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Tour Operations Essay

Aim and purpose

The aim of this unit is to develop learners’ understanding of the dynamic and challenging world of tour operations and for them to appreciate the variety of tour operators’ products and services. Learners will gain knowledge of how tour operators plan, sell and administer a package holiday programme and will also develop practical skills to plan and cost a package holiday.

Unit introduction

Every year millions of people turn to tour operators to provide them with holidays to all corners of the world. In this unit learners will explore how tour operators link with different types of travel and tourism organisations to provide a wide range of holiday experiences. They will see that tour operators must respond to legislation and external influences, and also face many challenges in the constantly changing travel and tourism sector. Learners will investigate these challenges and the ways in which tour operators respond to them. Tour operators are at the forefront of the travel and tourism sector, constantly seeking out new destinations and holiday experiences to satisfy the ever-demanding and ever-changing needs of today’s holidaymakers.

Different types of tour operators will be identified and learners will examine how they develop an extensive portfolio of products and services to meet differing customer needs. Whatever their size, tour operators must work through the same processes when planning, developing, selling and operating their holiday programmes. These different functions will be examined and time scales identified. Learners will find that tour operators compete in a commercially sensitive environment and they will identify how commercial considerations inform many of the business practices. Practical skills will be developed in the planning and costing of a tour operator’s package holiday, allowing learners to appreciate some of
the commercial decisions to be made in this competitive industry.

Learning outcomes
On completion of this unit a learner should:

Understand the tour operations environment Know the range of products and services offered by tour operators for different target markets Know how tour operators plan, sell, administer and operate a package holiday programme Be able to plan and cost a package holiday.

Unit content
1 Understand the tour operations environment

Links with other component industries: travel agents; transport providers; accommodation providers; providers of ancillary products and services eg insurance, car hire; horizontal and vertical integration Links with trade and regulatory bodies: The Travel Association (ABTA); Federation of Tour Operators (FTO); Association of Independent Tour Operators (AITO); UKInbound; Civil Aviation Authority (CAA) Legal framework: EU Package Travel Regulations; consumer protection eg Trades Description Act, Consumer Protection Act, Disability Discrimination Act; contract law; licensing eg Air Transport Operators Licence (ATOL) External influences: environmental eg hurricanes, floods; political eg terrorism, strikes. taxes; economic eg currency fluctuations, price of oil; social eg UK demographics, exploitation in host country; technological eg internet, computerised reservation systems Challenges: eg dynamic packaging, distribution channels, integration, budget airlines, maintaining market share, trend towards independent travel, responsible tourism

2 Know the range of products and services offered by tour operators for different target markets Tour operator categories: outbound; inbound; domestic; specialist; mass market Products and services: components of standard package; tailor made; range of destinations; accommodation choices; transport options; ancillary products and services Target market: eg families, couples, solo travellers, specific age groups, special interests, people with specific needs

3 Know how tour operators plan, sell, administer and operate a package holiday programme Planning: research; forecasting; product development; methods of contracting; costing the package; data input; timescales Sell: brochure production; pricing strategies; distribution eg travel agents, internet, direct sell; promotions eg advertising, sales promotions, sponsorship; reservations; commission; late sales Administer: confirmations; rooming lists; passenger manifests; errata; cancellations; amendments; travel itineraries; ticketing Operations: consolidations; load factors; over-bookings; transport operations; duty office; UK and overseas resort liaison; health and safety; emergency situations; crisis management; quality control; customer service (pre-, during and post-holiday); excursion sales Commercial considerations: maximising profitability; links to different planning, selling, administrative and operational functions

4 Be able to plan and cost a package holiday
Plan: destination; transport; accommodation; excursions (included, optional); activities; additional services Cost a package holiday: using load factors; mark-up or profit margin; currency conversions; fixed costs; variable costs

Assessment and grading criteria
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of achievement required to pass this unit. Assessment and grading criteria To achieve a pass grade the evidence must show that the learner is able to: To achieve a merit grade the evidence must show that, in addition to the pass criteria, the learner is able to: M1 discuss the impact of challenges facing tour operators

To achieve a distinction grade the evidence must show that, in addition to the pass and merit criteria, the learner is able to: D1 evaluate the effectiveness of tour operators in responding to challenges facing the sector recommend, with justification, how a selected tour operator could expand its range of products and services for its current target market or adapt its range of products and services to appeal to a new market.


explain the tour operations environment and the challenges it faces


describe the products and M2 analyse how a selected services provided by different tour operator’s portfolio categories of tour operator of products and services for different target markets meets the needs of its target market(s)



outline how tour operators plan, sell, administer and operate a package
holiday programme, identifying commercial considerations plan and cost a package holiday for inclusion in a tour operator’s programme [CT 1, CT 2, CT 3, CT 4, CT 5, CT 6].

M3 explain ways of maximising profitability during the different stages of planning, selling, administering and operating a package holiday.


PLTS: This summary references where applicable, in the square brackets, the elements of the personal, learning and thinking skills applicable in the pass criteria. It identifies opportunities for learners to demonstrate effective application of the referenced elements of the skills.


IE – independent enquirers CT – creative thinkers

RL – reflective learners TW – team workers

SM – self-managers EP – effective participators

Essential guidance for tutors

It is likely that learners will have already identified the role of tour operators when examining the structure of the UK travel and tourism sector in Unit 1: Investigating the Travel and Tourism Sector. A simple recap would be useful and this could be achieved by asking learners to produce their own definition of tour operators and a summary of their role within the sector, perhaps producing a diagram that highlights their position within the structure. Holiday brochures will help learners to identify how tour operators link with other component industries when providing and selling holiday packages. Links with trade and regulatory bodies and the legal framework could be researched in small groups, culminating in short, informal presentations. Vertical and horizontal integration can be a difficult concept for some learners and they will benefit from being given simple definitions, followed by practical tasks using the internet and holiday brochures to research one of the large integrated organisations.

Findings could be presented in the form of a diagram and could then be compared with one of the integration charts that are produced from time to time by the trade press. Tutors will need to explain how the travel and tourism sector is constantly changing (which is why textbook models of integration are likely to be out of date). Learners will need to read the trade press regularly in order to keep abreast of changes of ownership and takeovers. Tutors could initiate a debate or discussion on the impact of integration to determine whether integration is a good or bad force within the sector, and about the challenges integration creates. Research activities could be developed to examine external influences including environmental, political, economic, social and technological influences. Hurricanes, the credit crunch, unemployment and terrorist activities are just a few occurrences that can present significant challenges for tour operators.

A noticeboard could be created in the classroom to display any topical events or issues. Learners need to appreciate that there are hundreds of different tour operators, falling broadly into the categories of outbound, inbound, domestic, mass market and specialist. Learners, in pairs or small groups, could research to identify tour operators within each of the categories, and the range of products and services they offer. The internet is an excellent source of information, as are holiday brochures; however, tutors should discourage indiscriminate collection of holiday brochures. Learners will find that most tour operators have products and services that target different market segments and this will be reflected in some of the accommodation, travel, destination and ancillary services choices provided. Learners need to understand that all tour operators, whether large or small, carry out the same functions when planning, selling, administering and operating the holiday package.

Larger tour operators may have separate departments to carry out a particular function whereas a very small tour operator might have just one person responsible for a range of functions. A practical task could involve learners organising a college trip and relating the activities they carry out to the functions of tour operating. A visit to a large- or mediumsized tour operator would be very beneficial so that learners can see how tour operators work and how the different functions are carried out. Additional tutor input on planning, selling, administration and operations will be required.

Activities using case studies can reinforce understanding of aspects such as different methods of contracting, currency considerations and pricing strategies. It is essential that learners develop a sound understanding of all functional areas. Discussions are to be encouraged to help learners appreciate commercial considerations, the difficulties tour operators have in making a profit and to identify ways in which profit can be maximised within the planning, selling, administrative and operational functions.

In preparation for assessment, learners will need to practise designing and planning a package. Working in groups to a specific brief, they could practise by planning a college trip. As part of the planning, they would need to consider transport options, type of accommodation and board basis, excursions and activities. Each group could present their proposals to the class and vote on the most interesting proposals. Tutors should explain the terms ‘load factor’, ‘mark up’, ‘profit margin’, ‘fixed costs’ and ‘variable costs’ and then work through simple costing exercises to show how these terms are used. When learners have understood the process for costing a package, exercises should be designed to put this into practice. Tutors may need to devise additional exercises before learners become confident in working with these calculations.

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