© Tour operators reading Market report 41 Read the text on the following page and answer these questions. ‘1 What would be the best title? a) Forecasting the future b) Trends in the travel industry © Health and safety concerns ¢) Profitability and risk (2 What does ‘return on turnover’ mean? a) the profit left afterall expenditure ») profit made from total sales ©) the number of passenger flights d) customers purchasing a holiday over £400 3 According to the passage, tour operators a) usually make a profit of over 10 percent. ) often make very little profit. ©) always buy currency in advance. ¢) limit their surcharges to 2 percent. 4 What does ‘buying forward’ mean in context? a) purchasing foreign exchange at a pre-agreed rate b) charging customers more for their holiday ©) making customers pay in foreign currency ) keeping costs as low as possible 5 Which threats are NOT mentioned? @) changes in exchange rates b) natural catastrophes ©) social unrest ) unexpected cancellations 6 What is the purpose of this passage? a) to persuade b)to warn ¢) to inform d) to advise“The average profit made on package holidays is extremely low. Many non-travel companies supplying consumer services achieve profit on sales turnover of 10-12 per cent. The Civil Aviation Authority (CAA) records that the average tour operator's return on turnover in recent years remains around just 2-3 percent and amounts to just some £8 profit on a £400 holiday, The margins are rot only low, tour operators also have to manage considerable risks not faced by other higher margin industries. For example, holiday prices are set aver a year before @ holiday takes place and a large proportion of costs can fluctuate - especially exchange rates end aviation fuel. Although tour operators aré able to protect themselves against currency fluctuations by "buying forware’ on the money markets, this is expensive, ‘Accurate forecasting is also necessary for another reason. Late surcharges to clients are not allowed — and surcharges under 2 percent of the package price cannot be charged st any time. Remembering the average 2 percent profit margin, adverse fluctuations outside the tour operators! contro! can be enough to make the programme lose money. Yel another tisk can arise from the unexpected loss of popularity of a country where the tour ‘operator has contracted heavily. This may be because of political or security concerns, natural disasters such as typhoons and voleances or as a result of economic factors such as new aviation or tourist taxes, Adapted from niew:f.cakiface vocabulary Tour operators 2 Complete the sentences with words from the box. merger competition tailor-made takeover brand e-commerce collapse margins 4 Under the resources and be combined into one new company. 2 Management described the move as a hOStHlE cesninnaenewninnm Bid and said ‘Crossair would lose its independence. 3 Kuoni and Thomson are two of Britain's biggest package holiday names 4 The growth of _-- Applications such as online booking is transforming the industry. 5 It's increasingly difficult to survive in the face of so much 6 The wa _ of the tour operator meant that many holidaymakers were unable to return home untif new arrangements had been made. 7 We're in the business of offering ... _.. holidays at package tour prices. oe well in excess 8 Last year we were able to maintain high pro of the industry average. .. agreement the three companies will share their