Unit 14 Trends & Development in Tour Operations Management Assignment

Introduction

Tour operator industry is an integrated approach towards travel and tourism sector. Unit 14 trends and development in tour operations management assignment study is about the detailed analysis of the tour industry which includes the impact of recent trends and developments in the tourism and travel industry. Contemporary issues in the industry and its impacts are discussed in the study.Analyses are done of the features and components of holiday packages. Price determination and selling methods are analysed for strategic  decision making . The study identifies different methods for making brochures and facility of customization by entering into retail marketing which increases the distribution channel. Different types of analysis are done to understand the effectiveness of the industry in the market. Various strategies to increase the demand of the products and services of this industry are analysed. Satisfaction level of the customers is fulfilled or not, it is identified in the report. An overview of the role of tour operation industry in the growth of travel industry is explained.

Task 1

P1.1 Analyse the effects of current and recent trends and developments on the tour operators industry.

The tour operator covers both tour and travel industry to execute the holidays. The tour operator industry is growing by increase in the demand of the products and services of this industry. Tour packages and related services are treated as products of this industry. Tour operator industry is growing in the retail industry where travel agents work to sell the products of the travel industry just like other sectors. There are emerged many recent trends in this industry which have made an impact on the growth of this industry. The following are the recent trends and developments (Nessel, K. 2013).

• Increase in the disposable income in the economy: Economy of the country makes an impact onthe growth of any industry.The disposable income of any individual is that part of income which is the saving after the application of the money. Increase in the disposable income leads to increase in the standard of living of the population. Tour operator industry is developing the opportunities of the employment andalso increases the revenue of the country. Ultimatelyit makes impact on theGDP of the country.

                       

• Developed technology: Tourism industry is growing by the development in the technology. All the transactions are executing by the use of new technology. Digitalization in the industry is increasing the quality and reach of the tour operations and also making it time and cost effective (Nessel, K. 2013).
• Globalization and FDI: Globalization has eliminated the boundaries of the countries. This has influenced the tour and travel industry by expanding the reach of the industry worldwide. Foreign direct investments helped to increase the access of countries in the overseas market. This is generating the capital in the country and increasing the opportunities to grow the tour operators by providing them a support (UK Travel Agents & Overseas Tour Operators Market Report 2013).

                                   

• Customized products: The industry is providing the facility of customization in its product in which there are designed tour and holiday packages by considering the demands and requirements. This helps to make the industry more adoptable for the customers and easily accessible.The holiday packages are provided in varieties and with different features and be customized according to the customer. So there is a recent trend of flexibility.
• Marketing techniques: Marketing is the source and technique to aware the customer about the industry and its products.Tour operating companies using marketing as a tool to expand the reach and increase the demand of products of industry.The emerging trends in the travel industry like giving discounts and points on the holiday packages, collaboration with other industry to educate and aware customers about this industry are using by the tour operating industry. Even governments of countries are spending to increase the tourists by appointing ambassador for the advertisement of the travel industry (Morris, S. & Kazi, S. 2014).
• Level of customer satisfaction: The satisfaction level of the customers is the evaluation of the effectiveness of any industry. This is the benchmark for the growth of the industry by increasing the demand of the products and by retaining customers and their loyalty towards industry. Travel industry is achieving good customer satisfaction level by improving its variety of products and providing quality services.
• Management education institutes: The tour operator industry is growing by the result of the effective management and efficient employees who have the management education, which is providing by several management institutions.These institutes are helping by increasing qualities of the performance by the managers in this industry (Morris, S. & Kazi, S. 2014).
• Transportation cost: Transportation plays important role in the travel industry as in the cost of the products is influenced by the cost of transportation.The low cost transportation increases demand of the products. The airlines are providing low cost traveling facilities.Transportation cost depends on the cost of fuel and different types of taxes and charges.
• Effect of PESTEL factor: Growth of every industry is related to the PESTEL factor. PESTEL is defined as political, environmental, social, technological, economical, and legal factors. This is an analysis for effective decision making which helps to grow the industry and establish certainty. All these factors make positive or negative effect on the travel industry. Political aspect determines the safety of tourists in the country and must be positive. Economy of the country defines the level of disposable income of the customers and their spending. Legal aspect prescribes the essentiality to follow the rules and regulation of the country (Holloway, & Humphreys et. al 2012).
• Competition: The facility of easy entrance and exit helps to increase the competition in the market of travel industries.This increased competition leads to increase in employment and make equilibrium between demand and supply. Increased competition provides facility of comparison and chooses the most suitable option.

So now we can say that there is a positive effect of the new trends and developments in the travel industry on the tour operator industry. These new trends are making it a leading industry in the world. The industry is also making positive relations between countries by understanding and exchanging cultures (Holloway, & Humphreys et. al 2012).

Task 2

P2.1 Assess the stages and timescales involved in developing holidays.

Holidays must be replanted for more enjoyment. Planning is the initial process of every activity which creates an overall framework of activities and helps to take most suitable decisions by analysing the available options. While developing holidays various factors and stages are considered to increase the efficiency and certainty.The following stages ensureeffectiveness of developing holidays (Beard & Leckie 2012).

• Research for destination: The initial stage for developing holidays is to research the destination to be travel and explore.The travel destinations are selected according to the demand of the individual. Different types of analysis are done to research the destination for package tour like PESTEL analysis.The research process can be completed within two to three months.
• 
• Developing tour itinerary: After selecting the travel destination the next stage is to develop tour itinerary. It is a summarized form of tour program which includes all the destinations, travel routes, accommodations, transportations and places to be visited. It is a systematic process to complete a holiday without any complexity. This stage can be completed within two months.

               

• Negotiation: There are many vendors and suppliers dealing with the tour operator. Tour operators negotiate with these vendors to control prices of the packages. Group holidays are customized to enable more negotiation in the prices of airline travel, transportation, and accommodation.The history of the tour operators helps to get them more discounts from the suppliers.This stage can be completed within four months’ time period (Beard & Leckie 2012).
• Price determination: The next stage is to pricing the packages considering all the elements.The factors which effects the pricing of packages are foreign exchange rates, cost of fuel and taxation framework of the country. The pricing is fixed at least ten months before the holiday dates.There are variations in holiday packages with different prices to satisfy demands of all types of customers.There are two types or methods of pricing of tour packages, cost oriented and market oriented tour pricing.Pricing takes maximum one month after completion of the negotiation process.
• Marketing of the tour packages: Marketing is very important for every industry to increase the awareness in customers about the product and services of the industry. This helps to increase the demand of the products and enhance profitability of the industry. Marketing is done by developing a tour marketing plan by making brochures which includes all the material information related to the tour operator company working on retail basis.This stage is completed in four to five months (Lee & Chen et. al 2013).
• Execution of tour: This is last stage of the tour operator process. All the preparations and estimations are converted into reality. The effectiveness of execution of tour makes it successful. All the  marketing planning  process is exercised and most of the tour operator companies have the policy to monitor and control all the activities in the process. The time consumed in the process is the time defined in the tour itinerary (Lee & Chen et. al 2013).

P 2.2 Evaluate the suitability of different methods of contracting for different components of the holiday and different types of tour operator.

In the present context the tour operators design packages by considering different features and by two methods which are fixed contract and sale only contract. Different types of tour operators like airline and flight centre operators are using these methods of contracting. Tour operators do contracts with their vendors and suppliers by considering the following two contracts and choose the most suitable for that particular operator.

• Fixedcontract: In this type of contracts focus is on the collective or quantitative approach towards sale. The tour operators increase their capacity by maximizing the volume of the sales. This type of contract is done to take the benefit of the offseason. Tour operators contract in their full capacity taking the risk of un-utilization. Fixed contracts give the advantage of cost effectiveness by getting huge discounts and benefit of group prices. But in case of un-utilization the tour operators are liable to pay the balance amount of the contract to the service provider (Chand & Katou et.al 2012).
• Sale only contract: In sale only contract method the prices are high in comparison to fixed contracts. These are seasonal contracts and made by considering the demands of the customers and potential of the market. The risk factor is less in this type of contracts as in there is no liability on the tour operators. There is no scope for high discounts in these contracts.

By analysing both types of contracts we can say that high risk generates high return. The fixed contracts have high risk and provide huge discounts and profitability and in case of sale only contracts there is no risk which leads to high prices (Chand & Katou et.al 2012).

P 2.3 Calculate the selling price of a holiday from given information below.

In the given case the Chinese students are planning their tour from London, UK to Paris, France. Budget for the trip is estimated for per person and per couple. The travel agency has its network in France which enables the negotiationand provided low rates. There are 15 students in the in the group and the tour is for not more than five days.St. Michelle hotel is providing special rate as 60 euros for a twin room (two adults sharing) and supplement for BB is 10 euros per person/per night. The calculations for different costs are done as follows.

Calculation of accommodation cost: The twin room is provided in 60 euros where two adults can share a room. And for extra bad the hotel is charging 10 euros per night. So 10 students can avail twin room and remaining 5 can be adjusted by taking extra bad in each room. So the total cost for four nights will be 4*(60*5+10*5) = 1400 euros equal to (1400*0.78) = 1092 British pound.

Calculation of transportation cost: Transportation cost will be 1000 British pound for 20-seater luxury coach including two drivers, fuel costs.

Total cost

Details	Price (in £)
Accommodation cost	1092
Transportation cost	1000
Charges of tour guide	200
Total cost	2292
Add: Profit margin @10%	292.20
Sales price	2521.20

So we have calculated the total sales price of the package 2521.20 British pounds.

Task 3

P3.1 Evaluate the planning decisions taken for the design of a selected brochure.

In the travel industry or any other industry there is required to inform the customers about the products and services of the industry. Brochure is a document containing comprehensive and relative information to increase demand.This is a method or technique for marketing which involves low cost and its reach is extended. Brochures can be distributed online or offline. Digitalization and improved technologies are increasing the reach of the brochures (Baur & Steinhardt et.al 2014).

Issue identification for developing brochure: The issue must be identified before the development of brochure. The issues which should be considered are market segmentation, selecting the target market, format of the brochure, information to be discussed and time limit of execution of the brochure. Strategic decision making should be there which is done by analysing and comparing all the availableoptions.

Format of the brochure: Brochure is the systematic document of information. There are included many sections and sub-sections in a brochure and information is divided in segments, which makes it more attractive and understandable. The format of the brochure must be designed according to the target market. The information must be in the format given below (Baur & Steinhardt et.al 2014).

• Name of the tour operator company.
• Mode of transportation.
• Travel destination and itinerary of the travel schedule.
• Accommodation and meal facilities.
• Price of the tour package with explained distribution.
• All the conditions and other charges applicable.
• All the legal requirements to be fulfilled.

Budgeting and selecting target market: Before issuing the brochure the budget and the target market should be defined. The market segmentation is done by analysing the demand of different customers and the target market which is the most suitable for the tour operator company is selected. Budget can be defined as the spending power of the customers which is the key factor for selecting the industry’s products and services. The target consumers can be identified by analysing the budget (Baur & Steinhardt et.al 2014).

Time scales for completion of stages: Brochure must be designed in the prescribed time period as in it is the essential document for the marketing of the tour operator industry. It is included in the planning process which is a strategic method of decision making. All the stages in the formation of brochure are defined a maximum time limit and must be completed within those limits.

P 3.2 assess the suitability of alternatives to a traditional brochure for different types of tour operators and recommend the most appropriate for your tour package.

The traditional printed brochures are classical approach for the marketing of the tour operator industry. These printed forms of physical brochures contain all the material information but is not effective towards attracting the customers and increase in the demand of holiday products and services.The new technologies and emerging digitalization has developed different alternatives of the traditional brochures. These alternatives are effective and help to fill the gap or shortcomings of the traditional brochures. The different alternatives are as follows (Falzon, J. 2012).

• E- brochures
• Visual brochures
• Social media
• Websites
• Call centres
• Travel agents and retailers
• Direct sell

Electronic brochures are the on line designed brochures. This is a better alternate of physical brochure as in the reach is extended and the cost of preparing these brochures is less in comparison of the physical brochures. Visual and audio- visual brochures are more effective ways to attract customers and increase demand and productivity of the tour industry.This way of informing the customer by showing the pictures and videos of tourist destination increases the willingness of the customers to buy that holiday package. Social media is the most effective platform to aware the customers about the industry and its products. Websites are created to provide information to the customers about the information of Tour Operator Company and its products. This is a less expensive way to increase the accessibility for the customers. Call centres are sophisticated manner to getting information about the tour operating company and its products. Travel agents and retailers work as intermediaries and middleman playing an important role in balancing the demand and supply in the tourism industry of products and services.Direct selling can be explained as the direct communication with the customers.

In the given case where the a new brochure is planning for adventure holidays the most suitable alternative of the traditional brochure will be e-brochure, audio-visual brochure and website of the tour operator company having all the information of the holiday package including the pictures and videos of live adventures on its website and other social media platform like You Tube (Falzon, J. 2012).

P 3.3 Evaluate the suitability of different methods of distribution used to sell a holiday for different types of tour operator and recommend the most appropriate for your tour package.

Every industry expands and diversifies its distribution channel to make equilibrium between the  demand and supply .Preparing physical brochure is a traditional method to aware the customers.By the change in the trends and technology the methods of sales and distribution are also developed. There are emerged other sources like call centres, social media, E-brochures, websites, online marketing, direct sell, travel agents and retailers etc. These are the effective tools to increase the profitability of the tourism industry. These tools are cost and time efficient and have different features and pros and cons with them. Tour operators choose the most suitable source by analysing the various alternatives and their impact on the objects of the company. Strategic decision must be taken while selecting these tools of sales and distribution as in they have a long term impact on the growth of the tour operator company (Gurcaylilar-Yenidogan  & Windspergerc et. al 2011).

In the given case study the tour operator company is planning to execute the brochure for adventure holiday.In this situation to increase the sale of adventure holiday package the most suitable distribution channel will be creating websites, E- brochures, audio- visual advertisements of live adventures, social media platform, travel agents and retailers. By using these sources of sales and distribution the demand can be increased of adventure holiday packages of the tour operator company (Gurcaylilar-Yenidogan  & Windspergerc et. al 2011).

Task 4

P 4.1 Evaluate the strategic decisions made by different types of tour operator.

Strategic decision making is a key factor for achieving goals effectively by increasing certainty in the company. Companies adopt strategic management to increase the productivity and cope up with the future changes. In the process of strategic decision making the decisions are taken by analysing all the available options and choose the most suitable according to the objects of the company. Strategic decision making helps to take effective decision in any tour operator company.Following are the key strategic decisions taken by tour Operator Company for running of the business (Baur & Steinhardt et. al 2014).

• Demand forecasting: Demand forecasting is the first strategic decision made by tour operators. This is a futuristic approach in which an analysis is done to estimate the future demand of the travel holiday products and services. All other decisions are taken considering the future demand;this provides certainty in the business and fulfils the gap between demand and supply.
• Market segmentation, targeting and positioning: Customersare segmented by diversification of customers according to their features and demand.Packages are designed considering the requirements of the customers. Target customers are selected and positioned by the tour operators by analysing all the segments considering the factors like budget which is the spending capacity of customers and other factors (Baur & Steinhardt et. al 2014).

           

• Discount pricing strategy: In the tour operation industry discount plays important role. The level of discount helps to determine the price of package. Different type of contract defines basis of discounts. Fixed contracts lead to huge discounts and sale only contracts generates low discounts. These decisions are important for price fixing and achieving high productivity.
• Building product strength: Decisions should be taken which can build corporate product by increasing the brand strength. This can be done by taking effective decisions to make the product well positioned in the corporate world (Evans & Campbell et. al 2012).
• Risk management: Strategic decisions should be taken to manage risk in the tour operator industry. Risk can be emerged in the industry by doing fixed contracts where there is a risk to pay the balance amount in case of un-sufficient sale of products.
• Pricing strategies: Decisions related to determination of price are very important for increasing demand of the product. In this competitive environment pricing strategies can provide benefit of the competitive advantage over its competitors in the market. Seasonal aspects should be considered while pricing the packages and there should be variety of products for different seasons.
• Effective promotional strategies: Marketing is an effective tool to aware the customers about the products and services. The operators should choose the most effective tool for promotions from all the available options. This process helps to attract the customers and enhance reach of the product in the market.  Brochures, e-mails, websites, social media, direct sell are the examples of promotional strategies and techniques (Evans & Campbell et. al 2012).

P 4.2 Compare the tactical decisions that could be taken by a selected tour operator in different situations.

Tactical decisions are very important for the effective running and execution of the activities in every company. These decisions focus on the short term issues and are taken to meet day to dayrequirements.Tactical decisions are taken by negotiating and selecting the various service providers. Accommodation arrangements, transportation, food and other services are covered in these decisions. These decisions are components for the smooth running of every business. In the tour operator industry tactical decisions also cover maintaining relationship with the stakeholders providing financial resources in industry. These decisions include the following (Manuj, I. & Sahin, F. 2011).

• Frequent segment analysis and specific promotion.
• Tactical pricing determination of packages.
• Maintaining certainty by securing the daily transactions (Manuj, I. & Sahin, F. 2011). 

There are many factors which influence the tactical decisions. The impact of these factors is crucial on these decisions. Following are those factors influencing the tactical decisions.

• Information and communication technology influences tactical decisions as in effective communication is a need for every activity. In case there is lack of effective communication technology and its application in the process of decision making then it will not be effective.
• Regulatory framework explains all the laws and regulations which should be followed while taking tactical decisions. In case these rules and regulations are not followed then the company will be liable for relative prosecution (Wong, J. & Lee, W. 2012).
• Economic growth and decline also influences the tactical decisions of tour operator companies. The flow of money and the level of disposable income of customer’seffects the tactical decisions may be in positive or negative manner.
• Exchange rates are the base for the international trade. In the tour operator industry there are required to trade in the foreign currency hence the impact of exchange rate fluctuations influence the decisions of these industries.
• Environmental issues make an impact on the tactical decisions of the tour operator industry. Environment of a country determines its value and importance in the travel industry (Wong, J. & Lee, W. 2012).

Conclusion

The report has provided a deep study of the tour operator industry. The various features and factors influencing this industry have discussed in the study.We have learned about the recent trends and developments in the travel industry which are influencing the growth of the tour operator industry. Analytical study of different aspects of different tour operators is done in the report.The given tasks help to evaluate the existence and role of tour operator industry in the market. Holiday packages are termed as the products of this industry and we have discussed the stages and time required for completion of each stage in this study. And different types of contracts and their effectiveness and worthiness in different types of holiday packages are analysed.The packages should be effectively priced considering the target segment and customers. There are defined various techniques for pricing the tour products and services. Every industry can run smoothly if there is adopted a futuristic and strategic approach towards decision making. This ensures certainty in the business and also manages the risk factor.So now we can conclude the tour and travel industry contributes a huge part in the GDP of every country and participates in the growth of the country.

References

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