Transcript Tour Operations Management

Tour Operations Management
The Economics of Tour Operating
The Planning Cycle
Pricing an Inclusive holiday
See Yale (1995) The Business of Tour Operating
• What needs to be included in the costing?
The Economics of Tour
Operating
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Negotiating bulk rates
Yield Management
High Utilisation
Contingencies
– exchange rate and fuel price fluctuations
• Cash-flow management
• Secondary spend
The virtuous circle of tour operating
Thomson Holidays
in Morgan 1996
Negotiating issues
• How are the rooms contracted
– dTime Block, Sale or return, free-sale?
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Deposits or pre-payment
Release dates
Regularity - closed-out dates?
Exclusivity?
Facilities
Yield management
• Aim to maximise overall revenue by
balancing supply and demand (Middleton)
• Differentiated prices acc to season, time,
and customer segment
• Discounting to stimulate new demand
without reducing yield from existing
customers
• Danger - creating expectations of bargains?
- effect on perceptions of value?
High utilisation results from
• Good yield management
• operational efficiency
– back to back flight schedules
– quick turn-round times
• consolidation
– moving customers and cancelling flights/rooms
Conflict between utilisation and quality of
service? Ethical issues?
The vicious circle of tour
operating
Morgan in ETUP 2001
Cash-flow management
Aim to balance receipts and payments to
minimise the need for borrowing
• incentives for early booking
• interest on deposits
• year-round programmes
• timing of payments to principles
see Middleton 1994, Yale 1995
Secondary sources of revenue
• Add-on products
– commission
– merchandise
• cancellation charges
• foreign exchange dealings
• advertising
The Tour Planning Process
based on Holloway (1994) , Laws (1997)
Research
Select
Resort
Hotels
Yr 1
Summer
Negotiation
Agree
rates &
capacity
with hotels
and flights
Administration
Set prices,
design
brochures,
set up
CRS
Marketing
Brochure
launch,
advertising,
agency
support
Yr 2
Winter/spring
Operation
Review
sales,
tactical
pricing
Yr 3
Spring/summer
Autumn
Tours
start,
Monitor
CSQs
Winter/spring Summer
Does the package holiday
have to be a low-profit margin business?