Introduction to Tour Operations
Tour operation is the fast growing sectors and gaining popularity by its effective packages provided. Tourism industry is increasing profits by serving whole community with several types of services. Present study deals about tour operator role and their expansion strategies for development which leads to higher rate of return to firm. Report also studies about company Thomas cook, travel agency founded in England and specialized for providing holiday packages. Various pricing strategies as well as brochure design and development for giving information related to tailor made holidays of company is also study.
Part 1. Tour Operator
Tour operator is an organization or company specialized in building holiday packages. They planned vacations and provide many facilities along with tour such as accommodation arrangements, transport, food comfort and tailor made plan as per the requirement of customers. They plays leading role for the effective run of the business by providing proper coordination and cooperation for in all the activities for providing better services (Bhatia, 2013).
2. Role of tour operator
Tour operators plays a significant role in the tourism industry, they provides several benefits to visitors and earn large amount of profit. They perform following functions-
Coordination- Services provided by them includes hotel, airline and restaurants so that they ensure proper coordination among all these activities. It leads to achieve higher sales with increased customer’s volume (Chauhan, 2009).
Mediator- They work as mediator by providing sufficient information to consumers regarding these services so that they can have easy access.
Marketing of services- Tour operators adopt various strategies to provide details about services to target segment. For this they adopt several techniques such as advertisement, promotional activities (Castañeda, Frías and Rodríguez, 2007).
Planning tour- They plan tours for customers as per the requirements of visitors. Their main aim is to provide tailor made services which concerns about interest of clients about place, money, time period for stay, accommodation facilities etc.
Give advices and review of available alternatives- Under this, they evaluates various options available which can be suited as per the demand of visitors. Operators give appropriate advices also so that customers can have idea about best option.
Therefore tour operator’s makes customers feel happy and increase their volume by providing lucrative packages. It leads to increase profitability of firm and helps it to grow in the market with leading position (Chauhan, 2009).
3. Vertical and horizontal integration
Integration indicates merger of two tourism sectors and formation of new one. It ensures success of firm because it helps to increase capability with the help providing several services at one place. It assists overall tour industry to grow in the market with higher profitability. It has following integration strategies-
It is the strategy to perform better with increase revenue. When two different organizations merges in the one like tour operator buys hotel so that they work well because it ensures overall command over accommodation facilities for tourists. It contains following types of integration-
- Backward- Under this, tour operator merges with advertisement agency which helps it to provide details of the products and services to target customers.
- Forward- In this, they mergers with travel agency so that they can have command over widespread network of distribution (Chen and et. al., 2009).
Tour operators merge with the company who possess the same level so that they can contribute better in their operation. Organization having similar operation and services merges in the one different company so that they meet their requirement with cost saving and effective utilization of available resources (Fawcett-Tang and et. al., 2010).
4. Advantages and disadvantages of vertical integration
Tour operators have many advantages by the vertical integration because it helps to work better in the market and they can generate higher revenue (Francis and et. al., 2008).
- Cost control- Tour operators save their cost of operation by the merges because there is no need to pay higher amount to middlemen and there is saving in transportation cost as well. Because they have control on different types of services at one place (Johnson, 2008).
- Competition- With the help of integration they can have access to more customers and it leads to generate higher revenue. It helps them to grow in the market with higher productivity which leads to create competitive edge (Jukes, 2010).
- Specialization- Under this, tour operator innovate their services in effective manner for gaining customers attraction. They become more efficient to provide tailor made services by combining resources such as they will have higher volume of customers due to command over Travel Company (Bhatia, 2013).
Integration has its disadvantages also which effects performance of tour operators. These are as follows-
- Lack of concentration-Under this, tour operator looses their spotlight over their main function due to focus on the other activities related to merging firm. They give up concentration on improving their work method for better performance and achievement of targets (Mak, 2011).
- Lower economies of scale- Under this, operators have to perform several functions that require huge money in merely production of services which require more inputs and increase cost of the services (Middleton and Clarke, 2012).
5. Advantages and disadvantages of horizontal integration
Horizontal integration has following advantages-
- Economies of scale- It makes production process more convenient with utilization of resources in effective manner so that it leads to increase growth of the firm in the market.
- Cost saving- Economies of scale ensures smooth flow of production with improving work method so that they can save cost of creation (Puzis and et. al., 2009).
- Quality product- With the merger of same combination operators can work effectively and can add more features to services and make them more lucrative so that customers get attraction towards quality of services (Schwartz, 2010).
- Management problems- Operators face problems related to management because two firms work together create conflicts on the upper level due to different ideas and views as well as strategies for both operators (Tripathi, Choudhary and Agrawal, 2010).
- Communication barriers- It arises due to different perception of both tour operator because of existing company which they had. By the merger they will have more personnel which can creates problems in span of control as well as management.
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6. Stages involved in developing a holiday
Holiday packages are the important tool for tour operators to get higher profit they make it as possible as attractive. It involves following steps-
- Analysis of market- Under this, operators analyze destination and market where they can have access to all factors required such as entertainment, accommodation and food facilities. They analyze market by paying concentration on overall factors of market such as environment, target market, access to suppliers (Tsiotsou and Ratten, 2010).
- Tour plan- Under this, operators plan itinerary which contains details related to days of visit, places, accommodation, legal formalities and food facilities. This plan is made by keeping in mind about profitability and demand as well as requirement of customers.
- Communication- They communicate plan to supplies so that they can provides required material and other things necessary to execute projects. They negotiate with travel agents, transport operators for having access to these services on reasonable prices (Weis, 2010).
- Pricing of packages- In this, pricing is decided for the plan by paying proper concentration on cost and profit aspects. It should be competitive and generates higher revenue for operators (Vance and et.al., 2011).
- Marketing tour plan- Itinerary is marketed to satisfy customers need with the help of tailor made plan. It increases volume of customers by providing information related services offered.
- Brochure- It is the best way to provides brief of services so that customers can easily contact through operators. It contains basic details of services along with address and contact number of operators (Witt, Brooke and Buckley, 2013).
- Execution of tour-In this, consumers actually take advantages of services as per their requirements and enjoy tour plan. Operators keep manual to better handle their activities so that they can deliver quality of services and which creates goodwill of company.
- Post tour management- Under this, they get feedback from the customers and keep their record with them so that they can contact for the future period. It is very important to be in touch with customers because it is the tool for enhancing sales as well forecast of the same.
7. Difference between charter and scheduled airlines
Airlines are the most important tool for the tour operation because it is means of transportation as well as distribution channel for them. Chartered airlines offers services by ticket facilities whereas schedules airlines allow its passengers for online booking for regular use, it offers range of prices for different seats. Charter airlines mostly provide less fares and it avails customized trip for the organization where as schedules airlines are general means of transportation for all visitors (Schwartz, 2010).
Chartered airlines generally operate on full occupancy of seats whereas schedules airlines do not consider this. Chargeted airlines also used for package holiday and provide low cost for the visit, accommodation along with many other services whereas schedules airlines charges higher prices for the services involved. Chartered airlines are directly engaged with tour operators specialized in visit of holiday and offer services in summer only whereas schedules airlines provide services throughout the year (Bhatia, 2013).
PART B 1. Calculate the holiday price
Holiday packages contain details of overall tour related to destination as well as expenses. In this calculation of holiday package is done by taking destination Copenhagen for 7days in summer season. This package is providing cost per destinations on the basis of allotment per day so that it becomes convenient for tour operators to manage activities in efficient manner (Vance and et. al., 2011).
Details of services to be provided
- Details of services to be provided
- Accommodation for 6 nights including Dinner
- Transfer from Copenhagen to Kastrup Airport on departure
- Meals and drinks available at restaurant twice in a day
- Heavy breakfast for first two days
- Taxes and service fees
2. Planning Decision made for Thomas Cook Brochure
Brochure plays significant role for increasing the sales as well as volume of customers by providing details of services offered. It must be attractive so that customers get attention and access the information mentioned. For developing brochure Thomas cook considers following factors on which it has to take decision so that best brochure can be made.
- Types of customers- Under this, Thomas cook will analyze target market so that it can come to know about potential like businessman, tourists, highly educated etc so that decision can be taken (Schwartz, 2010).
- Design of brochure- Design makes brochure looks more attractive. It can have photo of the firm along with logo of the same with attractive manner so that it can create image of Thomas cook.
- Color- It plays significant role and have great influence on the customers. So brochure should contain appropriate color in which information given is visible along with nice look.
- Types of brochure- It is important to select types of brochure by keeping in mind perception or types of target market so that it can deliver information in better to right people (Vance and et.al., 2011).
- Quality of material used- Quality makes huge difference and make brochure distinctive from other. So Thomas cook should take better quality of paper or media to be used to circulate the same.
- Investment- Expenses incurred on the proposed brochures is given due consideration by Thomas cook so that they can target according to that with rate of return going to have with the help of brochure (Schwartz, 2010).
3. Advantages and disadvantages of advertising using the internet
Internet is very useful tool which helps tour operators to a great extent. It has following advantages-
- Easy to communicate- It help tour operation to easily communicate about the products and services offered by the company. It very flexible because firm can give detail and update the same on time to time so that customers can have exact idea regarding services.
- Saving of cost- It saves cost because there is no need to use paper and other charges to acquire agency. Company can give its detail on the official sites which will serves as source of information for clients (Chauhan, 2009).
- Provides database- It provides detail related to consumers perceptions, tastes, and helps in marketing research so that services can be altered as per the requirement which in result save overall time of the organization (Puzis and et. al., 2009).
- Access to right people- Operators can directly access to target customers with the help of internet as it provides details of organization as well as social sites. So that there consumers get exact knowledge and timely information about particular company and its offerings
Along with several benefits internet have some disadvantages also. These are as follows-
- Mislead visitors- Many times consumers are not able to find exactly where they will have to go for booking their ticket or where they will get exact information related to particular company.
- Theft of company’s details- Under this, another company can steal the information and database of company to know about the strategy as well as information related to services (Schwartz, 2010).
4. Suitability to use a digital brochure
Digital brochures help tour operations to increase profitability because generally there are many businessmen have to travel on daily basis and they stay one night in hotels so tour operators can contact with them with help of such type of brochure (Puzis and et. al., 2009). Company has proper control while making it and select design, backgrounds scene and colors at their own. It is very important for organization because it portray positive image of the firm which attracts consumers for the particular firm (Chauhan, 2009). It gain attention much quick than paper format brochures because reader generally like to listen and want visual effect which generate positive attitude towards services offered. It is very convenient to circulate among huge mass with the help of electronic devices and it takes very less time to rotate at market place. It helps to boost productivity of tour operation because contributes to a great extent for increasing volume of clientele. Such types of brochures serves visitors as sources of information for long term because it remains safe in electronic mode and any time they can access information by this. This provides offline content by downloading video file. It helps to provide accurate details of tour operation with better presentation and sound effect which make customers aware about the features of services provided. It serves to all community as existing as well as new customers for increase in the revenue of company (Vance and et. al., 2011).
5. Pricing strategies
Prices are the main sources of tour operation for generating revenue so that they must pay concentration while selecting strategies which in turn help to increase profitability of firm.
Premium pricing- Under this, operator’s charges higher prices of the services provided so that they can get higher profitability in the market. They put very high price in comparison with competitors. It is done with the help of making services distinctive from others by adding values and innovating strategies. It is suited to those firms who enters into new market and want to recover cost quickly. Under this organizations can covers cost with higher margin on early stages so that they can plan to move ahead by executing new projects (Chauhan, 2009). It helps to create competitive edge for long run with leading position in at marketplace. This assists firms to capture market shares and ensures its growth potential. Although it is very good but still it has several minus points such as all customers are not able to afford higher prices and they shift towards substitute product. It will create competition of the firm and it will lose control over the product because of shifting and existence of rivalry with substitute products (Schwartz, 2010).
Penetration pricing- Under this, Operators put lower prices for attracting customers. It is very good strategy when firm wants to grow in the market and launching new product. It helps to create image of the product and make all customers aware about the product at lower cost in the initial stages. Under this, they charges lower prices in comparison with competitors (Puzis and et. al., 2009). However, it can be very critical when there is market of superior customers because people perceive lower quality of service which has lower prices. It can affect reputation of company because there is no guarantee to recover initial investment (Vance and et. al., 2011).
6. Discounting from original brochure price and ensure that their maximizing the occupancy of contracted beds.
Tour operators often provides discount to visitors from the original brochures. There are several reason for this. As follow-
- Effect of gathering- Under this, operator offers discount to those who come in huge mass such as group of friends, family which will give them benefits for generate higher income (Mak, 2011).
- Existing customers- In this, they want higher profitability with increasing customer’s volume by offering services to existing customers so that they can be in touch with them for future time period also. It creates image of company and buyer induces for repeat purchase.
- For enhancing sales- It helps to increase sales of the company because client will have positive attitude towards particular company by seeing the discount provided.
- To generate higher revenue- By providing discount on initial basis firms offers several other services to consumers which help to recover its cost and increase the overall profitability of organization (Vance and et. al., 2011).
- Building new customers- Under this, existing customers plays vital role because they will serve as sources of information to new clientele and it will help to engage new buyer in the firm (Schwartz, 2010).
Maximizing the occupancy
In order to maximize the occupancy of contracted beds, tour operators can provide several benefits such as free breakfast on the initial two days and clean environment which attracts customers towards that particular firm. Parking facilities, free child services such as games garden facilities for families will also help to achieve their target (Mak, 2011).
Tourism industry is growing at rapid speed with the access of several types of consumers by giving them various offers such as discount. Report concludes about pricing strategies adopted by tour operators for increasing their profitability in long run. Further it give brief about digital brochure and its impact for the growth of the firm so that it can increase volume of customers.
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