TOURS OPERATIONS MANAGEMENT

10 Pages   |   2,828 Words

Table of Contents

Introduction. 3
Discussion. 3
Effects of Current Trends & Developments on Tour Operations Industry. 3
Stages & Timescales Involved in Developing Holidays. 4
1. Research. 5
2. Capacity Planning. 5
3. Financial Evaluation. 5
4. Marketing Planning. 6
5. Administrative Planning. 6
Evaluation of Suitability of Different Methods of Contracting for Different Components. 6
Calculating Selling Price of a Holiday. 7
Evaluation of Planning Decisions for a Holiday Brochure. 7
Assessment of the Suitability of Alternatives to Traditional Brochures. 8
Evaluation of Different Methods of Distribution Used to Sell a Holiday. 8
Strategic Decisions Made by Different Type of Tour Operators. 9
Comparison of Tactical Decisions in Different Situations. 9
Conclusion. 9
References. 10
 

Introduction

Tourism management refers to the management tasks in operational, union and non-corporative organizations providing services for potential buyers of tourism services market. Tourism management can also be understood as a system which is related to market and societal segments of the public in terms of the tourism markets they are most likely to visit according to the purchasing power and affiliations. Tourism management is also responsible for the improvement of concepts and business models related to tourism industry, development of new revenue models and revenue management systems, inclusion of new communication / pathways in sector and development of new products / product differentiation variables.
 

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Discussion

Effects of Current Trends & Developments on Tour Operations Industry tourism, leisure and tourism-related service industry are among the most important industries with huge growth potential. Therefore, effects of current trends and developments on tour operations industry are very high. Global mobility and development in communication networks has contributed to the growth of the industry by an immense amount and the industry has grown by huge measures (Ioannides, 1998). This is because the above mentioned trends have offered exciting opportunities for the development and international marketing of innovative tourism products, ideas and services. Another effect of the current trends is the shift from mass market to customization of holiday and tourism packages. Previously, mass packages were designed for the potential target markets; however, with the advent of the internet unlimited variations in the tourism packages are enabled for the target market, which implies increased utility derived by the consumers.
Accommodations have become more segregated in recent years in terms of the purchasing power of the tourists and add-on facilities which they may need to avail during their stay. This is a highly important trend because it indicates that people of highly diverse income groups are engaging in tourism.  Another key trend is creation of activities at resorts since the tourists does not simply want to visit a destination but they expect to be engaged in activities of their interest.
Creation of budget airlines is termed as one of the most important trends. Budget airlines are low-cost airlines which are positioned on the niche market of cost-sensitive air travelers. These companies have adopted a network structure based on point-to-point, a fleet of a single type of device and personal multi-functions, etc. that enables the travelers to reduce their operating costs (Hara, 2008).
Cruising is yet another highly important trend in tourism industry. Cruise is a form of tourism which offers a luxurious experience, some raise the bar so high that they are called luxury cruise. These companies go well beyond what is usually a great experience. Generally, cruise lines offer luxury unparalleled service, operate smaller vessels that transatlantic currents and offer highly exotic itineraries (Lucas, 2004).
In the light of the above mentioned trends in the tourism industry, the industry is termed as one of the world's biggest growth industries. The tourism industry is benefiting greatly from the ongoing globalization processes. The increasing acceleration of transport processes also makes too distant destinations more attractive.
Stages & Timescales Involved in Developing Holidays There is a methodical process involved in the course of development of holidays. The key considerations include during planning process of a holiday include transport costs which depend upon charter rights into the country, distance flown and ground handling costs. Also, accommodation costs depend on overseas exchange rate against sterling, political stability of the destination and pressure groups persuading to take more responsibilities on new developments. Tour Operator will have to prepare realistic appraisal of the likely demand, considering number of tourists the destination attracts, growth rates over recent years, present shares held by competing companies and mass market tour operator commit for a substantial period of time (Singh, 2008). The timescale is dependent on the time it takes for every subsequent step to get done.
1. Research is the first stage of developing a holiday plan. Research is carried out in terms of the access to the destination, its infrastructure, political climate of the region and also keeps in perspective the changing market conditions. During the research phase the holiday planner reviews market performance, forecasts market trends, selects and compare new and existing destinations and then ultimately determine the marketing strategy for the specific holiday package.
2. Capacity Planning is the second stage of developing holidays. During this stage, the developer of holidays has to decide the type of the destination for which holiday is being planned. This decision does not take place in isolate rather negotiations needs to be carried out, as well, to know whether the decision is feasible (Singh, 2008). This is stage in which the type of the destination and the volume of the holiday travelers are done. And these steps are carried out only after negotiations for beds, negotiations for aircraft seats and negotiation with contract suppliers has been carried out from the phases of the initial research to commencement of sales. The typical time required for this stage varies between 14 - 21 months. The time for stage is not same for winter and summer programs. Winter programs with shorter breaks are smaller in volume and their periods are less.
3. Financial Evaluation is the next stage in which financial implications and risks are assessed. During this stage, the holiday planner determines exchange rates between countries and estimates future selling prices for the holiday package to assess feasibility. On the basis of this stage, the holiday planner needs to finalize tour prices and most importantly have to hedge against risks which may be involved with the offering of the package. During this stage, contracts with local suppliers are commonly made in the currency of the destination country. It is worth mentioning that the currency for payment of airlines is usually US dollars. Hedging against risks is important because airlines maintain the right to raise prices in response to increases in aviation fuel costs; and there is alteration in dues, taxes or fees levied by governments (Chon, Weiermair and Mathies, 2004).
In recent years, the financial planning aspects of holiday also include earning interest from deposits of the customers received in advance. The deposits from customers are received in significantly large amounts prior to the actual expenditure; therefore, this source of revenue must not be lost. The sale of ancillary services and imposition of cancellation charges can potentially cause problems if they are not taken into account during financial planning phase. This step may involve ‘buying forward’ of foreign currency at times where exchange rates are favorable and getting cash quickly through direct sales to the public to gain resources at the earliest.
4. Marketing Planning is a natural step in the planning stage because holiday planners need to decide in advance about the potential expenses marketing will incur and the customers they will be able to gain. Marketing planning entails brochure production and distribution, as well as, advertising and sales promotion. Brochure planning and production have be planned at the very beginning in addition to media advertising and sales promotion. Holiday planner needs to plan for market stimulation.
5. Administrative Planning for a holiday destination includes key aspect of administration pertaining to holiday such as recruitment of staff; establishment of reservation system for customers; accounting and documentation of the entire process. Some holiday planners may establish reservation system to receive reservations by telephone and using phone as a medium for handling general inquires (Goodball, 1999). Similarly, organizing and supervising social activities at the hotels and publicizing and booking options have be prepared in advance. Also, for cost saving planners tend to hire outsourced workers for handling special requirements and complaints and acting as an intermediary for clients.
Evaluation of Suitability of Different Methods of Contracting for Different Components there are a number of alternative methods used for evaluation of suitability of the contracting methods. It must be mentioned that no tour operator adopt a single method of contracting rather multiple methods are generally used depending on the form of components.  
For bed allocation, the choice of contracting can be based on a sale or return basis with appropriate release date. Tour operators usually negotiate this variable with medium-grade hotels. The consideration during the choice is to look for a contracting method in which opportunities for resale generally easier because if the demand for the specific tour operator is low, he can resell it to another firm. Generally, hoteliers have contracts with many Tour Operators. In contrast, contracting for bed is different. Tour Operator agrees to pay for beds whether they sold or not to gain cheaper rates. This commonly applies to self-catering properties for exclusive contracts.
The approach towards contracting transport is entirely different. Time charter is a potentially feasible approach for large tour operators. An alternative is to contract an aircraft for the whole season or to go for whole plane charter. The method of contracting is dependent on the certainty of demand. Generally, tour operators engage in part charter or purchasing a block of seats on a scheduled service or charted airline or coach seats.
Scheduling is yet another variable with determines chartering method. Sometimes there is not enough demand for chartering an aircraft or some destinations simply don’t allow charter flights. Hence, tour operator may contract individual seats on demand (for tailor-made holidays) or contract a block of seats on flights (for brochure programmes). Brokers are involved in the process of contacting (Rodgers, 2001). They provide airline seats in bulk to other tour operators and cconsolidate flights on behalf of tour operators. Their services also include negotiating with airlines and buying in bulk.
Calculating Selling Price of a Holiday the process of calculating selling price of a holiday includes taking into account both direct and indirect costs. The tour operator calculates the selling price by directly including all direct costs into the package price, which include accommodation costs, air tickets, transfers, excursions and agent’s commission.
Indirect costs are apportioned through some method into the price of the package. The indirect costs incurred by tour operators include payroll expenses, marketing and office expenses of the tour operator. They are also included in the holiday packages’ prices.
Evaluation of Planning Decisions for a Holiday Brochure The planning decision for holiday brochures is highly important because these brochures are printed long time in advance and the business gained by tour operator is dependent on them. The first decisions which are included in brochure production process relate to taking photos, writing a copy and determine prices to be written on the brochures (Hara, 2008). Planning Issues for a holiday brochure also contain decision on financial investment in the technology necessary to undertake this work.
The tour operator needs to plan the format of the brochure which includes content layout like ‘house style’ front page recognized by customer. It is important that text and images in brochure must be attractive and truthful, accurate and easily understood (Papatheodorou, 2006). Structure and layout are also important since high quality photography enhances impact on customers. Paper quality should be suitable for the purpose while the size of the brochure may also need to be determined.
Information within the brochure also needs to be planned like choosing illustrations of the destination, the means of the transport used, full details of destination, the duration mentioned of each tour, full description of the location, type of accommodation and whether or not services of representatives are available abroad. The tour operator needs to plan for a brochure the details of special arrangements, details of documentation required for travel, departure panels, full conditions of booking, including details of cancellation conditions and details of any optional or compulsory insurance (Moutinho, 2011). This is because all these features need to be included on the brochure. Planning decision of the brochure also include timescale of production of the brochure. A creative brief is essential in the planning stage for the copywriting. Proofing decisions are made each stage of production. The final corrected proof before actual print is generally read by several members of staff.  
Assessment of the Suitability of Alternatives to Traditional Brochures Alternative to traditional brochures are several and each one of them has their own benefits and drawbacks. Perhaps the most important alternative to a traditional brochure is an E-Brochure. This alternative is highly important because it entails the benefit of no wastage of paper, ink, space or money. Also, this alternative to traditional brochure can be precisely targeted and information can be downloaded for a specific customer. Nevertheless, there are certain drawbacks of e-brochures which mean that they do lack the sharing capability of the printed brochures which can be taken away by the customer and shown to others.
Evaluation of Different Methods of Distribution Used to Sell a Holiday There are different alternative methods of selling a holiday package. Each one of them has their own usefulness and benefits. Sale representatives are a commonly used method of selling holiday packages which is quite useful in reaching mass markets. They are highly beneficial because they serve as a point of contact between Tour Operator and the Agent when problems or complaints arise. Also, consumers tend to place trust on their advice. Their drawback is that they reduce margin of holiday planner because he needs to pay a commission to these agents. Direct sell is the other alternative which includes selling through some direct medium (like internet) to households by placing advertisement in magazines, newspapers and internet. This method has been growing because it offers the benefits of higher margins for the holiday operator and creates a direct link with the consumer. Its drawback lies in its limited reach.
Strategic Decisions Made by Different Type of Tour Operators The strategic decisions make by tour operators relate to the volume at which they operate. A tour operator needs to make strategic decision about the positioning of its offering. The tour operator may choose to have a high positioning with a small target audience or to keep low prices for gaining a higher volume in the market. Positioning is a highly important strategic decision which also includes the decision pertaining to market one’s services as a specialist tourist operator in a certain segment or as a mass tour operator (Ioannides, 1998). The former has the liberty to charge higher margins. Branding and selection of retail channels also have long-term impact on the business of the tour operator, therefore, they are also considered as key strategic decisions.  
Comparison of Tactical Decisions in Different Situations Tactical decision making by tour operator is in response to the actions of the competitors and are taken with the objective of gaining competitive edge. Tactical decision includes competitor based pricing tactics and hedging decisions against exchange rate changes. Also, promotional pricing at certain seasonal times are also included in tactical decisions of tour operators. The tactical decision in the above mentioned situations does not require long deliberation rather they are made on the basis of limited information which is available at the time of decision making.

Conclusion

The paper evaluated different aspect of tourism management and business of tour operators. The unique thing about tourism management is that it consists of three different disciplines. A tour planner carries out market and competitor analysis, undertakes calculations pertaining to a travel product and takes care of execution details to create a new product.

References

Chon, K., Weiermair, K. and Mathies, C. (2004) The Tourism and Leisure Industry: Shaping the Future, New York: The Haworth Hospitality Press.
Goodball, B. (1999) Marketing in the tourism industry: the promotion of destination regions, New York: Routledge.
Hara, T. (2008) Quantitative Tourism Industry Analysis, Ohio: Elsevier Inc.
Ioannides, D. (1998) The Economic Geography of the Tourist Industry: A Supply-side Analysis, New York: Taylor & Francis.
Lucas, R. (2004) Employment Relations in the Hospitality and Tourism Industries, New York: Routledge Publishing.
Moutinho, L. (2011) Strategic Management in Tourism, Oxfordshire: CAB International.
Papatheodorou, A. (2006) Corporate Rivalry and Market Power: Competition Issues in the Tourism Industry, London: Tauris & Company.
Rodgers, J. (2001) Avce Travel and Tourism Advanced, London: Heinemann.
Singh, L. (2008) Marketing in Service Industry: Airline, Travel, Tours and Hotel, New Jersey: Engage Publishing.

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