Cosmos Travel: Tour Operations Management and Package Holiday Analysis

This report, prepared for Cosmos Travel as a newly appointed marketing manager, provides a comprehensive analysis of tour operations management. It begins by identifying key trends in the tourism industry, including digital advertising, niche marketing, and crowdsourcing, and assesses their effects on the tour operations industry. The report then suggests various package types, such as package tours, escorted tours, and all-inclusive packages, suitable for the company's development. It outlines the stages involved in developing a tour package, including planning and research, and estimates the associated timescales. The report also evaluates different methods of contracting individual components of a package holiday and calculates the selling price of a package using a sample itinerary. Furthermore, it addresses the planning decisions for designing a tour brochure, assesses the suitability of traditional brochures versus e-brochures, and examines the tactical decisions made by a major tour operator, Thomas Cook. The report aims to provide a strategic and tactical understanding of tour operations to guide Cosmos Travel's decision-making process in offering package holidays.

Tour Operations
Tour Operations Management
Joel Mambou Page1

Contents
Introduction:................................................................................................3
i) Identify three trends which will be important to your company when it
has to make decisions about producing and selling its own package
holidays....................................................................................................3
i) Assess the stages that would be involved in developing that type of
package and also estimate the timescales involved so that your
company will know when they can implement their new initiative..........7
ii) Evaluation of different method of contracting for individual
components of the package holiday........................................................8
iii)Calculate, as the final stage of your research, the selling price of a
package....................................................................................................9
holiday using the attached itinerary & rates............................................9
a) Evaluate the planning decisions that must be made for the design of
a Tour Brochure for your company’s new package holidays..................11
b) Assess of the Suitability of traditional brochure in comparison to E-
Brochure.................................................................................................12
B) Tactical decisions taken by my chosen mayor tour operator which is
Thomas Cook..........................................................................................17

Tour Operations
Introduction:
This report gives a detail introduction about tour operator, types of tour
operator and role of tour operator in tour industry. This report also
provides a research based analysis of trends and development of tour
industry and how tour operator plans different holiday packages and offer
them to their customers. This report will also help in understanding the
strategic and tactical decision making of tour operators. Cosmos travel
agency a leading travel agency in United Kingdom, company is also taking
sales agency for major airlines and tour operators. As a newly appointed
marketing manager in I have to make a research on recent trends in
tourism industry and on the basis of analysis of the research a business
plan will be prepare to present to the board of director of the company so
that company will decide and consider holiday packages to selling
package holidays as an agent for major tour operators.
Task 1
i) Identify three trends which will be important to your company when it has to
make decisions about producing and selling its own package holidays.
Tour and travel industry is the main contributor in United Kingdom
economy. There is tough competition available in the tour industry. To
take the competitive advantage over rival’s company have to make new
plans and strategies. Plans and strategies are based on research and
analysis of recent trends and development in tourism industry. Presently
UK’s tourism is booming because large number of domestic and
international tourists is attracted towards London.
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(Source:
http://0.s3.envato.com/files/90720290/preview/01_intro.__large_preview.p
ng)
Three major recent trends in this industry include:
 Wide product range
 All-inclusive
 Mass Marketing
The organisation functioning in travel and tourism sector have to consider
following three trends while making appropriate decisions:
 Digital advertising
 Niche marketing
 Crowd sourcing
ii) Analyse the effects of these trends and developments on the
tour operations industry in general.
Tourism industry is playing a significant role in the United Kingdom
economy. On the basis of recent trends there is huge potential for future
growth in the market. According to the analysis made of recent trends and
development in tourism industry it is found that London becomes a most
favourable tourist destination place for overseas and domestic visitors.
a) Wide product range:
Now a day’s tour operators offer wide range of services in order to
increase their sale. For example there is higher demand of package
holidays, tour operator sale tour packages with attractive prices like they
offer discount on the prices. Tour operators render different packages in
order to attract large number of tourists. Visitors or overseas consumers
attract towards those tour operators who offers wide varieties of services
with attractive offers.
b) All-inclusive:
Company can offer tour packages where it includes all types of cost
related with each item and offers unit price for the package. All cost
items include cost of air or other transport, land accommodation
expenses, cost related with meal and sightseeing etc. This kind of

Tour Operations
tour packages is suitable for professional and business personnel
who are travelling for the business purpose with their families.
b) Mass marketing
If tour operator advertises their services through mass marketing
tool, then they can increase their sale. Mass marketing help tour
operators in providing their services to every type of consumer
whether it is middle men or highly rich profile. Tour operators adopt
mass marketing tool for advertising its services and make appeal to
wide varieties of customers. It increases the overall cost that results
into high rate tour packages, they need to prepare effective
packages for every type of customers that require huge research
and information related to the demand of the customers.
If tour operator advertises their services through mass marketing
tool, then they can increase their sale. Mass marketing help tour
operators in providing their services to every type of consumer
whether it is middle men or highly rich profile .Thus the recent
trends in the tourist industry affect the whole industry in terms of
money, in terms of job and in terms of competition.
Inbound tourism
Increase in inbound tourism brings new opportunities for tour
operators and travel industry. It will help in increasing the business
of tourist operators. Increase in inbound tourism also brings job
opportunities for youth and increases their living standard, which is
the good sign of economic growth of the country. Inbound tourism
provides economic benefits to the country. If the large number of
tourist comes on the same destination to spend their holiday, then
the place creates its value and become preferable tourist
destination for future also. With development of tourism sector it
will also benefit the business of hotel industry.
Increase in inbound tourism adversely affect the need and want of
the local residents as they need to pay higher amounts to meet out
their necessities. Secondly it also impacts the environment as it
increases the air pollution, noise pollution, etc.
Domestic tourism
Domestic tourism also gives equal contribution in the development
of tourism industry. First of all, domestic industry gives its
contribution to the country’s economy. If the resident tourist
preferred the local city for their leisure time, then it will also affect
the inbound tourism. There will be growth in domestic tour industry
and it brings opportunities for tour operators. Domestic tourism also
helps in expanding the restaurant and other businesses.
There are some set of negative impact of increase in domestic
tourism is that it increases the pollution level, increase in
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exploitation of natural resources, increase in crime rates and many
more.
Digital advertising: Be it televised commercials or internet banners and
posters, digital marketing is present everywhere. Tour operators are
currently focusing on social media websites and search engine
optimisation techniques so that customers can be reached out without
any sort of inconvenience. Digital radio, e-marketing tools and brand
related websites are the basic platforms where company products and
services can be marketed.
Niche marketing: Specific set of audiences that are present in the
market are considered as niche and this niche is targeted with specialised
ads. This type of marketing is trending in areas where diversity in culture
and heritage is vast. Tour operators track customers and their needs and
requirements which automatically helps in formulating ads which are
niche specific.
Crowdsourcing: The power of customising advertisements according to
convenience of users is considered as crowdsourcing. It is the growing
trend in today's digital world. Competitions in which brand endorsement
and sponsorships are involved is the technique of outsourcing. From 2007,
this kind of advertising tool is trending and becoming popular amongst
customers.
iii) Building on i) and ii) make suggestions for the types of package my company
should develop:
For economic growth and profitability tour operators should plan and offer different
tour packages to their customer. On the basis of recent trend there are many options of
tour packages available to the company. This includes:
a) Package Tour: For overseas visitor’s company may plan for the package tour.
Package tour offers visitors two or more than two tourism services. The service
covers period of more than 24 hours or includes overnight accommodation.
A package includes:
 Transportation services through road, rail or air etc. from destination or
to destination;
 Accommodation services includes hotel, guest house or cottage
Company can give option to its customers to design their shorter tour as
per their requirement and customize their tour packages. If company
provides this kind of attractive tour packages to its visitors, then it can
bring economic benefit to the company. This package tour is suitable for a
family or visitors group.
b) Escorted tour packages: Company can hire professional tour
managers and organise escorted tour package for the visitors group.
Company will get benefit from this escorted tours that it could not
make any extra efforts to go to suppliers and other service providers
for the arrangement of other services. The whole arrangement is in

Tour Operations
the charge of professional tour manager. He makes structured
programme of sightseeing, meals, transportation and
accommodation. But these tours are expensive
than package tours.
c) All-inclusive package:
All-inclusive package is a set of services offered at a fixed price by a tour operator. It
usually includes transportation, accommodation and catering (e.g. All Inclusive), but
may also include tours, excursions and other services. According to European
regulations, for a journey to be called a package, it must exceed 24 hours, be sold at an
all-inclusive price and cover at least two of the following services: transport,
accommodation, excursions, Cultural or sporting activities.
d) For encouragement in domestic tour company can offer incentive trips
for the members of business organisation or staff of an enterprise.
e) Apart from this company may offer study tours for those student
group who are coming from the other country.
f) If tourist like to come to London for a specific season company can also
offer seasonal package tours to the visitors.
Airline:
The tour operator has three choices to set up his packages in advance:
The charter of aircraft: it leases a plane for a given duration, it is a
charter flight. If the estimated demand is not large enough, it can co-
charter the aircraft with other tour operators or market dry flights only.
The share: the tour operator leases a certain number of places on
regular flights and by regular airlines, to which he can surrender the
unsold places according to the conditions fixed during the negotiation.
The firm purchase: on certain destinations or on certain dates, the
allotment is not authorized (Air France on the West Indies for example),
the only way to obtain places then the firm purchase several months at
the time, Advance; Some tour operators have their own airline.
Hotel:
The policy of firm purchase and allotment is also valid for hoteliers; The
most important tour operators also acquired hotels belonging to them.
Marketing
For a long time, the tour operators sold their packages only by the travel
agencies, to whom they paid a commission e.g. company to company on
line. This mode of distribution, although still a majority, must now face
competition from the Internet, with more and more tour operators now
selling (on-line consumer).
Task2
i) Assess the stages that would be involved in developing that type of package and
also estimate the timescales involved so that your company will know when
they can implement their new initiative.
As per the recommendation given to the board of directors. There are
multiple tour packages available to the company. Company can arrange
group tours, study tours for students, escort tours etc. for the visitors. A
family plan their holiday in London and they contacted to the company.
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Company offers them five days’ tour package. There are many stages
involve in drafting package:
Planning:
The first stage is planning for a tour package. Visitors ask for unit price of
whole package. So in that package along with accommodation and
transportation services other services like breakfast meal, events, city
night seeing are included.
Research:
For making arrangements for sightseeing. Tour operator should find out
those places and tourist destinations which are suitable with budget of
tour package. Tour operator should not choose too many places which
cannot be seen by the visitors during time period of tour. It should be
ensured that if visitors demand for any specific destination or tourist
place.
Negotiation with suppliers:
Suppliers include bus service provider, hotel or accommodation service
provider and tour guide etc. All suppliers are providing their services to
the visitors on the behalf of tour operators. While planning for package
tours company should negotiate with these suppliers and make
agreements with them.
Legal obligation:
Making all the arrangements regarding to a package company should also
ensure that it complies all the legal requirements which are applicable on
tour operator.
Budgeting:
After making all the arrangements for the package, a budget is prepared
which includes all cost like cost of search, cost incurred in making
agreements with intermediaries etc. Budgeting gives a brief idea about
the total prospective cost incurred in tour packages this will help in
controlling cost of tour package.
Timescales estimation:
Planning for the tour package take time around one month as the time
period of tour is short. Searching destinations for tour package takes time
15-20 days which are suitable for the package, negotiation with suppliers
take 15 days’ time because there are many suppliers and after that 3-4
days are required for fulfilling legal obligations so one-month time period
is required in developing the tour package. To plan whole package and
implement new initiative 2-3 months’ timescale requires.
Forecasting: The tour package which is designed by the company has to
be made in such a manner that future predictions can be made. It should
be able to forecast the probability of success or failure of the strategy.
Contracting: This stage is considered to be little crucial because it
involves certain documentation that will help in legalising the entire tour
package. The structure that is designed has to be strong so that no legal
complication is faced by the company.

Tour Operations
ii) Evaluation of different method of contracting for individual components of the
package holiday.
The most important think for the tour operator while planning for tour
package is negotiation and contracting with individual components of the
package.
These individual components include transportation, accommodation and
other services arranged by the tour operators.
Following are the methods of contracting:
 Commitment: The most important part of a contract is
commitment. It may be possible that individuals that are involved in
this agreement be it suppliers or tour operators, may have hidden
motives. Commitment is an attribute of honesty and this cannot be
compromised in a proper agreement. Every person that is a part of
entire tour operations has to take his/her specific responsibilities
which will be a transformation of commitment.
 Allocation: Duties and roles of individuals must be distributed by
tour operators amongst other members without compromising
company demands. Allocation when performed correctly can result
into better accommodation and execution of contract.
 Ad hoc chartering: The process in which aircraft, helicopters or jet
planes are hired over a contract basis is referred as ad hoc
chartering. The trips that are involved in this type of contracts are
one ways, round trips or even multi-leg flights.
 Time series charters: The contacting in which certain transport
medium or vehicle is booked or chartered for a fixed period of time
with fixed voyages and trips. This type of contracts are formulated
as a loading and unloading costs which will be involved when hiring
or owning a particular vehicle for fixed amount of time.
a) Fixed contract:
Positive -It is a written contract executed between tour operators
and suppliers. Suppliers or service providers agreed at a fixed rate
prices for their services for a fixed volume based capacity. Tour
operators maximize their revenue and received benefits in off
season sale shortage. For example, Thomas Cook enters into fixed
contract with suppliers. Sometimes higher discount is offered in
these kinds of contracts because of their higher demand.
Tour operator prefer fixed price contract because consumers also
prefer transparency in prices of tour packages which can only be
provided through fixed prices rather than flexible prices. Fixed price
contracts also provide budgeting for all costs.
Negative -The main negative feature of this contract is tour
operator has to pay a fixed amount whether they utilize their full
capacity or not. A risk related with unutilized capacity is involved in
this contract.
b) Sale only contract:
Positive -In this contract prices for the services provided by the suppliers are
not fixed. Prices of services offered by suppliers are flexible and keep on
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changing. Suppliers are only charge for utilized capacity. This also reduces the
risk of weak responses for any tour package designed by the tour operators.
Negative -These contracts are made very rear because they have comparatively
high and often use by the consumers.
After analysing the above two contracts fixed contract method provide more benefits
than sale by contract method. Fixed contract are adopted mostly by the tour operators
Thomas Cook and TUI group adopt fixed contract method.
Recommendations
As per my recommendations they need to go for the fixed contract method as it create
transparency within their packages as well as help them in earning higher revenues
during peak seasons.
iii)Calculate, as the final
stage of your research,
the selling price of a
package
holiday using the attached
itinerary & rates.
1. Calculations based
on itinerary: -
(Eugenio-Martin &
Inchausti-Sintes, 2016)
Particulars
Amount in
NZD
ReturnAir Fare 5,349
Tokyo
Hotel room (per person, per
night) 104.86
Sightseeing tour
5 day tour 1,418.68
Full day city tour 246.73
Transfers (Between Airport
and Hotel)
Tokyo 30.84
Hong Kong
Hotel room (per person, per
night) 77.05
Sightseeing tour
Hong Kong Island Tour 29.9
New territories 28.75
Transfers (Between Airport
and Hotel)
Hong Kong 11.5
Bangkok
Hotel room (per person, per
night) 88.2
Sightseeing tour
Floating Market tour 41.16
City and temples tour 47.04
Transfers (Between Airport
and Hotel)
Bangkok 29.4
Cost 7503.11
Agent's commission (9%) 675.28
Total Cost 8178.39
Mark - up (15%) 1226.76
Selling price 9405.15

Tour Operations
2. Calculations based on itinerary: -
(Eugenio-Martin &
Inchausti-Sintes, 2016)
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Particulars
Amount in
NZD
Return Air Fare 5,349
Tokyo
Hotel room (per person, per
night) 104.86
Sightseeing tour
5 day tour 1,418.68
Full day city tour 246.73
Transfers (Between Airport
and Hotel)
Tokyo 30.84
Hong Kong
Hotel room (per person, per
night) 77.05
Sightseeing tour
Hong Kong Island Tour 29.9
New territories 28.75
Transfers (Between Airport
and Hotel)
Hong Kong 11.5
Bangkok
Hotel room (per person, per
night) 88.2
Sightseeing tour
Floating Market tour 41.16
City and temples tour 47.04
Transfers (Between Airport
and Hotel)
Bangkok 29.4
Cost 7503.11
Mark - up (15%) 1125.47
Total cost 8628.58
Agent's commission (9%) 675.28
Selling price 9303.86

Task 3
a) Evaluate the planning decisions that must be made for the
design of a Tour Brochure for your company’s new package
holidays.
Brochure is marketing tool used by Tour operators for advertising their tour packages.
Brochures are in the form of small book or magazine which contains images, and
information.
(Source:
http://www.leibnizo.com/leibnizotech/images/Brochure_Design_1.jpg )
There are two types of brochure used by tour operator online or e-
brochure and offline or traditional brochure. Tour operator provides
information of their different tour packages in attractive formats. Brochure
used as informative tool it provides information to the general public.
Brochure provides identity to the company.
For designing attractive brochure structured planning is required.
Planning decisions includes:
1) Budgeting:
Positive -A budget is prepared for that will come in brochure
designing. Budget helps in controlling actual cost of budget design.
Negative -Due to fixed budgets it may be possible that brochure
didn't get designed in desired manner.
2) Identify the customers:
Positive -Design and structure of brochure is depending upon the
type of customer market. Brochure only attracts the customers if it
is designed as per the need and requirement of consumers.
Negative -Brochure contain limited set of information and get
reviewed by everyone with this fact some of the low cost customers
didn't prefer to select the organisation for their purpose as they
didn't get adequate package for their purpose.