TOUR OPERATIONS

MANAGEMENT
Lecturer:Dr.S.Nyaruwata
INTRODUCTION
 Nature of tour operations
 Regulations affecting tour operators
 Vertical and horizontal integration
 Product development
 Strategic issues
 Tactical issues
NATURE OF TOUR OPERATIONS
 Purchasing in bulk and consolidating
 Innovation and creativity
 Highly competitive-thin margins
 Vulnerable to clients’ tastes- frequent
changes in holiday fashions
 Highly pressurized environment
 High risk and high rates of insolvency
REGULATIONS
 Regulations driven by the need to protect
customers from unscrupulous operators
 United Kingdom:
 Association of British Travel Agents(ABTA)
 Founded in 1950 to serve the needs of both
the travel agents and tour operators and the
travelling public
REGULATIONS (CONT’D)
 ABTA (cont’)
 Travel Agents’ Code of Practice
 Tour Operators’ Code of Practice
 ABTA Conciliation Scheme
 ABTA Arbitration Scheme
 All members pay a bonding fee to the
organization which is proportional to its
annual turnover(1975)
REGULATIONS(CONT’D)
 UK (cont’d)
 Tour operators who sell tour packages that
entail using charter airlines have to obtain an
Air Travel Organizer's License (ATOL) from
the British Civil Aviation Authority
REGULATIONS (CONT’D)
 The European Union(EU)
 1990 EU Directive on Package Travel
 All tour operators must be licenced,expected
great degree of honest in the brochure
descriptions, travel agents held more
accountable for what they sell
REGULATIONS (CONT’D)
 2015 EU Directive on Package Tours
 An update of the 1990 Directive-responding
to availability of tour packages on different
ICTs platforms.
 Became effective in 2018-more stringent
protection of the customer with regard to
 Cancellation of holidays
 Liability of the holiday seller
 Repatriation of travellers from destination in
case company closure etc
REGULATIONS(CONT’D)
 Southern Africa
 Southern African Tourism Insurance
Directive:
 A booklet that has been produced in
association with Southern African Tour
Operators Association(SATSA)which gives
guidance on the type of insurance that
operators should have to cover themselves
against third party claims
REGULATIONS(CONT’D)
 Customer protection enhanced
 Gradual increase in litigation from unhappy
client
 www.abta.com
 www.travelwatchdog.com
 www.cbi.eu/market-information/tourism
 THE EUROPEAN TRAVEL DIRECTIVE(google)
PRODUCT DEVELOPMENT:
SOURCE MARKETS
 Corporate strategy
 Research and planning-1-2 years before
product launch
 Destination selection and product type
 Negotiations with suppliers at home and at
destination
 Consolidating the holiday package
 Preparation of support services
PRODUCT
DEVELOPMENT(CONT’D)
BROCHURE DESIGN
6/9 months Decision on quantities

Distribution Channels
Travel Agents? Other:Which?

BROCHURE LAUNCH(Sept/Oct.for next SUMMER(May-Aug)

Marketing Campaign Programme Mon/Ev.

PRODUCT DEVELOPMENT-
DESTINATION
 Research-client feedback, site visits, staff
brainstorming sessions, one on one
discussions with overseas tour operators
 Development of draft itineraries and market
testing
 Negotiations with suppliers
 Brochure launch ahead of contracting period
of overseas operators
STRATEGIC ISSUES:
 Integration
 Tour operators endeavour to improve their
survival through a range of strategies
 Acquisition and mergers of companies in
different sectors of industry
 Integration can be vertical or horizontal
 It can also be backward of forward
STRATEGIC ISSUES
 Vertical Integration
 TUI has undertaken both forward and
backward vertical integration
 Airlines
 Accommodation
 Travel agents
 Ground handling
 Cruise ships
BENEFITS OF VERTICAL
INTEGRATION
 Need for quality control
 Offering of a seamless product
 Diversification
 Competitive edge
HORIZONTAL INTEGRATION
 Acquisition and mergers of companies in the
same business
 1988 Thomson Holidays in UK acquired
Horizon Holidays
 2000 TUI acquired Thomson Holidays
 2007 TUI merged with First Choice in UK
BENEFITS OF HORIZONTAL
INTEGRATION
 Market dominance
 Increasing negotiating power with suppliers
 Ability to offer competitive prices
 Improved marketing and promotional
strength
WILD HORIZONS :CASE STUDY
 Individually operated three companies which
came together to form one company.

 One of the most successful tour operating

companies in Zimbabwe.
STRATEGIC ISSUES: PRODUCT
DISTRIBUTION
 Direct sell: the age of Call Centres
 Use of own retail multiples
 Use of travel agents
 Use of the internet and other virtual
platforms
 Other strategic alliances: retail shops etc
STRATEGIC ISSUES(CONT’D)
 The external environment-destination life
cycle, political stability, epidemics etc
 Financial strength—sources of funding
 Product mix-implication for
positioning/image
STRATEGIC ISSUES(CONT’D
 Sustainable tourism and tour operations:
 2000 formation of the Tour Operators
Initiative for Sustainable Tourism
Development
 A network that brings together tour
operators who have recognized the
importance of integrating sustainability
principles in their business operations
 Partnership with UNEP,UNESCO and UNWTO.
 (www.toinitiative.org)
STRATEGIC ISSUES(CONT’D
 Sustainable tourism and tour
operations(cont’d)
 Key areas for integrating sustainability:
 Internal management e.g paperless office
 Product development-focus on products that
are environmentally friendly
 Supply chain management-encouraging
suppliers to be compliant to conservation
regulations and to introduce green policies in
their operations
STRATEGIC ISSUES(CONT’D
 Key areas for integrating
sustainability(cont’d)
 Customer relations-create customer
awareness of the need to practice
sustainable life styles during their holidays
 Destinations relations-assist destinations in
establishing and implementing sustainable
policies in tourism development
STRATEGIC ISSUES(CONT’D
 Key areas for integrating
sustainability(cont’d)
 Corporate policy-encourage tour operating
companies to adopt corporate social
responsible policies that include sustainability
 A wide range of company initiatives:
 EXODUS HOLIDAYS-UK
 VIRGIN HOLIDAYS-UK
 TUI-GERMANY
 KUONI-SWITZERLAND
TACTICAL ISSUES: DRIVE FOR
HIGH VOLUMES
 Back to back use of charter planes
 Maximizing load factors-charter consolidation
 Brochure relaunch and price cutting
 Special offers
 Intensive collaboration with retailers closer
to departure dates
 Subcontracting of services in receiving
countries