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Tour Operators and Travel Agents

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					                               TOUR OPERATION
                               TOUR OPERATION
                                             Tour operators

                                                     Defining the tour operator is far from easy

                                             process because their role, activities and form

                                             have changed dramatically from the early days

                                             when Thomas Cook first organised a package trip

                                             by rail in the 1840s.

       Tour operators are the organisers and providers of package holidays. They make

contracts with hoteliers, airlines and ground transport companies then print brochures

advertising the holidays that they have assembled. In simple terms a tour operator will

organise, package together different elements of the tourism experience and offer them for

sale to the public either through the medium of brochure, leaflet or advertisement, or using

ICT (information communication technology). If a tour operator is to offer a package holiday,

also known as an inclusive tour, it will normally have to include at least two elements that

are offered for sale at the inclusive sale price, and will involve a stay of more than 24 hours in

overnight accommodation. These elements normally include transport, accommodation and

other tourist services.

       Elements of an inclusive tour (a package)

       Basic elements:

              Aircraft seat

              Food and accommodation at the destination

              Return transfer from airport to accommodation

              Services of a tour operator representative

              Insurance

       Optional elements:

              Car hire

              Excursions




                                                                                                1
    Vocabulary box
    provider = someone who provides something
    an Internet service provider
    The bank is now a major provider of financial services to industry.
    assemble = to make something by joining separate parts
    furniture that is easy to assemble
    leaflet = a piece of paper which gives you information or advertises something
    Demonstrators handed out leaflets to passers-by.
    A leaflet about the new bus services came through the door today.


Why choose a package holiday?

         The major advantage of choosing a package holiday is probably the saving in cost.

These holidays are cheaper than those bought independently. Namely, the independent

travellers cannot get the prices that are as good as tour operators’ because they don’t buy in

bulk and they don’t buy in advance.

         Another important advantage of the package holiday is that it is much easier to

anticipate the total cost of your holiday. The price of a package holiday is all-inclusive which

means that accommodation, transport, transfers and a lot of excursions are included in the

price.

         Finally, it has to be emphasised that package holidays are organised by professionals

who have been to the destination and checked that the

facilities and services meet their

standards. The trained staff,

representatives of the company are

also on site in case the clients might

need any assistance. These

employees are usually called resort

representatives.




                                                                                                 2
Resort representatives

Resort representative is a representative oft he tour operator. It is his/her job to ensure that the operator's customers have a good
holiday.
This is what the job of a resort representative involves:

   accompanying, authorities, enquiries, guests, on, optional, paid, parties, supervising

      greeting incoming _________
      hosting welcome __________
      handling general _________
      organising and _____________ social activities at the hotel
      acting as a mediator with hotel staff, police, and other ____________
      advising guests ______ shopping
      organising ____________ excursions
      ensuring all bills and taxes are _______
      _______________ returning guests to the airport for return flight to their countries




                                                                                                                                        3
                  Transport                      Tourist               Accommodation
SUPPLY            companies                      services              providers



                              Packaging of elements into a
                               product by a tour operator



                 D I S T R I B U T I O N                 C H A N N E L S



                     Corporate direct           Virtual agency
                     selling                                               Travel agent
                                                through oline travel
Intermediaries
                      internet                 company/teletext
                      direct selling




 DEMAND                                           CUSTOMER




                                                                                          4
   The types of packages are often segmented according to:

                                            mode of travel, such as ferry or coach holiday.
                                             It may also be based on twin-transport

                                             packages such as fly-drive;

                                            mode of accommodation, where hotel chains
                                             become tour operators by packaging their

                                             surplus capacity to offer weekend or short

                                             breaks in business-oriented hotels, selling rail

                                             or air transport and visits to attractions as an

                                             all-inclusive package;

                                            whether they are international or domestic
                                             packages;

                                            length of holiday (whether a short break, i.e.
                                             fewer than four nights away, or a long

                                             holiday, i.e. more than four nights, is offered);

                                            distance, where the market is divided into
                                             short-haul and long-haul;

                                            destination type (e.g. city breaks, beach
                                             holidays, adventure holidays).

Vocabulary box
intermediary = a negotiator who acts as a link between parties
surplus = (an amount which is) more than is needed
The world is now producing large food surpluses.
We are unlikely to produce any surplus this year.
short-haul = travelling a short distance
short-haul flights
long-haul = travelling a long distance
a long-haul flight




                                                                                                5
Why do tour operators exist, and why do people use them?

Exercise 1: Match the words on the left to the definitions on the right.

1 a high level of knowledge or skill
                                                                           a a host of

2 a large number of something
                                                                           b principal

3 a reduction in the usual price
                                                                           c ancillary

4 a result or effect of an action, situation, etc.
                                                                           d in bulk

5 any person or thing that is involved in producing goods or providing
                                                                           e overheads
   services
6 in large amounts
                                                                           f assemble

7 person or company, such as a hotel or airline, which is represented by
                                                                           g third-party
   an agent
8 providing support or help; additional; extra
                                                                           h discount

9 someone who may be indirectly involved but is not a principal party
                                                                           i input
   to an arrangement, contract, deal, transaction, ...
10 the profit that can be made in a business after the costs have been
                                                                           j gain
   subtracted
11 the regular and necessary costs, such as rent and heating that are
                                                                           k profit margin
   involved in operating a business
12 to achieve or produce; to fulfil something promised
                                                                           l deliver

13 to bring parts together in a single group
                                                                           m draw up

14 to obtain something that is useful, that gives you an advantage, or
                                                                           n outcome
   that is in some way positive, especially over a period of time
15 to prepare something, usually something official, in writing
                                                                           o expertise




                                                                                           6
Exercise 2: Now read the following text and complete it with the missing words.

    ancillary       assembling         at    delivered        discounts        drawn up

expertise       gain          host of       in bulk     input      outcome         overheads

                    principals        profit margin          third-party

Why do tour operators exist and why do people use them?

       Tour operators have the ability to purchase services and elements of the tourism

experience from other (1)_____________ or suppliers (2)_____________ significant

(3)_____________ by buying (4)_____________. They fulfil a major role as they allow the

different tourism sectors to sell their capacity in advance - often a long time in advance as

contracts are (5)_____________ a year prior to tourists using accommodation or services. The

bulk purchase agreements in large resorts mean that, in the summer season, the complete

capacity of different types of accommodation may be block booked, leaving the business free

to develop its own (6)_____________ in running or managing its business. Similarly, the tour

operator connects together with all the (7)_____________ services to negotiate contracts and

deals that will allow a holiday to be sold and (8)_____________ on the ground.

       In terms of transport, the tour operator will bulk purchase airline seats, airport

transfer services from coach operators, and taxis in the destination area, as well as a whole

(9)_____________ local entertainment and visitor attraction opportunities to be sold to clients

at the booking stage or in the destination. The result is that tour operators traditionally

provided a guaranteed level of sales which allowed principals to fix their costs in advance

and allow the operators to (10)_____________ heavily discounted rates on their purchases.

The (11)_____________ is a business opportunity for the tour operator, which creates a

package, product or experience through (12)_____________ the elements together,

advertising and selling them, and using (13)_____________ agents to deliver each element on

the ground. The tour operator produce the price by calculating all the (14)_____________

costs and their (15)_____________ and adding a (16)_____________.




                                                                                                7
Tour operators’ risks

       Tour operators face a vast range of risks including:

     holiday prices are set over one year before a holiday takes place and a significant

      proportion of costs can be subject to considerable fluctuation - especially exchange

      rates and aviation fuel

     estimating the likely market – may face an unexpected loss of popularity of a country

      where the tour operator has contracted heavily (because of political or security

      concerns, or natural disasters such as typhoons or volcanoes, or as a result of economic

      factors)

     competing with long-established tour operators in a destination with a recognisable

      brand

     investing heavily in human resources and infrastructure to set up a destination

       Given these major risks, it is important for tour operators to recognise how important

it is to set up and operate their business in a competitive and sustainable manner so that the

investment pays a dividend over and above the costs of operation.

       Tour operating business performance is determined by the skill of the company in

buying its product components (e.g. aircraft seats, accommodation and transfers) at a

competitive price and reselling at a price that is lower than that for which a consumer could

assemble the same product.

       Tour operators may keep their prices low by:

                negotiating low prices from supplier

                reducing profit margins

                cutting their cost structures

    Vocabulary box
    fluctuate = to change or vary, especially continuously and between one level or thing
    and another
    Vegetable prices fluctuate according to the season.
    fluctuation
    fluctuations in share prices/the exchange rate/temperature



                                                                                                8
    exchange rate = price of currency if exchanged: the rate at which a unit of the
    currency of one country can be exchanged for a unit of the currency of another
    country
    estimate = to guess the cost, size, value, etc. of something
    [+ (that)] They estimate (that) the journey will take at least two weeks.
    [+ question word] It was difficult to estimate how many trees had been destroyed.
    long-established = having existed for a long time in a position of general respect or
    widespread success
    set up = to start/establish a business, or give somebody everything needed to start a
    business
    His family set him up in business.
    dividend = a bonus; something extra (especially a share of a surplus)
    determine = to influence or form something
    performance = (1) the manner in which something or somebody functions, operates,
    or behaves; (2) the way in which somebody does a job, judged by its effectiveness



A look at operators’ annual schedules for planning, marketing and delivering holidays

       Planning, negotiating, contracting, marketing and successfully administering a

package holiday is a complex management task and takes place over a long period of time.

For example prices are set and printed over a year in advance - despite the possible changes

in exchange rates, inflation, fuel prices, etc.

       Table 1 shows the main elements of a tour operator diary while preparing a package

holiday.




                                                                                               9
Table 1: Tour operator's diary
                             January                  April                 June                      September              December
Year 1                                                                Research                    Research
Research and planning                                                         Package holiday          Competing choice of
                                                                               prospects                 destinations
                                                                              Destinations selected     analysed
                                                                               for comparison
Year 2                                 Select destination           Brochure production              Printing of brochure proofs
Negotiation                   Hotel capacity       Negotiate with          Contracts
                               determined            airlines and             concluded/signed
                              Departure dates       accommodation
                               identified            providers for charter
                              Brochure production   seats, transfers and
                               decisions made        hotel rooms
Administration                                                                   Determine exchange         Final tour prices
                                                                                  rates                       added to brochure
                                                                                 Estimate selling prices    Brochure printed
                                                                                 Proofs of brochures
                                                                                  from printers
                                                                                 Recruit booking staff
Marketing                                                                                                    Brochure distributed
                                                                                                              to agents and
                                                                                                              launched
                                                                                                             Publicise to press and
                                                                                                              media
Year 3                       January                 April                      May                         September                  December
                              Peak advertising
                                     Recruitment and training
                                               of holiday reps
                                                           First tour departs




                                                                                                                                                  10
                                                        Sunny Land Tours

                                          Established in 1964, Sunny Land Tours has been a
                                   pioneer in tourism to the Middle East, the Mediterranean,
                                   Russia, Latin America, Africa and the Orient. Sunny Land
                                   Tours has earned an outstanding reputation for quality,
                                   consistency, reliability and, best of all, client satisfaction.

                                           In its ‘Magical Croatia – It will change you forever’,
                                   Sunny Land Tours has a variety of programs for those
                                   who love exploring monuments, wandering on solitary
                                   beaches, or jostling amid the liveliness of a Mediterranean
                                   town. Sunny Land Tours’ Croatia will delight you, as it is
                                   a land full of discoveries.



Answer the following questions regarding the vocabulary in the above description of a
tour operator:
Which term is used to say that:
      the company/tour operator was set up/started?
      this tour operator was the first to organise tours in certain parts of the world such as
       the Middle East?
      they have gained/established a certain reputation?
      their reputation is excellent?
      one of their main characteristics is the ability to maintain a particular standard or
       repeat a particular task with minimal variation?
      they can be trusted to do what is expected or has been promised?




                                                                                               11
Exercise 3: Complete the following tour operator’s diary by filling the gaps with the
offered words
       For someone taking a holiday in August 2010 the principal tour operator's events are

as follows. Complete them with the suitable words.

received, contracting, confirm, launch, staff, resorts, issue,

                                brochures, invoice

    late 2008 - planning which countries and _____________ to use, and broadly how many

     holidays to offer

    Jan/Feb 2009 - _____________with hoteliers and airlines

    March/April 2009 - preparing _____________ - prices, photographs, descriptions etc

    May 2009 - brochure _____________

    February 2010 - bookings _____________ and forecasts for programmes reviewed; early

     adjustments made if necessary

    March/April 2010 - employ overseas _____________, update training, finalise

     arrangements with hoteliers, coach operators etc.

    May 2010 - _____________ tickets and final _____________

    July 2010 - _____________ names of customers to airlines, hotels, overseas staff

    August 2010 - welcome holidaymakers




                                                                                          12
Exercise 4: Complete the following items from a tour operator’s diary with the missing
verbs:
  analysed, concluded/signed, departs, determined, distributed,

        estimate, identified, made, printed, recruit, selected

    Destinations _____________ for comparison

    Competing choice of destinations _____________

    Hotel capacity _____________

    Departure dates _____________

    Brochure production decisions _____________

    Contracts _____________

    _____________ selling prices

    _____________ booking staff

    Brochure _____________

    Brochure _____________ to agents and launched

    First tour _____________




                                                                                         13
Exercise 5: Which of the following words are good collocations of the nouns contract and
cost(s)?
   negotiate, cut, draw up, subtract, fix … in advance, sign,

                        input, make, saving in, total




                                                                                       14
                                        NEGOTIATIONS

       When they are putting together a tour, tour operators have to hold detailed

negotiations and sign contracts with a number of principals, such as hotels, carriers

(airlines), and coach companies. During these discussions the tour operator must try to

negotiate the best deal.

The key points in negotiations can be summarised as follows:

      Ask questions to gather information and facts about a client's needs and expectations.
      Anticipate possible directions in a negotiation. Have alternatives ready.
      Carefully read the other party's signals.
      Check your willingness to concede or to compromise.
      Close with terms that are acceptable to both sides.


       Vocabulary box
       gather = to collect or obtain several things, often from different places or
       people
       I went to several libraries to gather information about the scheme.
       anticipate = to guess that something will happen, and be ready to deal with it
       It's always best to anticipate a problem before it arises.
       alternative = something that you choose instead of something else
       party = a person or group involved in the negotiations
       concede = to allow someone to have something, even though you do not want
       to
       Britain conceded (= allowed) independence to India in 1947.
       concession = something that you allow or do, or allow sb to have, in order to
       end an argument or to make a situation less difficult
       The firm will be forced to make concessions if it wants to avoid a strike.
       compromise = to solve a problem by accepting that you cannot have
       everything you want
       terms = the conditions of an agreement




                                                                                           15
The negotiation process can be described as including the following steps: starting up,
proposing the agenda, setting and clarifying positions, dealing with conflict, making
proposals, bargaining, closing and agreeing

The following is sample of language that may be heard/used at each of the seven steps
suggested above:


function                      language
starting up                   I wondered if I could start by mentioning/saying ...
                              We've got a busy agenda ahead of us, so why don't we start?
                              If you don't mind, let's get started.
proposing the agenda          As we see it, the main objective of our meeting is ...
                              We've drawn up an agenda.
                              There are/We've got four/five items on the agenda.
                              We'd like to go over ... first/then ... last.
setting and clarifying        ... would like to say a few words about ...
positions                     If we understand you correctly, you're interested in/you'd like
                              (to) ...
                              So what you're saying is that you...
                              In other words, you feel that...
dealing with conflict         We're afraid that ...
                              Perhaps we could ... instead of ...
                              Maybe we could consider ...
                              I'd have to disagree with you there.
                              I'm afraid that doesn't work for me.
                              I'm afraid I had something different in mind.
making proposals              We propose/suggest/advise ...
                              I think we should ...
                              Why don't we ...?
                              How about/What about ...?
bargaining                    If you are unable/can't ... we'll have to look/go elsewhere.
                              We're prepared to offer you ...
                              We could consider ...
                              ... as long as ...
                              ... on one condition ...
                              ... provided that ...
                              ... unless you ...
closing and agreeing          We've agreed to the following ...
                              Is there anything you'd like to add?
                              Would you be willing to sign a contract right now?
                              I think we both agree to these terms.




                                                                                             16
                               NEGOTIATING WITH HOTELS

    Vocabulary box
    rack rate = the price a hotel charges for a room before any discount has been taken
    into account; the published rate for a room, sometimes set artificially high and used
    to calculate a variety of discounts
    mediocre = not very good
    The film's plot is predictable and the acting is mediocre.
    Parents don't want their children going to mediocre schools.
    concession = a reduction in the usual price of something, which is available to
    students or young, old or unemployed people:
    You can get travel concessions if you are under 26.
    assertive = describes someone who behaves confidently and is not frightened to say
    what they want or believe:
    If you really want the promotion, you'll have to be more assertive.
    mid-priced chains
    budget properties
    quote = to give a price, especially one that will be charged for doing a piece of work:
    The architect has quoted £3000 to build an extension.
    bargain = to negotiate the terms of an agreement with somebody
    complimentary = given free as a courtesy or favour
    complimentary seats


       Negotiating with hoteliers begins over a year before customers arrive. There are two

types of contracts used. With the so-called allocation or sale and return contract, tour

operators only pay the hotelier for the beds they use. For example, they may contract 100

beds weekly but use and pay for 80 beds one week, 70 beds another and 100 the next week.

An alternative is the fixed (or ‚guaranteed‛) contract, where the tour operator pays for a

fixed number of beds throughout the season, irrespective of how many are sold. With a fixed

contract the risk to the tour operator is obviously increased.




                                                                                              17
Tips for negotiating with hotels

  1   Do plenty of advance research

        Find out before meeting at your preferred hotel what the rack rate is, if there is an

«official» tour or group rate (a discounted rate offered to tours), when the «slow slots» occur,

either weekly or yearly, etc. You might also try to find out if the property has certain

weaknesses, such as a mediocre location, considerable competition or, in the case of newer

hotels, unfamiliarity.

  2   Begin negotiations as far in advance as possible

        Most hotels have a «group ceiling», a maximum number of rooms that can be

allocated to groups. To get best rates and availability, you may have to negotiate as much as

a year in advance. Hotels usually will grant bigger concessions six month or more out, since

it reduces unpredictability. It also helps the tour operator, since rooms at the preferred hotel

may not be available later.

  3   Be assertive, not aggressive

        An assertive person makes his or her needs known clearly, emphatically, but

diplomatically; the negotiation becomes a cooperative activity where both sides are working

toward a common goal. An aggressive person views a negotiation as a battle and the

opponent as an enemy to be defeated. Such an approach creates ill-will and rarely brings

positive results.

  4   Reveal your principal need, for a discounted room rate, first

        What kind of tour discount can you expect? Fifty percent off rack rate is common,

especially for mid-priced chains like Sheraton or Hilton. Top-rate luxury hotels, like those of

Ritz-Carlton, rarely give better than 10 to 20 percent, since they rarely cater for tour business.

Budget properties like Days Inn or Hampton Inn also rarely give better than 20 percent,

since their rates are also low in the first place.

        Try to have the hotel representative quote you a rate first, rather than ask you what

rate you are seeking. Sales manager will often quote you a rate that's 10 to 20 percent higher

than what their real final offer would be, just to see what will happen.



                                                                                                18
  5   Now play your other cards

       Now is the time to offer other things that will motivate the hotel to bargain further:

taking meals in the hotel, holding special catered functions (e.g., a welcome party),

guaranteeing a very large number of tours, or perhaps accepting less desirable rooms. The

sales manager will also favour requests for dates when the hotel is less full or seasonal

slumps.

  6   As negotiations draw to a close, ask for a few small concessions

       Here's when you should ask for a complimentary room for the tour leader and for

the driver, if there is one. If meals are included, these too should be provided free of charge

to the tour leader and the driver.

  7   Request a written confirmation of the agreed-upon conditions and prices

       Be sure that the letter, when received spells out exactly what was agreed upon. Also

check to see when the hotel expects to receive a rooming list. Any minor adjustments to the

rooming list can be phoned or faxed in by the tour company within a few days of arrival.




                                                                                                19
                           UNIT 2 ASSIGNMENTS – TOUR OPERATION

       ROLE PLAY

       You are going to role-play the negotiations between a tour operator and the

representative of a hotel chain. Your roles are described in the table below.

TOUR OPERATOR                                     HOTEL REPRESENTATIVE

Your objectives are:                              Your objectives are:

- find out the prices for this year (you           - set allocation – 60 rooms per night in high
  would like to get better prices than last          season
  year)                                            - promote new self-catering villa complex
- a larger allocation of rooms – 50 per night      - limited credit period (account was
  in high season                                     settled very late last year)
- a range of types of accommodation (e.g.          - tell tour operator about new recreational
  self-catering, family rooms, half-board)           facilities
- shorter release dates (so you have more          - a more prominent display in the
  chance of selling your allocation at the           operator’s brochure
  last minute)                                     - introduce a sell-on clause (sell the unsold
- hotel to provide some better photographs           rooms for weeks before date)
- clearer idea of the hotel’s recreational and
  leisure facilities (there was some
  confusion last year)
- more complimentary rooms/meals


   1   Write a follow-up letter summarising and confirming the decisions you made.

You can start by saying that it was very nice to meet them (when?, where?), and that you
think the meeting was very useful. Then follow the agenda of your meeting/negotiations to
summarise the decisions. Cover each topic in a separate paragraph.

   2    Visit: http://www.etoa.org Find out about this organisation. Summarise your
        findings.
Go to MEMBERSHIP DIRECTORY. Select TOUR OPERATORS 5,000 -1000,000 pax per year
OR over 100,000 pax per year OR under 5,000 pax per year. Then, choose a country and then
a tour operator. Choose two tour operators and compare them. Your tour operators can be
from the same or from two different countries. For each tour operator a brief summary will
be shown but there is also the link to their web site. You will need to visit it in order to get a
better idea about your chosen tour operator. What kind of tours do they specialise in? What
are their main markets? Did you choose two similar or two very different tour operators? …




                                                                                                20

				
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