Unit 13 - Tour Operations
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M3 - explain ways of maximising profitability during the different stages of planning,
selling, administering and operating a package holiday
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Unit 13 – Tour Operations
M3 - explain ways of maximising profitability during the different stages of planning, selling,
administering and operating a package holiday
As a pass task my group and I put together a brochure. Included in our brochure were contracting,
consolidations, cancellation charge and commission. In this assignment I will be explaining ways of
maximising profitability during the different stages of planning, selling, administering and operating a
package holiday.
Firstly in the planning section we used Ad Hoc as our method of contracting. This meant that we would
only pay for rooms and coach seats which have been booked. By doing this meant we would not lose out on
money if things were booked. Following this if we didn’t sell 30 seats before 8 weeks of the travelling date a
consolidation of an alternative holiday would be put into place. If a new holiday had to be put in place then
this could maximise profitability as the alternative holiday might include extra added on excursions which
the customer would have to pay for.
Within out brochure it was important to include booking conditions which included times, dates and
cancellation charges. Cancellation charges are put into place to help secure the finance. This means the tour
operator will not lose out on money if a person decides to cancel right at the last minute. For example if 30
people were to book the holiday and last minute 1 person pulled out, this would mean we wouldn’t break
even and we would be at a loss. This is an example of how tour operators maximise profitability.
If there are leftover seats six weeks before the holiday date then we will advertise them at a cheaper price.
We worked out that we could sell them at £250 pp rather than £310pp, this is so we don’t lose out on
money for empty seats. If we sold the tickets at £250 then we would have to sell 37 seats to breakeven. It
will also encourage more people to book as they will see that there has been a reduction.
We used the travel insurance ‘Insure and Go’. By selling this ancillary product will add to the profit. We are
selling insurance at £7. Because we are not able to offer car hire and currency this is a good service to sell.
We create business for lots of different organisations such as hotels and attractions, by bringing large
groups and repeating custom, we will receive discount from the hotels and attractions. This means we can
do cheaper prices to the customers which will look like a deal. This will gain us more profit because we will
have a competitive advantage over the competition and will stop customers from booking themselves
directly.
The administration fee we set was £10 to cover things like postage, paper, printer ink etc. The person will
be charged an extra £10 which ensure profit margins are met.
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