Table of Contents
Role of tour operators can’t be neglected in present age tourism industry which considers tour operators as a major stakeholder in the industry. By getting into vertical and horizontal integration process role of tour operators has increased so much that some of the tour operation organizations are so dominant in market place that demand & supply scenario is predicted by such organizations in tourism industry (Syratt, 2003). Tour operators are defined as the agencies which combine several service packages such as accommodation, transportation and other purchases services for the convenience of consumers. Present paper would examine the role of tour operators in tourism industry, would understand stages involved for creation of holidays, examine brochure and review method of holiday selling and highlight the tactical & strategic decisions made by tour operators.
Tour operators were initially considered as the agencies combining different services and building holiday packages for their consumers. With emergence of dominant players like Thomas Cook into tour operator industry role and powers of tour operators has increased significantly in present age. Tour operators manage several services such as accommodation, transportation, food and other service element for the consumers. Tour operators take different shapes, sometimes travelling agencies act as tour operator while on other instances hotel organizations can be said to act as tour operators. Categorization of tour packages can be done basis on several factors such as economic factor, number of people travelling and purpose for which tourists are travelling. Looking at the tour operator industry in tourism industry there are some well-known players such as PGL, TUI and My travel group etc. These organizations has done expansion in entire Europe and handling a big customer portfolio for which entire needs related with their transportation, accommodation and other travelling needs are handled by these organization. Tour operators work on the principle of bulk buying by getting the significant discount and sells to consumers by gaining good margin for their services (Swarbrooke, 1999).
P1.1 Analyse the effects of current and recent trends and developments on the tour operators industry
In the present context effect of current and recent trends on tour industry would be analyzed with special reference to marriage segment for tourism. Tourism industry is expected to maintain its growth at a rate of 4% as predicted by World Trade organization. Technological advances in the field of tourism industry have allowed the organizations to create awareness among the consumers which can’t be physically contacted by the tour operators. Looking into the growth of arrival for the tourist in year 2008 there was a net increment of 1.9% in tourist arrival leading to total of 992 million people as compared to previous year. Similarly growth in total receipt for the tourism industry touched total of $944 billion in year 2008 as compared with previous year receipt which made growth of 1.8% annually.
Tourism industry worldwide is witnessing a big shift in the way tourism and holidays were perceived earlier and in current time. Due to this there is impact on the tour operators from the change in current & recent trends in tourism industry. Some of the major trends prevailing in tourism industry and their impact on tour operators can be given as under:
- Changing demographic pattern: With special attention towards newly married couple there would be great shift in the tourism activities organized by tour operators. The type of destinations would be quite different and services needs by newly married people would also vary according to this segment. Further tour operators’ needs to understand distinct need of this segment in order to cater to this group of consumers.
- Mass market to customization: Present age tourism industry has recognized several key segments which are having high income opportunities and newly married segment of consumers is one among them (Johnson et al, 2008). So despite of going towards mass market concept marketers should focus their attention towards the newly married couple segment of consumers looking into future potential for growth.
- Changing economics of holiday packages: There are generally higher spending made on the honeymoon packages as compared to the other tourism activities. Hence in terms of average spending these tours would be able to generate higher revenue for the tour operators.
- Scale and segment: Number of passengers carried on the tour would be based on the type of tour such as single coupe or large number of couples travelling together. This segment for newly married people is niche segment wherein tour operators needs to provide relevant services to attract consumers.
- Different products and services: Based on this niche segment consumer requirement for products and services would also be different and tour operators needs to understand them.
- Expansion of cruise market: Recent trends for expansion in cruise market has helped tour operator to give higher attention towards cruise and for newly married segment this market is quite attractive.
- Environmental awareness from tour operators: Tour operators have got high awareness about environment and this is also being communicated to consumers. Hence visitors are visiting places which attracts attention towards environment and carry out activities which does not harm surrounding environment to these places.
- Impacts of ecommerce: People in young age would prefer using ecommerce for making booking. Newly married couple segment would be the ideal target segment for ecommerce and presence of ecommerce can help the tour operators to develop high reputation in this segment.
- Role of trade bodies: Trade bodies such as ABTA, AITO and FTO has regulated the industry due to which there are better services offered to consumers and consumers in newly married segment has got benefited from these regulations.
Present task would evaluate the different stages involved in development of holidays for 7 days wedding package in Las Vegas. Process of development of holidays follows below mentioned stages:
- Setting deadlines: In deadline setting stage planning is done backwards i.e. from the launch date deadlines are set for the work activities to be accomplished in the holiday development process. Pricing of the final product is also one of the important criteria which help in deadline setting as changes in currency prices would affect overall pricing structure of the holidays and hence accordingly deadlines are decided according to pricing of the holiday packages as well. Hence depending upon the dates for wedding package in Las Vegas final pricing would be made.
- Market research: While making decision on the pricing of a holiday package it is important for the tour operators to carry out extensive research with the consumer base regarding proposed pricing structure for Las Vegas (Holloway, 2002). Market research is one of the key elements for holiday design and with better market research process it would be easy for the tour operators to set prices which are profitable for them and in accordance with the consumer’s willingness to pay towards holiday package offered by the tour operators. Market research would help the tour operators to plan its schedule in accordance with the market trends and accordingly scheduling can be done in line with the market findings obtained in market research process. Hence depending upon the type of services required such as wedding ceremony in helicopter sightseeing tour would require higher pricing.
- Forecasting: Forecasting of the future trends are important in tour operator industry as this would help the tour operators to understand overall market scenario and operational issues of the tour operator industry. Further forecasting future trends would help tour operators to understand potential challenges which would be faced from the tourism industry. After knowing the potential challenges posed by industry tour operators can prepare themselves in order to meet with these challenges and carry out their operations in smooth manner. Forecasting need to be done for the packages for Las Vegas so that according investment can be made in design of the tour package.
- Contract allocation: Various set of services included in holiday packages such as transportation, accommodation, food and other service elements would be contracted to the related vendors. This stage involves chartering process where in split chartering, time schedule chartering and ad hoc services are being chartered but it is not necessary that all services would be offered. There is possibility that out of the chartered services some of the services might not be offered to the customer group. This stage involves services from the stakeholders such as air brokers who act as intermediary between travel companies and tour operators. Contract allocation can be done in two ways i.e. on fixed income basis and utilization basis. So based on the services required such as helicopter and stay in Las Vegas contract would be allocated.
- Deal negotiation: Deal negotiation element of the holiday planning process is important as this would lead to the development of lower cost holiday package for consumers. Negotiating a deal would require bargaining on the unutilized accommodations, cancelled flights and other unused services which are not availed by the consumers. By negotiating on these elements tour operators can minimize their overall cost of holiday package which can further pass on to the consumers so as to offer desired services for them in lowest possible cost. Such negotiation makes holiday package attractive for all travellers. Different transport vendors for helicopter and other services would be contacted in order to make negotiation.
- Cost attachment: Cost attachment stage of the holiday design would be sequential process to align & allocate costing for each service offered under holiday package. This stage is also known as the hallmark process for holiday design. After allocation of costing for each stage a final pricing is developed for the holiday package which is kept quite competitive so as to attract consumers towards offered holiday package. Special offers are generally included in the holiday package so as to lure clients to avail the deals offered by tour operators. Cost attachment stage also helps in order to determine overall profitability for the holiday package designed by the tour operators (Cooper et al, 2005). Based on the distinct service requirement for the consumers in their wedding ceremony cost would be attached to each element.
P2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of tour operators
In the present task different methods of contracting would be evaluated for the two tour operators named Airtours and Flightcentre. For various components of holidays such as accommodation services, transportation services and other service elements mainly there are two ways of contracting implemented in the tour operator industry. Two methods of contracting along with suitability for the two tour operators selected can be given as under:
- Fixed income based contracts: Fixed income based contracts are made in the tour operators industry in order to allocate long term and volume based capacity. From the Airtours all inclusive summer package 2014 it can be derived that there is a fixed amount paid to the facility owner such as hotel owner and based on the duration of contract costing would be allocated. There is possibility that some part of the facility remain unutilized by tour operators would have to pay for the entire facility regardless of the fact that facility is used or not. This is due to the reason that summer is a peak season and there are very less chances for Airtours that seats would be vacant at this time (Porter, 2004). Similarly Flightcentre makes fixed cost contracts at the time of peak season. Hence the two tour operators are using peak season for making average cost low by dealing in bug volume.
- Sale based contracts: Sale based contracts are made on the utilization basis where in costing for the facility is made by both Airtours and Flightcentre based on the utilization made by the consumers. Tour operators book particular facility such as hotel or transportation facility and based on the utilization of facility payment would be done. Such contracts are not cost effective and involve high cost for the tour operators. Such contracts are suitable for specialized tours involving small number of tourists.
For the present task a seven day tour involving travelling to Greece would be covered with booking of Boeing 737-800 plane booking which can have maximum capacity of 180 tourists. Agent from Rhodes would be involved in order to book 3 to 4 star resort. Avra Beach Hotel located in Rhodes would be book on fixed cost basis in 30 Euros for twin sharing basis. With Thomas cook airline total of 80 seats would be booked and in advance payment would be made for 80 passengers in case tour operator does not have even a single consumer. Agreed price for the holiday would be 130 Euros per person. A charge of 10 Euros would be taken for transportation between hotels to airport from coach while a charge of 35 Euros would be taken for transportation through taxi. Below table depicts the total all inclusive package for the present 7 day tour to Greece:
|Sr. No.||Package detail||Sale price/person||Sale price/couple|
|2||Hotel to airport transportation
For visit of representative
|3||Hotel accommodation (Avra Beach hotel)||20||30|
|4||Local sightseeing charges||40||80|
|Total cost||Euro 335||Euro 535|
Table 1: Calculation for the selling price of holiday
Brochure are known as the mean of distribution for holiday package with both online and offline methods. The present task would involve planning decision for the brochure of Thomas Cook. The online methods for brochure distribution come with the advantage of wider reach and low cost. In order to develop an effective brochure for selling holiday package tour operators needs to develop an extensive planning, organizing and implementation for the brochures (Thomas cook, 2010). Planning decision made for the brochure design keep into consideration three major objectives for the brochure which are given as under:
- Recognition of planning issue: The first consideration would be regarding issues which needs planning in the present context. For Thomas Cook brochure various parameters such as objectives, target segment, format and timescale for the brochure would require deep analysis and planning.
- Deciding the format: Format of the brochure needs to be decided and this format along with content should match with the target market of the company.
- Target market and budget: The target market for Thomas Cook brochure would be as per the niche segment or mass market opportunities identified by the company.
- Timescale and stages: Timescale and stages for the planning of brochure needs to be taken into consideration at first step. Timescale needs to be developed and same needs to be followed.
P3.2 Assess the suitability of alternatives to a traditional brochure for different types of tour operators
In the present task alternative to the traditional brochure would be provided for Air Tours summer 2014 and Thomas Cook cruise 2014 so that higher consumers can be attracted towards offerings of the company with different design of brochure. Traditional brochure methods have remained popular way to provide information and attract consumers for the holiday packages around the world. In present age of internet fast means of information sharing allowing consumers to know about products & services of the organization have been developed. This has helped tour operators to adopt online brochure methods for the information sharing and sales of holiday packages. There are vital changes made by the internet with development of e-brochure where in major reason for gaining popularity in online brochure is the globalization phenomenon.
Online media for the development and distribution of brochure would help Airtours and Thomas Cooks to reach out to much larger consumer base as compared with the physical brochure designed by the tour operators (Kelsey, 2014). Another benefit for the online medium for development and distribution of brochure for the holiday package is low cost medium with much higher reach for the tour operators. Brochure design process through online media does not involve any stationary expense and other expenses as compared with the traditional brochure design method. This would lower down overall marketing expenses made by the tour operators on distribution and sales of holiday packages due to which consumers would be benefited through lower holiday packages designed for the consumer segment.
Alternative method for the brochure design and distribution process for the holiday packages of Airtours and Thomas Cook can be visual media method where in information required by the consumers and sales of packages is made through visual media method. With the help of video brochure information is presented into better way as compared with the online brochure and traditional brochure method. Further usage of video brochures can be used in present age so as to distribute it through online media via social media applications such as you tube and Facebook. Such low cost marketing methods for the organization are helpful to impart information and attract large consumer base at much lower efforts as compared with the traditional brochure and online brochure (Levy, 2010).
P3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator
Brochures are used since long time to create awareness and promote sales by tour operators and in present time also brochures are used to sell holidays. For the present case of Thomas Cook for selling their cruise holiday package different methods can be used such as call centre, direct sell, telephone and online methods etc. These methods for distributing brochure can be adopted for several means such as direct selling process, employing external agency for the distribution of brochures, online methods and usage of call centre or telephones. In the present case of Thomas Cook cruise package direct sales through online methods and direct sales through phone can be adopted as efficient means of distribution (Lewis, 2013). Direct sales through online would be advantageous as it would help the consumer to get all information required for decision making while direct sales through telephone would help the company to get immediate consumer response. A mix of these two methods would ensure higher conversion rate as Thomas Cook is one of the most reputed brands in market.
Tour operators need to make several strategic decisions in order to carry out tour operations smoothly. Strategic decisions taken by tour operators would allow them to grab market opportunities and prepare themselves to tackle threats confronted by the organization. Strategic decision making process for the tour operators includes several areas such as pricing, promotion and distribution of the brochure by tour operators. Below are some of the strategic decisions made by tour operators:
- Discount pricing strategy: Tour operators are making use of the fixed price contract which allows the tour operators to make cost effective contract. With help of low cost contract tour operators have the opportunity to provide discount pricing for their consumers so as to ensure that all vacancies are filled (Paulo, 2012). For example pricing offered by Airtours summer 2014.
- Volume pricing strategy: Based on the higher volume for the consumer special discounts would be offered e.g. Airtours summer 2014.
- Positioning: Positioning of the products and services of the company would be a strategic decision wherein company needs to take decision whether it want to position itself into premium range or normal range e.g. premium positioning by Thomas Cook.
- Product distribution: Method of distribution would be an important strategic decision for the company wherein based on the method distribution would be enhanced.
- Fluid pricing strategy: Prices in tourism industry would vary depending upon the overall cost incurred by the tour operator and related demand for the products & services offered by tour operators. Hence there would be fluctuations in the prices depending upon this factor and such pricing technique adopted by the organization is known as fluid pricing strategy.
- Competitive pricing strategy: Prices offered by the tour operators would be in correlation with the other tour operators. In age of globalization prices set by the tour operators would be kept competitive so that potential consumers can be attracted towards products & services of the organization.
- Seasonal pricing strategy: Entire year would be divided into two seasons which are summer and winter. Based on the each season capacity, destination type and pricing would be varied by the tour operators. Winter season would be from November to April while summer season would be from May to November. This would allow the tour operators to change prices in accordance to the season (Poon, 2010). For example Thomas Cook makes use of the seasonal pricing where in Peak prices would be high while in non peak season heavy discount is offered.
- Distribution by travel agents: Brochures are sold with the help of travel agent as this allows the tour operators to make use of the low cost method for distribution of brochure along with the most effective method for production of sales with brochure distribution which is the major objective of brochure.
- Promotional pricing strategy: Promotional pricing would be used in order to promote the sale. Promotional pricing strategy involves elements such as discount offered and other sales offered made by the tour operators in order to promote their products & services towards their potential consumers.
- Creative promotion strategy: Creative promotion techniques are being used by marketers in present age so as to promote the sale through present age technology enabled methods. Marketers having wide experience in the marketing tactics would design the creative promotional strategy so that sales for the holiday package of tour operators can be enhanced significantly by leveraging on technology (Lewis, 2013).
P4.2 Compare the tactical decisions that could be taken by a selected tour operator in different situations
Tactical decisions are taken by the company in order to survive and do not involve much decision making process (Sachdev, 2013). Some of the key decisions influenced by tactical decision making process would include responses from company which are triggered through competition and price war. Competition prevailing in the tourism industry would have high impact on the overall pricing used by the tour operators in order to attract consumers. Entire tour operators market consists of number of tour operator hence higher level of competition in the tour operators industry would involve changes in the pricing for the tour operators. Depending upon the market forces overall pricing of the holiday package would be determined in the market. Hence tactical decisions taken by the tour operators would depend upon market forces and overall costing decided by the tour operators.
Tour operators are considered as the major stakeholder in tourism industry and they have capacity to make enormous changes in the tourism industry depending upon changes developed by tour operators in the industry (Streeter, 2012). Tour operators have managed in order to deal with various technological and social changes and despite of these changes overall industry scenario has been maintained positive by tour operators. Tour operators have remained successful in order to leverage on the emerging technology and by using the technology overall demand of the products & services in tourism industry has increased. Further technology has allowed tour operators to provide information to consumers which are out of the reach of tour operators. Further present age technology has proved supportive in order to obtain sales. Hence it can be said that tour operators holds high importance in tourism industry there by providing a link between the consumers and facility provides such as hotel owners and transportation owners (Sheldon, 2010).
Present paper has analyzed the role of tour operators in the tourism industry emerging in present time. Among all the stakeholders in tourism industry tour operators are considered to play vital role. Tourism sector in present age has changed with adoption of trends and pattern coming in the tourism industry. Designing of holiday package is very important aspect for the tour operators where in different stages are involved and pricing of the holiday package is maintained in such a way that it can attract consumers. Planning process is an important part of the overall holiday package design where in tour operators go through several planning elements in order to develop holiday package. Tour operators also make several tactical and strategic decisions so as to carry out their operations and these decisions are in field of pricing, promotion and distribution etc.
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