Tour Operations Management.

Concept ofTour Operation
Tour Operations Management
2/17/20161 Preji M P IITTM Bhubaneswar

Introduction
 Tour operation business is an important constituent of
the tourism 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.

Introduction
 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
 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 life styles 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

Meaning
 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

 How ever, 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 calledTour 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
ForeignTour
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.

Types of Tour

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.

Independent Tour
 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.

Escorted Tour
 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,
 en route and
 at the destinations are provided by tour escorts.

Escorted tour
 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
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 A hosted tour is conducted at the destination region.
The tour is called “hosted tour” because the local
operator acts 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.
Preji M P IITTM Bhubaneswar

Hosted Tour
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 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.

Hosted Tour
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 For example, German clients of COX & KINGS are received at
the Indira Gandhi International Airport, New Delhi.
 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.

Incentive Tour
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 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”.

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Difference between Tour Operators &
Travel Agents

Travel Agents
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 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.

Travel Agents
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 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, entertainment,
shopping, entertainment, guide & escort services.
 Confirmation of various ground services is made by the
travel agency to the tour operator.

Travel Agents
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 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.

Types of Tour Operators
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 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,
 there by increasing the tourist influx to the host country.

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Types of Tour Operation Business

Forms of Organization
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Tour
Operators
Inbound
Operator
Outbound
Operator
DomesticTour
Operator
Ground
Operator

Types of Operators
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 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
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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

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Different Functions in Tour Operation
Business

Functions in Tour Operation Business

Travel Information
41
 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.
2/17/2016Preji M P IITTM Bhubaneswar

Itinerary Preparation
42
 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
43
Date/ Day Places /Sector Visit
(Arrival &
Departure)
Program
What to/Where
to See, Stay

44 2/17/2016Preji M P IITTM Bhubaneswar

Airline ticketing & Reservation
45
 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
46
 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
47
 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 un-
foreseen emergencies.
 Thus costing is done by adding each element of cost-
 transport, accommodation, sight seeing, 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
48
 Once the package is formulated and priced, it means that it is
ready for sale.
 The travel agent/tour operator needs to promote its
package so 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
49
 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
50
 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.

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The Process of Travel Decision
Making

The Process of Travel Decision Making
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 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
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 Desire toTravel
 Reasons for travelling to a specific destination
 Should be a
 Independent traveler/group traveler/
Or
 should avail certain travel components only

2. Information Gathering & Deliberation
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 Study travel catalogues
Advertisements
Popularization of packages/ nation/ destination
Trends / family/ travel advises

3. Decision
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 Deciding a
 Destination
 Transportation
 Budget
 Time (how long)
 Activities

4. Travel Preparation
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 Bookings & Reservations
Travel funds
Complying with travel formalities of theVisiting country

To sum up

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Mode & choices in Destination
Selection

Mode in Destination selection
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1.Travel Stimuli
2. ExternalVariables
3. Social & Personal determinants of travel behavior
4. Features of Service distribution

Mode of Destination Selection

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History Of Tour Operation Business

Travel Trade in India
 Travel agency business in India is relatively new. At the time of
independence there were hardly any travel company worth naming.
 The travel business in India in an organized manner started with the
setting of the “Travel Agents Association of India”(TAAI) in Mumbai in
1951.
 Prior to this there were some prominentTravel companies
 Thomas cook and Sons
 TheAmerican express with their main branches
 And Indian companies
 Jeena & Co, Lee India Pvt ltd & N Jamnadas and Co Ltd.
 However majority of the international tourists were handled by
Thomas cook and sons and American express.

Travel Trade History
 In India in thee year 1920, Jeena and Company has become the
first Indian travel agency who had organized
 group tours aboard for Indian travelers and
 later handled group of foreign travelers who visited India
way back in 1940’s.
 However Jeena and Company and other two Travel agencies were
merged into one composite travel company Known as “Travel
Corporation of India ltd” (TCI) in 1961.
 After this there were a number of travel companies established in
India such as SITA( 1963), Thomas Cook India Ltd, American
Express, Cox & King , Indo AsiaTour etc

Present Context
 Presently there are around 800 tour operators on the
approval list of department of tourism, Government of India.
These are located in more than 60 cities across the country
and many have promotional offices aboard.
 In addition to this, there are a large number retail travel
companies scattered across the country.
 In India there are more than 500 travel agencies which has
been approved by IATA (International Air Transport
Association) and a number of them have more than one
branch.

Historical Development in Travel Trade

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Tour Operations Management.

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