Role of Travel & Tourism Sector in Economy
Travel and tourism is leading sector in UK at present that provide maximum contribution to the economic development of the nation. The contribution by travel and tourism sector to the global GDP is around 10%. In addition to this, it also furnished around 300 million jobs around the world in 2014. It can be stated that travel and tourism is highest growing sector that present wide range of opportunities for economy and individuals and entity working in this sector. UK is considered as 8th biggest destination of the world. In year 2014, around 34.4 million travellers visited UK and in turn generated income of US$17.2billion while spending on different goods and services (Economic impact of travel and tourism, 2015). To attain the ample number of benefits available from this sector, large number of tourism entities are rendering effective and innovative services.
Tour operations management is effective approach that help executives of tourism entity to manage the tour and travel elements so as to design holiday packages for different visitors. It is important functions performed by tour-operators who also pool various services like, travel and transportation, lodging, entertainment and food etc to render a absolute package to customers (Blanke and Chiesa, 2013). The key purpose of tour operations management is to assure convenience to customers, reduce the overall cost of package by being a part of the entire supply chain in hospitality industry. In this report, various aspects of travel and tourism will be studied in the context of Thomas Cook Group. It is a renowned travel agency, headquartered in Peter borough, England. It provide package holidays, services in hotels, cruise lines, charter and scheduled passenger air services etc. In this report, learning will be shown regarding recent trends and development in travel and tourism sector and their impact on tour operators industry. The stages involved in developing holiday will be detailed out. Thereafter, understanding will be shown regarding strategic and tactical decision making for tour operators.
As per the recent scrutiny of travel and tourism sector it has been identified that it is viable source of income to the economy. It also have consistent growth rate of around 4-5% in global travel industry. In addition to this, around 1-2% growth is witnessed in travel industry of UK alone. As per world travel and tourism council, the sector generated US$7.6 trillion to the global economy (Blanke and Chiesa, 2013). Therefore, travel and tourism play important role in boosting the economy. Therefore, the constant progress in tourism sector will result into fruitful results for country.
The recent trends in the travel and tourism sector are described as follows:
Mobile first: It is leading trend at present where most of the travelers booked their holiday packages through mobile phones. In this respect, 30% of the travel bookings in UK in year 2014 were done through cellular phones. It is anticipated that figures will increase significantly in the coming years (Giaoutzi and Nijkamp, 2013).
Technology beacons: It is also important trend along with mobile technology. The leading cellphone brand, Apple is doing vital modifications to its iBeacon technology which will improve the processes and increase the facilities for both customers and service entities. Therefore, hotels, airline etc can use iBeacon technique in iOS7 so as to share information about new packages, offers etc and interact with buyers. This will increase the convenience to customer as they can easily their needs and preferences (Trends in Tourism, 2016).
Customized tour package: The tourism entities at present provide tailor made tour packages to buyers. This concept enable them to select the holiday package as per their budget, need and preference. It also help in increasing brand loyalty among customer and improve their satisfaction level as they get what they desire .
Niche segment of tourism: There are wide range of niche market segment that jon together to develop tourism industry. These segments further possess wide range of profit making opportunities. Such as adventure tourist are one which can be considered by providing tour facility to destination famous for sports etc. Similarly, urban tourism is one where individual explore the places in city, pubs, theme park etc.
Fewer barriers to travel: The connectivity around the world is increasing gradually. There are more and more airline company providing cheap flights and services to customers which is further making affordable for wide range of audience to travel abroad. Thereafter, there are many cellular application that provide facility of language translation which removes another obstacle of international traveling (Bellma, 2015).
Millennial seeking adventure: Millennial are those individuals that are born between 1982-2004. The many surveys that identified that around 20% of the global tourist is comprised of millennial group. It has been ascertained that this group will be taking 47% and above foreign trips till year 2020 (Trends in Tourism, 2016). Therefore, it is important for organizations to match the requirement of young travelers by considering their needs while designing tour packages. Therefore, unique experience can be provided like, tour to dark destination, volcano boarding sites etc.
Furthermore, it is important for tour operators to consider these trends while providing services. The holiday packages can be designed as per the needs of customers. Also, travelers can be reached through new and innovative means as per prevailing trends like, mobile, online portals tc.
From the provided scenario, it has been identified that tour operator of travel company are planning to provide a sightseeing tour package for 15 Chinese students for at least 5 days. The tour will began from London, UK to Paris, France. It is important for tour operators to focus on providing new offerings to their customers (Tsiotsou and Goldsmith, 2012). This will help in increasing the satisfaction level of customers and encourage them to make repetitive purchase from operators in future. With the help of proper plan, effective services can be provided to customers. Therefore, tour operators will be needing at least 4 moths duration to develop best suited tour package as per customer’s suitability. The cultural needs of customers should be considered by tour operators. To design a tour package for Chinese customers is different as, there is vast amount of difference in culture of two nation, in currency, tax structure, language etc (Chan and Tay 2016). Therefore, tour will be designed in such a way that potential customers does not face any kind of barrier in UK. The various stages involved in developing the tour package are described as below:
Planning - It is the foremost stage in the process of developing holidays. At this stage, all the information about the tour package is gathered and analyzed. Planning is done to make allocation of all the resources. A suitable option is selected after scrutinizing a list of options.
Development – At this stage development starts taking place. The decided holiday package is developed through different features. More attractive features are kept in order to make it more attractive for the customers.
Examining the destination: It is the first and foremost step of tour designing which enable tour operators to study the destination. This further help in providing prime services to customers. Therefore, tour operator can decide which destination will be covered in tour package. Such as, Eiffel Tower, the Louvre Museum of Paris etc. In this stage, study of external environment is done so as to identify the probable obstacle in travel packages that can impact the experience of visitors. This will take at least 2 month duration.
Research: It is important step which enable tour operator to survey the prospective destinations, London and Paris. This further assist in determining the state of country like, political situation, crime, weather condition etc (Meng, Turk and Altintas, 2012). Such as, if it is witnessed that heavy rains or snowfall is predicted in the selected destination than customers can be advised to delay their traveling dates. This help in preventing customer from state of inconvenience. The research will also help in various suppliers of services that provide best quality offerings at affordable prices. Such as hotels that provide budget rooms etc. This process will take around 1 month 10 days (Kapiki, 2012).
Negotiations: This step help tour operators in negotiating with various service providers in cited destination. By negotiating, tour operator can render lost cost yet good quality holiday package to customers (Xu, Dan, Zhang and Liu, 2014). Therefore, it is important for its to choose the suppliers having good brand name, offering superior services at affordable prices. The negotiation procedure needs at least 20 days.
There are different methods that can be considered by travellers to reserve the service and tour packages offered by travel companies. The choice is done by buyers as per their needs, suitability and convenience. Broadly, tour operators use two methods for booking the services of suppliers that they need to include in their tour package, only for sale or fixed contract. The fixed contract is one where price are not subject to any type of modifications. Only for sale contract are those which can be negotiated by tour operators due to services consumed in greater volume etc (Radford, 2012). In the present case, Chinese students have selected Thomas cook as travel agency to render services. The two ways that will be considered by tour operators of designing the holiday package and contracting with suppliers are detailed out as follows:
Fixed contract: Here, the suppliers of service will charges for the volume based capacity so as to increase their income by covering up the off season sale inadequacy. In order to reserve the services demanded by customers, tour operators can enter into fixed contract with suppliers. Considering this, tour operators will reserve the total capacity irrespective of the actual consumption by customers. However, this methods have some limitations like, operators have to pay for total amount regardless to un-utilized capacity (Blanke and Chiesa, 2013). The advantage of this contract is that maximum discount can be offered to consumers as the number of individuals taking the holiday packages is more. It also enable tour operators to do advance booking of the services that will be needed by its customers. Also, they can determine their profits in advance. Since, 15 students are travelling together this, type of contract can be considered.
Only For Sale Contract: It is a kind of contract considered in weak season which enable suppliers to charge moderate prices for the service offered by him. The overall cost of such contract is high. Tour operators are required to keep constant track of preference of prospective customers. Further, payment is done by tour operators for just the services used by its customers. Therefore, it will buy only specific services from suppliers. Therefore, they are able to minimize the wastage of funds (Evans, Stonehouse and Campbell, D., 2012).
Commitment: Under this contract an agreement is made between the intermediaries in order to render different types of services. These services include accommodation, food, entertainment etc.
Allocation: Here the contract is formed between tour operational managers and the intermediaries. They need to complete the contract within the stated deadlines.
Further, there are many tourist destinations that will be covered by tour operator in packages . London is among best destination of world which entertain around 17 million foreign travellers last year. It is famous for rich heritage and culture (Becker, 2013). The major destinations there are, British Museum, National gallery, Natural history Museum, Tower of London, Coca Cola London eye etc (Destinations in London, 2015). On the other hand, Paris is also regarded as honeymoon destination which welcomes large number of new wedded couples. The major attraction points of Paris are, Eiffel Tower, St Tropez, Chamonix Valley, Palace of Versailles, Mont Saint Michel, Gorge du Verdon, Chateau de Chambord etc. The Eiffel tour is also among seven wonders and also top tourist attraction in France. Therefore, attractive holiday package can be designed to that customers will help in publicity of company through word of mouth. The tour package designed for students for 5 days will be as follows:
To determine the selling price of the holiday package, it is important for tour operator to identify the overall cost of the package. This is followed by anticipating the amount of profit the company wants along with the commission of tour agent. Also, the extra facilities rendered to customer will be included while determining the selling price. Such as, the expenditure on lodging, traveling, entertainment, food, pre booking of air services etc while determining the selling prices of tour package (Molz, 2012). The cost elements within tour package will consider factors like, expenditure on reserving special room for customer like, sea facing, economy or business class seat in airline, cost of beverage and food that will be provided in package etc. In addition to this, service or entertainment tax will will be paid to government will be included . The offering price of tour package will rely upon the seasonal changes like, price can be kept low in of season while premium prices can be charged in peak season. Therefore, competitive pricing policy will be adopted for bookings n off season while price skimming is done in peak season. To determine the final price of package all the cost incurred will be taken into account (Boniface, , Cooper and Cooper,2016).
Since, its inception that tour operator is required to design brochure for adventure holiday. Brochure will help in informing the prospective customer about the travel services offered by company. Therefore, it will be required to take various decisions regarding planning the design etc. The brochure must contain all the important information that must be communicated to the potential customers so that maximum number of individuals take the holiday package offered by company (Standing, Tang-Taye and Boyer, 2014). The list of items that will be part of brochure must be made. Thereafter, decision regarding the mode of distribution of brochure must be taken, such as they can be physically distributed by agents or through online media etc. Further, major decisions that must be taken by tour operators while preparing brochure are as follows:
Determining issues impacting the planning decisions: The major issues that can affect the decision regrading brochure development must be identified in advance. Such as, information about prospective customers, purpose of transmitted information, format etc (Hudson and Thal, 2013).
Structure of the brochure: The brochure must be designed after considering the knowledge and preference of potential customer. It should contain details about the company, time period of tour, details of destination etc. The details regarding prices, offers, features of services , reservation conditions and other norms must be mentioned (Gustavo, 2013).
Budget consideration and potential market: The prospective market must be chosen and budget must be decided accordingly. Thomas cook can select niche market, individuals interested adventure tourism. The budget will play important role in determining the spending pattern of the potential customers.
Content – Content has to be something which can appeal to the customers. It should be fresh and attractive. People would show interest in the tour service if the message associated with it is very strong
Style – Here style is related with designing. The brochure has to be designed in a manner that it can influence the minds of the customers. The style must be different and unique.
Paper quality – Another important factor is use of paper quality. The paper quality has to be strong. It must show long term durability.
Time limit: The brochure must be designed in the provided time duration only, 1 month.
Distribution: The brochure must be distributed to palaces where there are majority of customers are located. Online sites, social media is major platform as it help in spreading information to vast amount of audience in less time (Kapiki, 2012).
With the rapid progress in technology, there are large number of alternatives that are evolved that can be considered by Thomas Cook so as to replace it traditional type of brochure. Company can consider e-brochure which also help in transmitting information easily and quickly . The marketing preference of customers is also changing with time and hence they prefer new an d improved ways of information sharing. Technically effective and attractive brochure will increase the curiosity of customers to gain more information about the services. With this aspect, potential customer can be transformed into actual one (Blanke and Chiesa, 2013). Therefore, Thomas Cook an design e-brochure which will contain attractive picture of adventure destinations, sports provided there in along with necessary information. Thereafter, video brochure can also be considered which will provide clear message by showcasing the pictures of selected destination. It will also be cost effective solution as compared to traditional brochure. Thereafter, company can distribute these brochures through, emails, upload on social sites like, Facebook, Twitter, or on official site of company (Meng, Turk and Altintas, 2012) The customers having mobile application of company can directly download the brochure into their cellphone. Other than this,video brochure is also emerging trend that can be considered by entity. It will enable the organization to provide information through using both audio and video components. Therefore, pictures of destination along with sound effects can be shared with potential customers so as to induce them to visit the places in reality. Further, the video brochure can be shared through YouTube where there are viewed by millions of customers (Kapiki, 2012).
Video brochure can also be designed which can be displayed on several channels such as YouTube, and other social media platforms. It will help in gaining quick awareness in very less span of time. This technique is more user friendly.
There are large number of ways accessible to Thomas Cook for offering tour package to its customers. Such as, company can use Online media, telecommunication, personal selling, direct mailing etc. The online media provide opportunity to tour operators to directly sell the holiday package to customers. It is effective means that will help in reaching wide audience at low per unit cost.
All the information can be integrated in brochure along with information about destination which is further passed on to potential customer. Thereafter, company can check its past records and identify the loyal customers who are again approached through email marketing. Therefore, all the information that company wants to communicate regarding holiday package is communicated through email facility. Similarly, customers can be contacted through telecommunication facility where they are given knowledge about new package, offers of entity etc (Giaoutzi and Nijkamp, 2013). Further, Thomas Cook can take help of marketing company who will help in assuring the sales of holiday package using effective promotional techniques. Therefore, every distribution method possess different benefits and cost. Therefore, Thomas cook is recommended to adopt a integrated distribution method which means it should use both direct and online media to reach maximum customers and thereby offer its services (Xu, Dan, Zhang and Liu, 2014). It can be very useful for the companies. The customers can be targeted very easily. Online channels can give many costs improvements for the company. The marketing of the services has to be strong and effective.
In order to attain the desired goals and objectives, there are large number of strategic decisions that must be taken by tour operators while working. The major decision like, expenditure on various activities like, designing brochure, selecting lowest cost supplier, determining the selling price of holiday package, choosing the distribution method etc. Also, tour operator is required to decide the potential customers to whom services will be provided by entity (Gustavo, 2013). They are the important decisions of business that determine the future prosperity and failure of business and hence must be taken with due care. Therefore, major strategic decisions that can be taken by tour operators are as follows:
Segmenting, targeting and positioning: It is important for tour operator to divide the market as per the demographic, geographic and behavioral factors etc. Thereafter, decision regarding whom business want to offer its product must be taken so that holiday package can be designed as per the needs of targeted individuals or group. To position in market, tour manager should decide on promotional tactics etc (Kapiki, 2012).
Discount pricing strategy: It is effective approach that help company in attracting maximum number of customers. The tour operator can offer discount on holiday package. However, it must decide the amount of discount that must be offered to customer. The tour operator can provide high discount during lean season (Standing, Tang-Taye and Boyer, 2014).
Competitive pricing strategy: It is important aspect that enable company to consider the strategic policies of rivals before taking any decision. Since, Thomas Cook is facing intense competition from rival like, Expedia, Cox and Kings etc, it must consider the pricing policy of rivals their marketing strategy etc (Hudson and Thal, 2013)
Seasonal aspect: The seasonality factor play important role in the revenue of tourism entity. The demand of tour package is dependent upon the factors like, lean season or peak season (Molz, 2012). Hence, more discount can be provided in weak season so that inflow of customers remains consistent to selected destination and also help in maintaining profits to tour company.
To operate business smoothly, there are large number of tactical decisions that must be taken by tour operators. Such as, bargaining with service providers, selecting the lodging, food and other services. In addition to this, tour operator is required to connect with the stakeholders so as to become important component of overall value chain (Standing, Tang-Taye and Boyer, 2014). Tour operator is required to determine all the service providers that can be selected for rendering final services to client. In this respect, different suppliers for various functions like, transportation, food, entertainment, accommodation etc must be selected. Further, the offer must be prepared and transmitted to various service providers to obtain invitations regarding quotations. It is followed by selection of service provider which is agreed to supply prime quality services at minimum possible cost. The tour operators can also conduct individual meetings with the suppliers so as to get knowledge about the prices, features of services, its quality etc. Further, bargaining is done with suppliers so that affordable tour packages can be provided to customers (Hudson and Thal, 2013). They also need to take decisions about the technological elements that are to be added in the services. For example use of online channels for promotion of the products. These decision could be very difficult to implement. Further employment of skilled human resources is another tricky task. The people selling the services have to be skilled. For that purpose they are to be given proper training and development.
In a nutshell, it can be concluded that travel and tourism is fastest growing industry at present. It can also regarded as major economic booster that contributes to GDP, employment generation etc. It has been identified that there are large number of recent trends in tourism industry which must be considered while designing tour package like, mobile application, technology beacons, customized tour package etc. It has been identified that tour operator can contract service providers through two methods, only for sale contract and fixed contract. The tour package to Chinese customers will be provided at £ 2560 which will cover all the cost plus provide opportunity to company to earn at least 10% profit. Further, it has been identified that tour operators are required to take various strategic and operational decisions which must be taken by them wisely. It can be also concluded that, tour operators must replace traditional brochures with integrated one which have feature of video, audio and e-brochure.
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