Tour Operations Management: An Analysis of Thomas Cook and TUI Group

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TOUR OPERATIONS MANAGEMENT
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Contents
LIST OF FIGURES.............................................................................................................................4
INTRODUCTION............................................................................................................................. 5
LO1.................................................................................................................................................6
TASK 1A......................................................................................................................................6
TYPES OF TOUR OPERATORS..................................................................................................6
MAJOR TOUR OPERATORS.....................................................................................................7
INTEGRATION.........................................................................................................................9
ROLE OF TRADE BODIES.......................................................................................................12
TASK 1B.................................................................................................................................... 13
RECENT TRENDS IN DEVELOPMENT OF TOURISM...............................................................13
LO2............................................................................................................................................... 14
TASK 2A....................................................................................................................................14
STAGES IN HOLIDAY CREATION............................................................................................14
TASK 2B.................................................................................................................................... 18
TASK 2C.................................................................................................................................... 19
COST OF PACKAGE............................................................................................................... 19
LO3............................................................................................................................................... 20
TASK 3A....................................................................................................................................20
COMPONENTS OF BROCHURE.............................................................................................20
TASK 3B.................................................................................................................................... 22
COMMUNICATION APPROACHES........................................................................................ 22
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TASK 3C.................................................................................................................................... 23
DISTRIBUTION APPROACHES............................................................................................... 23
LO4............................................................................................................................................... 24
TASK 4A....................................................................................................................................24
STRATEGIC DECISIONS......................................................................................................... 24
TASK 4B.................................................................................................................................... 25
TACTICAL DECISIONS............................................................................................................25
CONCLUSION............................................................................................................................... 27
REFERENCES.................................................................................................................................28
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LIST OF FIGURES
Figure 1: Thomas Cook Logo..........................................................................................................8
Figure 2: TUI Group Logo...............................................................................................................9
Figure 3: Horizontal Integration of Thomas Cook........................................................................10
Figure 4: Vertical integration of Thomas Cook.............................................................................10
Figure 5: Horizontal Integration of TUI Group.............................................................................11
Figure 6: Vertical Integration of TUI Group..................................................................................11
Figure 7: Brochure....................................................................................................................... 21
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INTRODUCTION
Tourism industry deals with all the activities regarding the traveling and staying of outsiders at a
tourist destination. A tour operator is a person or an organization which accumulates various
combinations of tourism components to create an attractive package for the tourist. Tour
operations management is an essential management process where the tour operators manage
the various stages of tourism to provide a high-quality experience to their customers.
In this report, the need and importance of Tour Operations Management have been studied.
The report also covers the stages of developing holidays and the different methods for the
contracting of various components of holidays. An evaluation of the planning of the holidays is
also being done and the strategic decisions taken by the tour operators are also covered.
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LO1
TASK 1A
A tour operator can be considered as a person or a company that combines the various
components of tours and travel for the creation of an attractive tourism package for the
customer (Medlik, 2012). The combination of these travel components is being sold by the tour
operator at a specific price. A basic package provided by any tour operator majorly consists of
three components that are transportation, accommodation and a transfer from arrival point to
accommodation.
TYPES OF TOUR OPERATORS
There are various types of tour operators in the tourism industry, some of which are as follows:
 Outbound
Outbound operators are those tour operators that plan tourism in foreign destinations.
These operators promote tourism outside their home countries. For instance, when a
tour operator of London would promote a tour to India, he would be known as an
outbound operator (Holland and Leslie, 2017).
 Specialist
Specialist operators are those operators that specialize in a specific or niche tourist
destination. These operators work for a niche market and provide advice and
recommendations for such holiday destinations.
 Direct Sell
Direct Sell Tour operators are those operators that are willing to sell their tour packages
to the public through the various travel agents. Due to the higher value received
through these travel agents, the concept of direct sell operators has increased
(Camilleri, 2018).
 Inbound
Inbound tour operators are those operators that manage the foreign destination tours
in the host country despite having being based in another country. These operators
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collaborate with various locally based providers that provide existing packages so that
they can manage the entire tour for the customers.
 Long Haul
Long Haul deals with the destinations that are based at a longer distance from
the home country. Maximum of the inbound tour operator's deal in the long
haul as the customers would not have much awareness regarding the
destinations (Theobald, 2012).
 Short Haul
Short Haul deals with the destinations that are at a shorter distance from the
home country. In the short haul destinations, customers are aware of the
destination and have specific expectations that are to be fulfilled by the inbound
operator.
 Domestic
Domestic operators are those tour operators that promote tourism for the destinations
of the home country itself. For instance, a tour operator from London promoting a tour
for London would be referred to as a domestic operator (Robinson et al., 2016.
 Cruise
Cruise operators are those operators that manage the trips that are being planned on
the cruise line. The cruise travel industry has been rapidly growing and accommodates a
huge number of passengers.
MAJOR TOUR OPERATORS
Thomas Cook Group PLC
Thomas Cook is one of the leading companies in the travel and tourism industry. Having served
about 19 million customers worldwide, the firm operates from about 16 countries and is willing
to serve the tourism services to more customers every year (Thomas Cook, 2019).
Market share: Thomas Cook Group PLC holds a huge share in the UK travel industry by holding
about 27% of the market share.
Turnover: The annual turnover of the firm for the year 2018 was noted to be 9584 £ million.
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Passenger Numbers: The firm has served about 11 million tour operators customers and about
20 million airline customers in the year 2018.
Origins and Ownership: The firm was established in the year 1841 by Thomas Cook and has
been one of the largest leisure travel organization in the world. The company is a public limited
company and the CEO of Thomas Cook Group PLC is Dr. Peter Fanhauser (Thomas Cook, 2019).
Market Segment: Thomas Cook Group PLC is a major holder in the travel and tourism industry
and has tapped all the segments of travel, hotels and resorts, holiday planning, etc.
Figure 1: Thomas Cook Logo
[Source: Thomas Cook, 2019]
TUI Group
TUI is one of the largest tourism groups in the world which is holding about 1600 travel
agencies under it. It has a very strong value chain under its brand and holds numerous hotels,
aircraft and cruise lines (TUI Group, 2019).
Market Share: The current market share held by the TUI Group is 21%.
Turnover: For the financial year 2018, the annual turnover recorded by the firm was €19.5bn.
Passenger Numbers: As per the statements produced for the year 2018, the number of
customers served by the TUI group was 27 million.
Origins/Ownership: The TUI Group was founded in the year 1923 and after several mergers;
the firm has established itself as a leader in the tourism industry. The firm is a joint venture by
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the TUI AG and First Choice Holidays PLC, with 54% of the shareholding held by TUI AG. The
CEO of the TUI group is Mr. Friedrich Joussen (TUI Group, 2019).
Market Segment: Under the travel and tourism industry, the firm has tapped all the segments
including airlines, cruise lines, hotels and resorts, travel agencies, online portals, etc.
Figure 2: TUI Group Logo
[Source: TUI Group, 2019]
INTEGRATION
Horizontal and Vertical integrations are the two strategies used by major travel and tourism
operators. Horizontal integration is said to be done when a company merges with another
company that follows a similar value chain (Sezgin and Yolal, 2012). Vertical integration is said
to be done when a company acquires another company dealing in the same business
operations.
Thomas Cook has followed both vertical as well as the horizontal integration for expansion of
its business. Following is a glimpse of the horizontal integration by Thomas Cook:
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Figure 3: Horizontal Integration of Thomas Cook
[Source: Thomas Cook, 2019]
Thomas Cook has horizontally integrated its business by acquiring all the different business
following similar value chain so that it can keep a hold on diversified businesses together. The
organization also follows vertical integration through acquiring similar business so that it can
expand its reach to the customers (Kachniewska, 2013). The following is the representation of
vertical integration by Thomas Cook:
Figure 4: Vertical integration of Thomas Cook
[Source: Thomas Cook, 2019]
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Thomas Cook
Group PLC
Thomas Cook
Airlines
Thomas Cook
Holidays
Thomas Cook
Hotels and
Resorts
Thomas Cook
Tour Operators
Thomas Cook AG
MyTravel Group PLC
Hotels4U.com
Elegant Resorts
NetFlights
Oger Tours
The Co-operative Travel

The TUI Group has also integrated its business in horizontal as well as vertical ways. Through
the horizontal approach, the firm has acquired various businesses with similar value chain to
expand its reach in diversification (Sezgin and Yolal, 2012). Following is the representation of
the horizontal integration by TUI Group:
Figure 5: Horizontal Integration of TUI Group
[Source: TUI Group, 2019]
TUI Group also has vertically integrated through acquiring similar businesses to expand its
services that can be provided to the customers, which is represented below:
Figure 6: Vertical Integration of TUI Group
[Source: TUI Group, 2019]
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TUI Group
TUI Airlines TUI Cruise
Lines
TUI Hotels
and Resorts
TUI Travel
Agencies
TUI Online
Portals
TUI AG
Hapag-Lloyed
Thomson
Nouvelles Frontières
RIU
Magic life
First Choice Holidays PLC

ROLE OF TRADE BODIES
For the proper regulation of the travel and tourism industries, various trade bodies have been
set up to implement the various code of conduct for the companies that are set up in the
industry. Some of the major trade bodies are as follows:
 ABTA [ASSOCIATION OF BRITISH TRAVEL AGENTS]
ABTA is a travel association of UK which safeguards its members and customers of its
members against various hazards so that its members can grow sustainably and the
customers can relish a seamless experience of their travel (Medlik, 2012). The major
factors covered by ABTA are financial protection schemes, raising the standards of the
travel and presenting a unanimous review on behalf of the industry.
 AITO [ASSOCIATION OF INDEPENDENT TOUR OPERATORS]
AITO is an organization which has been established to represent the independent tour
operators of UK. The main purpose of this trade organization is to ensure high customer
satisfaction through its specialized tour operators and has three main pillars of
functioning being Choice, Service, and Quality, that has to be strictly followed by the
member operators (Sharpley, 2012).
 FTO [FEDERATION OF TOUR OPERATORS]
FTO is an integral part of ABTA which coordinates between the various destination
governments and strives for the improvement of the overseas holiday areas. The firm
also has the major purpose of handling crisis and operational issues and maintains the
standards of health and safety of the tourists (Cetin and Yarcan, 2017).
 CAA [CIVIL AVIATION AUTHORITY]
CAA has been established for the major purpose of regulating the aviation industry in
the UK by developing policies for the safety of aviation and ensuring that the safety
standards are being met (Walulik, 2018). This authority regulates all the decisions
regarding airlines, airports, airspace, the capacity of aviation, security of aviation,
funding required by aviation, and the environment that is required to maintaind.
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