Investigate the tour operations sector of the travel and tourism industry
Defining the tour operator is a far from easy process because their role, activities and form have changed dramatically from the early days when Thomas cook first organized a package trip by rail in the 1840’s. One useful approach is to identify what a tour operator does as a means of establishing their characteristics and form. In simple term a tour operators will organize, package together different elements of the tourism experience and offer a package, also known as an inclusive tour, it will normally have to include at least two elements that are offered for sale at the inclusive sale price, and will involve a stay of move that 24 hours in overnight accommodation.
These elements normally include transport, accommodation and other tourist services. The type and range of packages sold by the tourism industry can normally be divided into two types: those using the traditional charter flight and those using scheduled flight, where it is uneconomic for the tour operator to purchase charter flights.
The types of packages are often segmented according to:-
Mode of travel, such as ferry or coach holiday (typified in the UK by shearing) it may also be based on twin transport packages such as fly –drive, which are very popular with inbound tourists in the USA.
Mode of accommodation, where hotel chains become tour operators by packaging their surplus capacity to offer weekends or short breaks in business –oriented hotels, selling, rail or air transport and visits to attractions as in all inclusive package.
• Whether they are international or domestic package
• Lengths of holidays
• Distance, where the market in divided into short-haul and long-haul, over 90% of UK outbound packages are short- haul.
• Destination type
These tours may be organized by small in depend tour operators, who specialize in certain segments (for example: youth operators, such as PGL in the UK) larger operators such as TUI, which have trans-European; or global operation such as my travel group. in addition, there are over 300 tour operators who organize the itineraries, activities and 8logistics of inbound visitors to countries such as UK and who are represented by their trade organization – the British Incoming Tour Operators Association (BITOA).
Tour operators have the ability to purchase services and elements of the tourism experience from other principals or suppliers at significant discounts by buying in bulk. They fulfill a major role in the tourism sector. As they allow the different tourism sector to sell their capacity in advance – often a long time in advance as contracts are drawn up a yrs prior to tourists using accommodation or services.
Tour operators have traditionally been the “builder” of holidays. Quite simply the tour operator buys the components of a holidays – flights, accommodation and transfer – and puts them together as package so a typical package holidays, such as tow weeks at Mediterranean resort with full-board and transfer would consists of a flight, accommodation, meals and airport transfers. Because these components can be bought in bulk , the tour operators can usually provide the holiday cheaper than if the customers bought and arranged each component of the holidays separately. The tour operators are often referred to as a wholesaler of holidays, selling products through retailers, who is the travel agents. The suppliers of transports, accommodation and other components of the holidays are referred to as principals.
As the UK tourism industry developed through the second half of the twentieth century. Tour operators become successful in providing an ever-increasing range of package holidays to leisure tourists. They were able to produce brochure showing destination and accommodation options, with prices for the holiday’s shown customers would go their high street travel agent to collect brochures from different operators featuring the holiday’s area they wanted to visit. When a choice had been made the tourists returned to the travel agent to make a booking. The travel agent would receive payment form the tour operator, called a commission in return for making the booking and recommending the holidays.
Although this relationship between travel agents and tour operators still exists today, a great deal has changed in the last ten yrs as more and more tourists are able to contact both the tour operators and principals directly using the internet. At the same time, the major holiday companions have changed the way they operate and are able to sell more of their holidays directly to the publics without using travel agents. Some tour operators have become travel agent as well.
Types of tour operator
With in UK, there are some 600 organization working as tour operators. These can be grouped into one of the following categories.
• Mass –market tour operators
• Specialist tour operators
• Domestic tour operators
• In-bound tour operators
Mass market tour operators
These operators specialize in selling high volumes of holidays, mainly to traditional short-haul coastal destinations. However, in recent years more package holiday to long- haul destinations have been sold through mass market operators. These companies include some of the most familiar names in the travel industry including Thomson (tui), my travel, Thomas cook and First Choice holidays.
These so-called ‘big four’ provided holiday and flights for nearly 12 million people in 2005. However the companies have been finding it increasingly difficult to sell package holidays as more people find it more convenient to make the independent arrangements through making use of the internet. In the second half of 2007 mergers between Thomas cook and My Travel, and Thomson with first choice holiday, took place. Form now on, the ‘big two’ – TUI UK/ Thomson and Thomas Cook will be better placed to compete with other travel organizations mass market tour operators may employ “reps” who are based in larger hotels in popular resorts to provide support to their customers.
As their name suggests, specialist tour operators specialize in particular types of holiday, rather than providing mass-market products. Very often a specialist tour operator will provide holidays to a specific country or offer adventure tours to a region such as the Amazon or South East Asia. The company will be able to provide in –depth knowledge about the area in which they operate, unlike the mass-market operators. These specialist companies are becoming more popular as customers look for a more individual type of experience rather than a mass market product.
Domestic tour operators
Domestic tour operators provide package holidays which take place within UK. One of the leading providers is WA Shearing ( a meager between two coach holiday companies , Wallace Arnold and sheerings). This type of holiday is more favored by older holiday maker who enjoy the companion ship of the coach journey to regions of the UK they may not have visited before.
Inbound Tour Operators
It should be remembered that in global terms, the UK is an important tourism market many people living in countries throughout the world hope to be able to visit the UK at some point in their life. Each day, travel agents in different countries sell package tour holidays to the UK.
Independent travelers also book flights and accommodation to allow them to visit this country. A large no. of these tour are based on the Heritage, Gardens and Castles found throughout the UK while London remains one of the prime destinations for inbound holiday market from around the world. These are over 200 inbound tour operators providing a range of holiday’s options for overseas visitors coming to the UK.
Task 2 :Explore the stages involved in developing packages
Planning for the introduction of a new tour programmed or destination is likely to take place over a lengthy span time, sometimes as long as two years.
In planning deadlines for the programmed, it is necessary to work backwards from the planned launch dates. One critical problem is when to determine price. These have to be established at the last minute before material goes to printing, but inevitably this will be several months before the tour programmed starts. This is situation which could be considerably eased by Britain’s entry into the European common currency, should that take place within the new few years.
The decision to exploit a destination or region for package tours in as much an act of faith as the out come of carefully considered research. Forecasting future development in tourism, which as a product is affected by changing circumstances to a greater extent than most other consumer products, has proved to be notably inaccurate. Tourist patterns change over time, with a shift from one country to another and from one form of accommodation to another. With the emphasis on price the mass tour operator’s principal concern is to provide the basic sun, sea and sand package in countries that provide the best value for money. Transport costs will depend upon charter rights into the country, distance flown and ground handling costs. They will also be affected by the relative demand for, and supply of, aircraft in any given year.
Accommodation and other costs to be met overseas will be the outcome of exchange rates against sterling, and operators must consider these vis-à-vis other competitive countries’ currency values when considering how many clients they can anticipate traveling to any one destination. Operators also have to take into account such qualitative issues as the political stability of the destination, the support given to developing tourism to the destination, the support given to developing tourism to the destination by the carriers, or tourist office, of the country, and the relationship between the host and destination countries. Increasingly, the effect upon the environment of such new development must be considered, and how this can effectively manage by the operators, the hotels they work with and the local authorities.
Once the tour operators have narrowed the choice to two or three potential destinations, they must produce a realistic appraisal of the likely demand to these destinations, based on factors such as the number of tourists the destinations presently attract, growth rates over recent years, and present shares held by competing companies. The mass- market operators are unlikely to be looking at a single years programmed-any commitment to a destination is likely to be for a substantial period of time, unlike the specialist operators, which may be more flexible in switching destinations according to changing demand. Mass market operators will be considering long-term contracts with their hoteliers abroad, or even establishing their own hotels.
The process of negotiating
Once the decisions have been made as to destinations to be served and numbers of passengers to be carried during the season, and dates of departure have established, the serious negotiations can get under way with airlines, hotels and other principals, leading to formal contracts. These contracts will spell out the condition for the release of unsold accommodation or aircraft seats, or the cancellations of chartered aircraft flights, with any pen
Task 3 : Review the role of brochures and methods of distribution used to sell package Holidays
Traditionally the printed holiday brochure has been the tour operator’s most powerful marketing tool, since the intangible nature of tourism makes it imperative that the potential customer can read about what they may want to purchase. This has been accompanied by online brochures, websites and virtual tours of destinations, making the places accessible to potential visitors. It is not uncommon for up to 50 % of tour operator’s marketing budgets to be spent on brochure production although web based materials have now become a key elements of investment. This has to be viewed in the wider context of planning, organizing and implementing a tour programmed. The tour operator has to undertake a series of stages of work including:
• Research planning
• Negotiation with suppliers
With the exception of the initial research stage, the holiday brochure is an integral part of the planning and marketing process.
Front cover Spine Introduction Resort pages Term & conditions Contract forms Rear cover Logo Key information to attract interest Introduction to company and outline of destination Illustration of each destination attraction and details of each hotel Illustration of company and other brochures Branding Quality statement Prices and departure grids Imagery to attract intended clients Images indicated type of holidays or destination featured.
The printed holidays brochure currently in vogues among tour operators has evolved form its moderns- day predecessor, introduced in 1953 by Thomas cook, it adopted a similar format to that of women’s magazines reflecting the important roles has gradually changed to its present one of holiday catalogue.
Holiday brochures distributed through travel agents seek to achieve a number of objectives.
To obtain sales
To provide information to assist in decisions- making by purchasing in relation to the destination, product offering bringing, prices and ancillary services. To afford cost effective distribution for the tour operators, by having an attraction cover, being permanently racked in travel agents and generating business among agents. To provide on effective tool to allow agents to sell holiday with detailed products/ booking codes. To allow a contract to be agreed between the tour operators and customers, providing information’s and procedure for changing the booking, complaints, refunds , the details of the products purchased, the clients detailed and the insurances premium paid.
In the case of direct mail, the brochure seeks to fill some of the objectives about, but places more emphasis on the customers to decided on the product offering. It also seeks to appeal to the market segment it is targeted at and needs to be easy to use.
A brochure will typically comprise the elements embodied and involve a complex process of design including
Identifying the market audience and product
Utilizing an appropriate company brand.
Designing a mock-up, using the computer, with illustration and professional photographs of the hotels, destination, products offering and services. Using a desktop publishing system that will help with brochure layout and design Producing a proof, this is checked so that inaccuracies can be identified and rectified prior to printing.
With increasing consumer regulation is most countries holiday brochures must get potential tourist to book a holiday advertising dreams or images of their ideal holiday but must also be honest, truthful and accurate. Above all they must not make false statements that can be prosecuted in many countries under trade descriptions legislation.
Task -4 :Examine strategic and tactical decision making for tour operators
A number of pricing strategies are commonly used by tour operators.
The brochure is issued a long time before the season and is printed with prices. The prices at this stage may not be a true reflection of the price that the customer will ultimately pay. Operators may prices if costs increase, or if there is a surge in demand. Also many tour operators may use the same hotel but arrive at different prices for the package.
Prices may be discounted if holidays remain unsold. By fixing contracts and therefore prices a long time ahead of the season, tour operators purchase their supplies at the cheapest prices. In order to ensure that holidays are not left unsold and that cash flow is good, tour operators must encourage early booking. When early booking are high, the tour operators knows whether there will be any excess capacity in holidays- hopefully none and takes a substantial deposit per person. Tour operators are able to use or invest this money as they do not need to pay their suppliers until the holidays are taken
Tour operators divide the year into different seasons. First, there is a broad division into winter and summer season. In summer there are more beach holidays, and in entire ski programmes are running. A summer brochure will typically cover the period May to November, and a winter one will run from November to April. Within these periods there are peak seasons, shoulders seasons and off-peak seasons. Tour operators vary their capacity during the season but must fill the planes they have contracted. This can result in discounted prices at shoulder season. At peak season- the school holiday period of July and August in summer, and the Christmas holidays in winter –demand and therefore prices are at their highest. Tour operators have been heavily criticized for charging their highest prices in school holiday times, but they to make their profit when they can.
Mass market operators are very keen to remain competitive on price; they will often match prices offered by the competition. Sometimes more up market operators will do this as well as, so it is worth customers asking them.
Tour operators have tried various promotions linked to price over recent years, including a two –for-one offer. This was not very successful as many customers believed that the original prices had been raised to cover the offer, early booking promotions with price discounts are more credible.
Tour operators must determine how best to distribute their products and services in order to maximize sales. Traditionally, distribution is via travel agents who stock tour operators’ brochures and sell on their behalf on commission. Although this method is still common, it is now used in conjunction with internet distribution where customers can find information and even book via the tour operators’ own websites or via a travel agent’s website. When products and services are sold via the tour operators’ website or by telephone, this is known as direct sell. Some tour operators, for example Portland, only use direct methods. Most tour operators use a combination of distribution methods.
Promotion is the work of marketing personnel. The nature of promotion depends on the budget available, and ranges from television advertising campaigns to press releases about new products and destinations. Promotions may be aimed at the final consumer or to the trade. Trade promotion can be just an important as consumer promotion as travel professional can bring preferred products to the attention of their customers. For examples of trade promotions include educational trips for agents to resorts, competitions and sales incentives.
Tour operators do their best avoid late sales and encourage customers to book holidays in advance. This give the tour operator the benefits of adjusting contracts to meet demand, making a better margin on sales and enjoying good cash flow. Late sales harm cash flow and are usually discounted so less profit is made.
DFDs Seaways: www.dfds.co.uk
Tourism at biz/ed: www.bized.co.uk
UK Tourism: www.ukinbound.org
Holloway J C –the business of Tourism (Longman,1999)
Bull A – the Economics of Travel and Tourism (Longman,1999) Yale P- the Business of Tourism (Longman,2000)