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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. Negotiating bulk rates Yield Management High Utilisation

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Tour Operations Management

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  1. Tour Operations Management The Economics of Tour Operating The Planning Cycle

  2. Pricing an Inclusive holidaySee Yale (1995) The Business of Tour Operating • What needs to be included in the costing?

  3. The Economics of Tour Operating • Negotiating bulk rates • Yield Management • High Utilisation • Contingencies • exchange rate and fuel price fluctuations • Cash-flow management • Secondary spend

  4. The virtuous circle of tour operating Thomson Holidays in Morgan 1996

  5. Negotiating issues • How are the rooms contracted • dTime Block, Sale or return, free-sale? • Deposits or pre-payment • Release dates • Regularity - closed-out dates? • Exclusivity? • Facilities

  6. 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?

  7. 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?

  8. The vicious circle of tour operating Morgan in ETUP 2001

  9. 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

  10. Secondary sources of revenue • Add-on products • commission • merchandise • cancellation charges • foreign exchange dealings • advertising

  11. The Tour Planning Processbased on Holloway (1994) , Laws (1997) Research Select Resort Hotels Negotiation Agree rates & capacity with hotels and flights Administration Marketing Set prices, design brochures, set up CRS Operation Brochure launch, advertising, agency support Review sales, tactical pricing Tours start, Monitor CSQs Yr 2 Yr 1 Yr 3 Spring/summer Summer Winter/spring Autumn Winter/spring Summer

  12. Does the package holiday have to be a low-profit margin business?

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