators and independent operators..................................4
Evaluation of impact of integration.............................................................................................5
Part 2................................................................................................................................................5
Steps in creating holiday package...............................................................................................5
Role and function of each stage..................................................................................................6
Critical analysis of stages............................................................................................................6
Steps in costing holiday package................................................................................................7
Part 3................................................................................................................................................8
Review of package tour programs...............................................................................................8
Comparison of tour programs ....................................................................................................8
Evaluation of various tour programs...........................................................................................9
Part 4..............................................................................................................................................10
Examples of strategic and tactical decision-making.................................................................10
External factors affecting decision-making..............................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Tour operation management forms the fundamental part of tourism industry and thus
links tourists with the various service providers by catering the needs and wants of customers.
The main aim of this report is to analyze the tour operations of TUI and hence devise the various
programs for attracting customers and achieving competitive advantage.
TUI is basically multinational travel as well as tourism company being established in
1923 and headquartered in Berlin and Hannover. This company mainly owns the various travel
agencies and airlines.
This report gives a brief about roles and functions of tour operators, structure of tour
operating industry, comparison between mass-market operators and independent operators,
evaluation of impact of integration, steps in creating holiday package, role and function of each
stage, critical analysis of stages, steps in costing holiday package, review of package tour
programs, comparison of tour programs, evaluation of various tour programs, examples of
strategic and tactical decision-making and external factors affecting decision-making.
MAIN BODY
Part 1
Roles and functions of tour operators
The tour operators are basically the people and entity who combines the tour as well as
travel components for creating the package holidays. They are mainly responsible for producing
brochures for promoting their products. There are mainly three types of the tour operators who
have different kinds of roles and functions.
Inbound operators
There are also known by the name incoming tour operators where their main role is to
promote the particular destination by working in collaboration with various travel agents as well
as distribution partners. Besides this, their major function is to provide the planning and
coordinates reservation and other travel arrangements (Robinson and et.al.,2016).
Outbound operators
These are the operators which work inside their countries for taking the travelers top
different countries. The main role of these tour operators is to develop the packages as well as
tours for allowing travelers from one country to another. On the other hand, foremost function of

these tour operators is to market the tours for various international destinations either for the
business or for the leisure travel.
Domestic tour operators
These are the one who mainly put together various inclusive tour packages as well as
sells them to the domestic travelers. Major function of these operators is to provide the travel
packages as well as tours within the native country of tourist (Holland and Leslie, 2017).
Structure of tour operating industry
The structure of tour operating industry is highly complicated and thus comprises of
various components. TUI mainly follows the functional hierarchical structure where the various
departments of the company are divided according to their functions. The organizational chart of
the company mainly displays the 207 main executives. Along with this, there are various
different departments within the organizational structure of TUI which has its own functions and
responsibilities like designing, operations, packaging, marketing etc. Each and every department
has its own roles as well as functions for example the marketing department is mainly
responsible for promoting the services as well as products of the company. Thus, in the way
structure of the tour operating industry represent the most important and inseparable part of the
domestic tourism. The organizational structure of TUI in order to reduce the transaction costs as
well as increasing its marketing is developed into a great form where the packaging tours are
being made according to the nature and requirements of customers (Arekamari, 2016).
Comparison between mass-market operators and independent operators
The tour operating industry is basically the mixture of small markets as well as
independent operators which forms the great part of the domestic tourism. Some of the tour
operating companies markets themselves on large platform and thus functions within mass
market while some of the operators are specialist and independent and thus starts their own
business. The mass market tour operators are basically the organizations and entities which
organizes the tours for large group of people at a time. They are mainly responsible for arranging
the transport as well as extra services. On the other hand, the independent travel agents are
basically the agents which has their own at-home businesses. They generally on full-time basis
or part-time basis. These independent travel agents mainly partners with the host agency as well
as earns the commission for travel packages along with deals sold (Kotiloglu and et.al.,2017).

Evaluation of impact of integration
The integration of both the large mass-market as well as independent tour specialists have
a great impact not only on the market but on the overall economy of the country. The mass
market tour operators that mainly organizes the tours for large group of the people is mainly
vertically integrated. The best example of the mass market tour operators is TUI. TUI is mainly
horizontally integrated because they basically owns the other brands on similar level as them like
Thomas cook. TUI merged together for saving the costs and to make the other companies
profitable. On the other hand, the specialist operators are mainly lesser known as compared to
the mass market operators. These specialist tour operators provides the holiday package for range
of customers and thus is more flexible than the mass market operators. The main reason behind
this great flexibility is that their customers are able to do what they really want to do instead of
getting the package holiday. The integration of these two types of tour operators have a great
impact on overall market and thus on the entire tourism industry (Tsaur, Cheng and Hong, 2019).
Part 2
Steps in creating holiday package
Creating the package holiday is highly necessary as well as important for the organization
in order to attract the customers. Having the great holiday package will help TUI to take its
products as well as services to the customers and thus promote them to the high extent. Creating
a successful and good holiday package consists of large number of steps.
Identifying the business needs
This is the first step towards creating a successful and great holiday package.
Understanding the needs is highly essential for TUI as this will help to be clear about their
business drivers. Thus, it is highly essential to clear out that what the particular business
demands and to what extent it is feasible (You, Chen and Su, 2019).
Identifying the target market
The next step towards this is identifying the target market. The customers serve an
important link between the company and the market. Recognizing the target market is highly
essential for TUI in order to take its brand message to the wider audience. So in this step, TUI
should make sure that whether their business needs matches with the target market or not.

Starting small
This is the another step which is highly essential for monitoring the overall tour package.
TUI can try the two or three packages out of the many which they have designed in order to
monitor the response of audience and customers. The trial of the package will provide a clear
view to the company regarding whether the package has been successful or not.
Role and function of each stage
Each and every stage towards creating the successful holiday package has its own
function as well as role. The first stage which is identifying the business needs is one of the most
foremost and important stage. Until and unless the company is not clear about its goals and
objectives, it cannot have the focus on the needs of its customers. The main function as well as
role of this stage is that it will help TUI to make a clear vision as well as mission statement
which will help the company in gaining competitive advantage. Like for example whether to
focus on longer stays or night booking etc. The second stage towards creating the best holiday
package is identifying target market. This is the another most important step towards attracting
the customers and promoting its products as well as services (Richards and Font, 2019). When
TUI will identify its business needs along with its goals and objectives thereafter it is highly
necessary for the company to recognize target market which would basically take the advantage
of promotion and package. The major function as well as role of this step is that it will help the
organization to understand needs and wants of the customers and thus increase its overall
profitability ratio. The last step towards creating the great holiday package is monitoring the
package. Only designing the holiday package as per the needs of customer is not enough instead
monitoring it in the similar way is highly essential. Company should monitor the holiday
package by starting the trial of two or three package. This will provide a great idea to the
company about the flaws of the package and what are the benefits of package which customers
are enjoying.
Critical analysis of stages
The various stages as well as components of the holiday package are highly different and
thus differs according to the tour operators as well as business objectives. Each and every
organization have different goals as well as objectives and therefore they design the different
components of the package holiday in entirely different manner. For example- TUI has the
business objective of providing great accommodation to the customers and thus mainly focuses

upon accommodation services in its holiday package instead of the other fees (Yan and Ho,
2017). Thus, in order to fulfill this objective, the tour operators in TUI mainly lays the emphasis
on researching about the hotels which provides the great accommodation services and thus
partners with them. On the other hand, the specialist independent tour operator has their own
objectives which sometimes differs from the other tour operators and agencies. For example- the
major objective of the independent tour operation is to increase its sale and thus penetrate the
market instead of focusing on the profit. Thus, in this scenario the independent tour operator will
mainly include the major promotional activities as its components within its package. The major
component in this case will be the various offline as well as online promotional tools like social
media, charitable events etc.
Steps in costing holiday package
Holiday Package to Belgium
Visiting attracts: Ghent, Brugge, Ostend, Antwerp, and Brussels
Number of nights: 7
Accommodation at Van der Valk Hotel Nazareth-Ghent
Accommodation Cost per person per night: € 130
Accommodation Cost per person: 130 x 7 = € 910
Total Accommodation Cost = 910 x 50 = € 45,500
Transportation Cost:
1. Luxury Coach Cost: £7, 600
1. Visitor attractions charge €55 per person= 55 x 50 = € 2750
2. Local tour guide is €960
Total Accommodation Cost = 910 x 50 = € 45,500
Visitor attractions charge €55 = € 2750
Local tour guide is €960
Total Cost in Euro €49210
Conversion rate €1.12 per £1

€49210 = £ 43937
Luxury Coach £7600
Total Cost = 51537
Adds a mark-up of 25% of 51537 is 12,884
Total = 64421
Cost per person 51537/50 = 1030
Price Per person 64421 /50 = 1288
Per student profit 1288- 1030 = 258
Total profit 258 x 50 = £12900
Part 3
Review of package tour programs
The package tour programs are basically the programs which are being designed by the
organizations and thus consists of various services like accommodation, transport etc. The
package tour programs created by TUI mainly targets the adult students. The main reason behind
focusing on the adult students as the core market is their numerous needs as well as wants to
travel to different parts of the world. These tour programs will mainly emphasizes upon the
needs and desire of the adult students. The programs will mainly provide the great
accommodation as well as transport services to the adult students whether traveling
internationally or domestically. Alongside this, the programs will be a great blend of the luxury
services as well as value for money (Avlonitis and Hsuan, 2017). The program will mainly focus
on the 7 day and 5 day package as per the needs of customers. Within this package, main
emphasis will be laid on the city and tour as well as sight seeing in affordable price. Besides this,
as adult students are mainly fond of trying out the various different dishes as well as are highly
conscious towards hygiene thus the programs will provide a great meal in the best restaurants
and hotels.
Comparison of tour programs
Thomas cook TUI
The package tour program of the Thomas cook
mainly focuses on the price of the services.
The package tour programs of TUI are highly
enticing and thus mainly focuses on providing

The travel programs of Thomas cook mainly
includes the 4-day package at €56432. The
package will the accommodation charges as
well as transportation cost. The great punchline
of this package is that the company will not
charge extra amount for the local tour guide.
Besides this, the package will include the
additional visitor attraction charge to around
€4321 and the total cost would be
approximately €56312. Thus, company mainly
focuses upon providing services at much high
price (Gizyatova and Voskolovich, 2017).
a great services to the adult students at much
affordable prices. The range of the luxury
programs offered by TUI basically emphasizes
on the needs and wants of the adult students.
Keeping in view the excitement within the
students to make their trip adventurous, TUI in
its 7 day package provide a great range of
adventure activities along wit the sight seeing.
The overall price of the adventurous trips
together with the fees visitor changes is around
€3216. On the other hand, the programs also
focuses on providing the luxury coach as well
as cars for the transportation at just £7, 600.
The total accommodation cost for the 7 day
package is around € 45500.
Evaluation of various tour programs
Thomas cook is one of the company which serves the similar market that is adult students
and thus their main focus is identifying the needs and wants of these students. This company
provides a range of services to the adult students like accommodating services, adventurous trips,
sight seeing etc. The major change which company has inculcated in its program is that it offers
free local guide to the students in order to provide knowledge to these students about various
historical places, museums, artifacts etc. On the other hand, the other tour operator company
which is Jet2holidays also have their focus on adult students as well as old age people. This
company has designed a range of packages keeping in view the changing needs of customers.
The major ficus of this company has been enhancing its customer base and thus emphasizes upon
reaching the target audience through a range of online activities (Kumar, Kumar and Reddy,
2018). For example- the recent advancement in its tour programs has been the addition of
discount vouchers. In order to entice the customers, this company has recently launched its save
and travel scheme where the company provides a 5-day package at much low cost and thus
provides discount on travel bookings.

The best which TUI can choose in order to meet the needs of target market is penetrating
the market through use of different social media tools. TUI can explore more online tools in
order to reach the customers. In addition to this, for attracting the adult students company can
focus on providing more customized services to them. For example- company can provide a
great discount as well as vouchers to the adult students in order top increase the sale. Besides
this, company can also increase itys product range by focussing on married couples along with
the students.
Part 4
Examples of strategic and tactical decision-making
Strategic decisions are basically the decisions which are being made as per the goals and
objectives of the company. On the other hand, tactical decisions are mainly the medium-term
decisions which normally spans between the six months as well as one year. The major
difference between strategic and tactical decision is that the former ones are long term and
corresponds to future planning while the latter are the short term and thus are generally made for
short period of time. Both the decision-making are highly important for the organization in order
to gain competitive advantage and thus should be an inseparable part of the success of the
company (Hamid and Isa, 2017).
External factors affecting decision-making
There are various external factors which actually have a great impact upon the strategic
as well as critical decisions.
Political factors
The political stability of the host as well as home country have a great impact upon
decision-making. For example- if the political situation of the country is not stable then it will
affect the decision-making of TUI as the company would have to plan its packages accordingly.
Economic factors
These factors largely impacts the overall stability of company and its position in the
market. For example- when a country is economically unstable say high unemployment rate, low
GDP then it will be difficult for TUI to inculcate that destination in the package as it will not
yield much profit (Arekamari, 2016).

CONCLUSION
It has been summarized that there are various range of tour operators and each and
everyone have its own functions and roles. The structure of the tour operating industry is highly
complex and thus ranges from large mass-market to the independent operators. In order to
develop a successful as well as great package holiday for attracting customers, organizations
follows some well-through steps. These steps help them to develop a package which eventually
helps them to gain competitive advantage. Besides this, each and every stage basically helps the
organizations to identify their business objectives and hence attract the customers through their
exceptional promotional activities. There are various package tour programs which organizations
design and each and every program fulfills the different needs of the customers. Apart from this,
the various strategic as well as tactical decisions helps the organizations to make certain
improvements and thus affect their decision-making.

REFERENCES
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