Tour Operations Management

Concept of Tour Operation


 Tour operation business is an important constituent of thetourism industry

 The tour operator is a partner in the distribution channel for catering to outbound, inbound & domestic tourists.

 The business of tour operation is integrated with other tourism business as it is a linking point between the tourists and other service providers.

 Consequently, the tour operation business generates ample income sources for the host country and

 offers wide range of services and

 other ancillary services in a professional manner.

Role of Tour Operators


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 The role of tour operators also have become diverse. They work as

 agents,

 promoters &

 image builders of the destinations.

 With the tourism business evolving & changing with every passing year, tour operators have changed their functions and operation techniques

 to adapt to the changes and to cater to the various needs of the mass tourism market.

Changing Features of Travel

 The volume of travel trade business have been growing significantly over the last decade as holidaying or vacationing is a new concept

 determining the lifestyles in the developing countries.

 As a result, the size of the travel market has become so large that several attractive and value added services are offered at competitive rates to satisfy the expectation of the tourists.

Changing quality aspects of Travel services

 Personalized services are the hall marks of the travel trade business today. The cost factor is substituted with quality of services

 Now a days, the tourists are more concerned about for having authentic experiences and for being in novel attractions.

Reach of Tour Operation Business

 Considering the thriving economic conditions of the Middle East, South East Asia, Central Asia, Asia Pacific and the western European Region, the prospects of tour operations business are certainly bright.

What is Tour Operations Ultimately?

 The tour operator is not only a wholesaler, buyer of bulk services, and manufacturer of package tours but also

 a destination promoter who creates comprehensive itinerary and innovative packages.

Meaning & Definition of Tour Operation


 The tour operator is a vital link between tourists and the primary service providers.

 It act as a destination promotion agency

 Professionally tour operators are recognized as wholesalers as the

 capacity of buying in bulk and

 distributing through the channel is undertaken in a methodical and organized fashion.

Defining the Tour Operation Business

 The tour Operation business is defined as an organization, firm or company which

 buys individual travel components separately from different suppliers and

 assembles them into package tours by adding certain value and

 selling them with their own price tag to the public

 directly or through middle men (Retail travel agents/ travel portals/Excursion agents etc .)

Features of Tour Operation Business

 Tour operators are largely responsible for making timely delivery of services and

 providing the services as per the contract.

 Tour companies are professionally managed with much expertise and experience in the

 planning and

 operation of pre paid and pre planned vacation packages for the general public

 directly or through franchise travel agents.

How Tour Operators Work?

 Tour operators enter into long term contracts with air carriers, hotels, cruise liners and other suppliers for the provision of bulk travel services.

 The travel services are assembled into a package tour featuring

 Round trip transportation

 Ground transportation

 Accommodations

 Tours of local sites

 Arrival & departure transfers

 Entrance fees

 Cultural programs

 However, package tours are offered to the general public through intermediaries who function as a retailer.

 Tour operators are principal agents or wholesalers that are responsible for the provision of components of travel services of each tour package.

 An individual or company of entity (including all types of hotels & tourist accommodations) that offer

 Tour packages & services such as transfers, lodging, meals, guided tours are called Tour Operators

 Tour operators are the organizers and providers of all inclusive tours or components of package holidays.

 Tour operators can provide the services independently if

 they have their own cars & coaches, hotels and other travel related services or

 these services can be arranged through suppliers in the distribution channel.

 Thus tour operators are recognized as manufacturers of package holidays and are popularly known as wholesalers because they are

 engaged in buying services in bulk in order to design various tour packages.

 The package tours are retailed through the travel agencies or directly to the clients.

Sequence of Arrangements

  • International Travel

Foreign Tour Operation Company

  • India @ Delhi (SOTC)

Ground Handling Agency

  • Excursion Agent(EA) Goa

Types of Tour & Tour Operations

Types of Tour

 The tour operator is a manufacturer of tours and initiates the process of assembling varied services from the principal service providers

 Tours are conducted in

 different names and

 the components of services and arrangements of ground services vary from one type of tour to another.

Independent Tour

 A package tour is designed for independent tourists whose, needs and priorities are different in terms of selecting destinations, accommodation and transportation.

 It is a type of tour that gives enough freedom to travel. Each individual element of service (service elements) can be purchased or a combination of related package tour components can be included.

 The service elements of the independent tour comprise

 domestic air tickets, hotel room services, processing of travel formalities, arrival &departure transfers and sightseeing.

 Other services include

 adventure sports, cultural events,& health related activities that generally enhance the value of the independent tour.

 Tourists generally look for independent tour for two reasons

 To minimize the total cost

 Ensure flexibility in the tour

Escorted Tour

 An escorted tour is conducted for a group as well as for independent travel. The need of the tour is to provide timely assistance and guidance to group members as they are unfamiliar with the culture & environment of the destinations.

 This form of tour helps the group members in visiting places safely.

 Thus an escorted tour is accompanied by

 qualified, well informed trained & experienced & professional tour managers or guides.

 In most cases, an escort cum language interpreter accompanies the guests from the first to last leg of the tour.

 Basically , escorted tours are meant for those tourists who plan to visit destinations for

 the first time or may be physically weak.

 In an escorted tour, information and assistance to the group at

 the origin,

 enroute and

 at the destinations are provided by tour escorts.

 The primary task is to coordinate hotel & flight check in, meal arrangements, & baggage handling along with interpretation during sight seeing.

 They also advise group members for

 dining at safe places and

 use their free time for shopping and

 other health related activities.

 Familiarity with people of the destination and advice on the dress code is the part of the tour.

Tour Escort helps in

 Seating arrangements in flights, trains & sight seeing coaches

 Advises about smoking rules/etiquettes in public areas

 Baggage & belongings are tagged and arranged to identify them easily.

 An important aspect of escort tour is the affinity group package that comprise

 members of a community club to travel together as they are known to each other. It offers club members an opportunity to socialize.

Hosted Tour

 A hosted tour is conducted at the destination region. The tour is called “hosted tour” because the local operatoracts as the host to guests.

 It truly fosters the host guest relationship and tourists or guests try to understand the local culture and people with the help of the local agents.

 A hosted tour can be described as a form of tour which is handled by the

 ground operators or destination management agencies, authorized representatives of the wholesale tour operators that have to provide ground logistics as per the contract.

 The wholesale tour operators appoints the service providers at the destinations to ensure the provision of services.

 It involves the utilization of services of one operator by another due to peculiar nature of tour operation business.

 For example, German clients of COX & KINGS are received at the Soeta International Airport, Cengkareng.

 Guests are transferred to the hotel and a city sight seeing tour is also conducted to them. The local tour operator is instructed to make ground arrangements much before the arrival of the group.

 Thus it is the duty of the local tour operator to

 offer a warm welcome at the airports or at the railway stations. Lot of personal care and attention is given in the tour as the reputation and credibility of the principal tour operator depends upon the hospitality extends to the guests.

 A package tour that is fully sponsored by business firms or organizations is conducted for the employees.

 The tour is an incentive for employees to enhance their performance.

 It is a form of a tour that includes all essential components of a standard tour.

 They are usually all- inclusive tours.

 Incentive tour are motivational tour which are fully sponsored by the employer which is also known as “Paid holiday”.

Difference between Tour Operators & Travel Agents

 The tour operator is a wholesaler who is responsible for manufacturing a tour package.

 The tour operator deals directly with tourists and foreign travel agents or principal agents.

 The itinerary is prepared by an experienced executive and possibility to any amendments of tour program lies with the tour operator.

 Retail travel agents are those who work for the tour wholesalers to sell the packages to earn commission.

 Travel agent mostly functions as an intermediary between tour operators and tourists to market tour packages.

 Tour operator sells varied services in the tour package and appoints a travel agency to handle ground services such as

 Sightseeing, tours, airport arrival & departures, transfers, check-in, check-out, transportation, shopping, entertain ment, shopping, entertainment, guide & escort services.

 Confirmation of various ground services is made by the travel agency to the tour operator.

 The travel agency depends on the tour operator for business and provides services at the destinations as per the contract

 Local problems faced by the tourists are solved by the travel agent under the  guidance of the tour operator.

 Travel agents are the associate members of IATO to keep  contemporary track of the business and

 to widen business relationship with the other members.

 Tour operators are classified on the basis of

 the nature of the tour business and

 the area of operations of the package tours.

 The primary purpose of different inbound & outbound tour operators is to

 showcase the tourism attractions by offering package tours to the mass markets,

 thereby increasing the tourist influx to the host country.

Types of Tour Operation Business

Forms of Organization

  • Tour Operators
  • Inbound Operator
  • Outbound Operator
  • Domestic Tour Operator
  • Ground Operator

 Similarly, domestic tour operators take the lead role in building

 the attractiveness of the tourist destinations through innovative tour packages.

 Specialized tour operators show interest in

 demonstrating the off the beaten track destinations to cater to the niche market

Organizational structure

Tour Operation Company Designing

  • Leisure Package Holiday / Business/ Corporate Packages
  • Customized Packages
  • Marketing Packaging
  • Operations
  • Ground Handling Agencies
  • Excursion Agents
  • Industry Linkages Services
  • Travel Advise on Immigration/Passport
  • Transport/ Entertainment/ Event Services
  • Escort/Manager/ Tour Guide Services
  • Accommodation Services

Different Functions in Tour Operation Business

Functions in Tour Operation Business

Travel Information

 What ever be the size of a tour operator, It has to provide necessary travel information to the tourists. This task is utterly difficult and very complicated.

 A tour operator must give up-to-date, accurate and timely information to the tourists regarding

 destinations, modes of travel, accommodation, sight seeing, shopping, immigration, health and security rules and about various permits required to travel in particular areas etc.

 Further the tour operator are image builders of a country. There fore they should present an accurate picture of various tourist resources and potentials of a country to the tourists.

Itinerary Preparation

 The term tourist itinerary is used to identify

 the origin, destination and all the stopping points in a tour.

 It is a composition of various elements and designed after detailed study of market.

 Practically a tour operators prepares two types of itineraries.

 General itinerary

 Special tourist interest itinerary

 Preparation of different types of itinerary is a very important function of travel agencies/tour operators

 A tour operator also gives advice to intending tourists in various types of tour programs which they may choose

Segments of an Itinerary

Date/ Day Places /Sector Visit (Arrival & Departure)

Program What to/ Where to See, Stay

Airline ticketing & Reservation

 Air ticketing and reservation is still a major source of revenue. Air tickets (International & Domestic) the travel agents/GSA/online portals are selling the major share.

 The computerized Reservation System (CRS) has changed the entire scenario of travel industry.

 Today by using CRS, the travel agency may serve a wide variety of clients and fulfill their needs and requirements.

 Almost 90% of the international tickets and 60% of the domestic are either issued or booked by travel agents and tour operators.

Tour Packaging & Costing

 A tour package is a combination of various tourism services, transport, accommodation, other facilities at en route and ultimate destination.

 A tour package has two basic components

 Travel

 Destination services

 Tour operator prepare a package keeping in view the preference of target market which is based on different factors like

 modes of travel, client choice, income, age group, country and region.

 After the identification of target market, the tour operator liaisons with service/ goods providers and enters into a contract with them.

Costing & Pricing

 The costing and pricing of tour packages depend to a large extent on the ability of tour operator , how effectively he is able to negotiate with the GSA/EA/retail agents/ similar service providers.

 The cost of a tour is calculated on the basis of what he has negotiated with the producers. Some extra cost is added for unforeseen emergencies.

 Thus costing is done by adding each element of cost

 transport, accommodation, sightseeing, guiding, and other expenses.

 For fixing up the price of a tour package, one has to add some percentage of profit margin to the cost ( based on competitiveness of the product/services)

As a Tour Package

 Once the package is formulated and priced,it means that it is ready for sale.

 The travel agent/tour operator needs to promote its packages that targeted clients

 may come to know about it and are motivated to purchase it.

 Technically this is known as marketing of tour package.

Travel Insurance

 Some tour operators also features travel insurance also which covers traveler and tourist’s baggage also.

 A travel insurance generally covers

 Personal accidents

 Medical & related expense

 Baggage loss

 Trip cancellation etc

Currency Services

 Tour operator which are permitted by RBI & FEMA (Foreign Exchange management Act) 1973 to deal with foreign currency offer

 currency exchange services to the intending clients.

 This is a very important facility to the tourists as it saves their time and energy. How ever for this , tour operator will charge their commission.

The Process of Travel Decision Making

 The process of travel decision making is based on the

1.Tourism Need

2.Information gathering & Deliberation

3.Decision Making

4.Travel preparation

  1. Tourism Need

 Desire to Travel

 Reasons for travelling to a specific destination

 Should be a

Independent traveler/group traveler/ Or

should avail certain travel components only

  1. Information Gathering & Deliberation

 Study  travel catalogues


Popularization of packages/ nation/ destination

Trends / family/ travel advises

  1. Decision

 Deciding a




Time (how long)


  1. Travel Preparation

 Bookings & Reservations

Travel funds

Complying with travel formalities of the Visiting country

To sum up

Mode & choices in Destination Selection

  1. Travel Stimuli
  2. External Variables
  3. Social & Personal determinants of travel behavior
  4. Features of Service distribution


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