Clear overview of how tour operators work and description of many aspects which influence the price determination of travel packages. Detailed explanation of all calculations included!
very clear explained and the calculations were described into details which really helped me while studying :)
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Tourism Industry Producers | Eefje Godding
Tourism Industry Producers
TABLE OF CONTENTS
5: UNDERSTANDING TOURISM SUPPLY ...................................................................................2
Four Market Situations .......................................................................................................3
Management ......................................................................................................................4
Tourism Business Strategies................................................................................................5
7: TRAVEL INTERMEDIARIES....................................................................................................6
The Tour Operator ..............................................................................................................7
tour operator .........................................................................................................................8
CALCULATIONS .....................................................................................................................15
Transport ..........................................................................................................................16
Accommodation & Additional ...........................................................................................19
Margin ..............................................................................................................................19
Commission ......................................................................................................................20
ASSIGNMENTS ......................................................................................................................21
ANSWERS .............................................................................................................................29
1
, Tourism Industry Producers | Eefje Godding
5: UNDERSTANDING TOURISM SUPPLY
basic concept = the demand for goods & services and to what extent this demand is satisfied
the scope of tourism supply is tourism demand by consumers
extremely broad and wide motivated by leisure or business
ranging. ~ based on individual preferences
It comes down to: multiple
suppliers providing a combination
of tangible and intangible information sources such as the
products internet, television, radio or
magazines. Word of Mouth plays
a big role too.
Tourism supply is a complex
phenomenon because of both the
authorities monitoring, guiding and controlling the process
nature of the product and the travel distributors include both
process of delivery.. direct booking systems and tour
> it cannot be stored operators & travel agencies
(perishable product)
> it is intangible in that it cannot
be examined prior to purchase transport provided by airlines,
railways, car rentals, cruises, bus
> it is necessary to travel in
companies and ferries
order to consume it
> heavy reliance is placed on
both natural and human-made
resources destinations are an important
feature within tourism as their
> a number of components are uniqueness often determines the
required, which may be amount of tourist arrivals
separately or jointly
purchased and which are
consumed in sequence
on the actual destination = food
> information intensive sector to and beverage, accommodation,
ensure products are known transport, both natural and
> tourism demand is highly human-made visitor attractions,
volatile and trend driven the local community, events and
entertainment, the infrastructure
> coordination is required to
bundle together different
elements
the tourism supply chain “all2the goods and services that go into the
delivery of tourism products to the consumer”
, Tourism Industry Producers | Eefje Godding
there are three types of business forms in supply terms:
1. public sector such as local authorities providing the necessary infrastructure,
safety and security measures, signposting, information,
environmental care and accessibility to attractions etc
2. private sector both small and global operating businesses which are often
mainly driven by profit
3. non-profit sector organizations focussing on other aspects than profit, such as
sustaining cultural or environmental features. These
organizations might receive public sector grants.
Global Transnational Companies
they are particularly on the rise in Europe, think of TUI. These already big companies
attempt to merge and create even larger entities, as it brings many advantages:
- involvement of (own) airlines → offer customers more flexibility in departure times
- overcome competition issues
- great reach
- increases a strong strategic vision of the market conditions they operate in
& the way they need to respond regarding the products they offer.
Four Market Situations
they can be determined when looking at:
• the number and size of firms
• entry and exit barriers to specific tourism businesses
• which market concentration exists in a specific sector
• the costs of capital and operation
• the extent to which price discrimination exists
• pricing policies
• the extent to which products differentiate
Contestable markets often a mass market with little product differentiation, due to
high competition, which leads to similar prices being charged.
Operators cannot charge more than the average cost because
then, customers would simply go to one of many competitors.
It is easy to enter the market, as there are low entry barriers.
Oligopoly there are limited suppliers who dominate the specific sector,
such as the aircraft suppliers. In an oligopoly, the company can
control its price and output level due to the high entry barriers.
3
, Tourism Industry Producers | Eefje Godding
Perfect competition rarely happens. It would mean that neither companies nor
consumers can affect the price of the undifferentiated product.
There would be no exit or entry barriers at all.
Monopoly there is only one producer, which indicates that this
particular company can basically determine the price freely.
Although a too high a price might discourage people to
use the product at all. Unless the product is pivotal.
The products and services that tourism businesses provide are a function of
changing market conditions. Businesses need to constantly consider the
market and adapt their business strategies to remain competitive.
Management
“getting things done in organizations through other people”
In a business context, organizations exist as complex interactions of people, goals and
money to create and distribute the goods and services which people and other businesses
consume or require.
Organizations are often organized into specialized groupings to achieve particular functions.
(e.g. sales – human resource management – finance – marketing)
A hierarchy exists when the organization is horizontally divided into different levels of
authority and status. Managers are on top of a particular department and grouped by level:
Chief Executive Officer exercises responsibility over the entire organization and is
accountable for the ultimate performance of the organization
top managers one level below the CEO and are usually confined to a specific
function, such as marketing or sales. Top managers work on a
desirable relationship between the organizations departments
middle managers usually they are at the head of a niche where they are
responsible for the performance in their area.
first-line managers performing one of the most critical roles: the supervision of the
non-managerial staff who affect the company’s daily display
No company is the same and therefore, different structures to manage businesses exists.
Current trend = a less hierarchical, more team-based approach
Tasks of managers are: planning – organizing – leading – controlling – decision making
Goals of managers may include (combination of): profitability – efficiency – effectiveness
4
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