Package Holidays Classification PDF - STI Travel

TH1910 CLASSIFICATION OF PACKAGE HOLIDAYS Package holidays (package tours or tour packages) refer to the arranged combination of at least two (2) travel components, namely: transportation, accommodation, meal plans, sightseeing tours, tour coordinator, and tour gu...

TH1910 CLASSIFICATION OF PACKAGE HOLIDAYS Package holidays (package tours or tour packages) refer to the arranged combination of at least two (2) travel components, namely: transportation, accommodation, meal plans, sightseeing tours, tour coordinator, and tour guide services. Convenience is the primary principle that entails package holidays. The convenience for the prospective tourist encompasses a range of wants. These package holidays are perceived as being effective and less expensive (not literally discounted) than to buy flight tickets and hotel accommodation separately. These are also considered to be safer, more comfortable, and more secure than do-it-yourself (DIY) package tours (Holland & Leslie, 2017). Package holidays are also divided into two (2) types: regular tour packages and ad-hoc tour packages. Thus, these are classified into any of the following (Holland & Leslie, 2017): Static holidays or single-destination holidays take place in a single fixed location. A static holiday is also known as an all-inclusive holiday if all the meals, beverages, snacks, facilities, and services at a hotel or resort are all included in the price that clients paid upfront. The level of all-inclusiveness of a package holiday depends on the brand and target market of the company. An example would be El Nido Resorts in Lagen Islands, Palawan. Multicenter holiday is a combination of two (2) or more destinations into one (1) trip. This type of package holiday allows tourists to see more than one (1) place. An example would be Magellan’s Cross Tour in Cebu then off to Shangri-La’s Mactan Resort and Spa. Tour or guided vacation is a travel program that takes place in several destinations. It is divided into the following categories: o Escorted tour is a prearranged travel program escorted by a tour manager or a tour leader who provides tourists with a variety of services and information throughout the tour. It may also include additional tour guides with expertise on the localities or regions involved. An example would be Cordillera Escorted Tour in Banaue, Batad, and Sagada. o Guided tour hosted package offers tourists the opportunity to travel independently with guidance and assistance from a host based in the tourist destination/s. The host serves as a representative or a ground agent of the tour company, who provides meet and greet services and assists tour participants with the planning and organization of their activities, including transfers, tour guides, and ticketing arrangements. An example would be 7-day Palawan Tour: Puerto Princesa to El Nido with host from STI Travel and Tours. Independent tour is a package holiday designed for independent tourists who travel without being in a group. The travel components found in an independent tour are being selected depending on the profile and request of the tourists, which may also include other services such as sports, cultural events, and excursions in multiple destinations. An example would be Exploring Volcanoes: Mt. Pinatubo, Taal Volcano, and Camiguin. Tailor-made packages involve deciding all aspects of a package holiday to meet the clients’ needs. These are termed as tailor-made because these are designed to fit the requirements of the client which in turn may be offered more expensive than the other package holidays. An example would be Siquijor Island Getaway for Dela Cruz Family. 01 Handout 1 *Property of STI  [email protected] Page 1 of 4  TH1910 Other Types of Tour Packages The following are the other types of tour packages that are commonly applicable here in the Philippines (Traveldepot, 2019): According to land arrangement: o Hotel Accommodation Only is a per-room-night basis hotel accommodation. This arrangement usually includes breakfast. o Hotel Accommodation with Add-ons is a hotel booking with one (1) or two (2) add-ons such as transfers from airport to hotel and vice versa. o Land Package (hotel with breakfast, transfers, and tours) is a full set land arrangement package. This normally includes city tours. Clients who want this would like their agency to take care of their sightseeing tours. o Customized packages are available for clients who have specific requests in their itinerary. According to the number of destinations and tours: o Free and Easy (F&E) tour package includes a single destination and usually comes with non- compulsory day tours. This arrangement is normally on a Seat-in-coach (SIC) basis, not private arrangements. Private arrangements can be done with additional surcharges. o Compulsory tours are budget tour packages arranged by tour operators that offer compulsory city tours. Clients may be penalized if they opt not to join once they availed it. This is also on an SIC basis. o Combo tours are a combination of two (2) or more destinations. Day tours may or may not be compulsory. o Meetings, Incentives, Conferences, and Exhibitions (MICE) tour packages refer to a specialized niche of group tourism dedicated to planning, booking, and facilitating conferences, seminars, and other events. According to the duration of stay: o 3 DAYS 2 NIGHTS (3D2N) refers to a tour package that is for three (3) days and two (2) nights. o 4 DAYS 3 NIGHTS (4D3N) refers to a tour package that is for four (4) days and three (3) nights. o 5 DAYS 4 NIGHTS (5D4N) refers to a tour package that is for five (5) days and four (4) nights. According to booking: o Book and buy cannot be reserved and must be finalized to be able to reserve the booking. o Reservation can be reserved with a deadline to finalize, auto-cancel and auto-finalize. According to meals inclusive: o Full Board Meal Package is a tour package inclusive of breakfast, lunch, and dinner. o Half Board Meal Package is a tour package inclusive of breakfast and lunch. o Breakfast Only Package is a tour package inclusive of breakfast only. 01 Handout 1 *Property of STI  [email protected] Page 2 of 4  TH1910 THE OPERATING ENVIRONMENT Tour operators must work within their environment and respond appropriately to changes in that particular environment. The activities are subject to and influenced by the current issues and events in the country wherein they are based, as well as the destinations of the package holidays they develop and create. They seek to be aligned with the demand of their market coming from the country where they are based and the market from other countries (Holland & Leslie, 2017). Chain of Distribution Package holidays primarily consist of basic travel components. The traditional chain of distribution shows that package holidays and other travel products are distributed through a number of intermediaries, who are considered as wholesalers or retailers. The perfect example of a wholesaler is a tour operator, while a retailer is a travel agency. Aside from being wholesalers, tour operators are also considered as follows (Holland & Leslie, 2017): Brokers are tour operators that run within the airline industry that may also offer accommodation and other travel services. They purchase in bulk and sell on to other tour operators or travel agencies. Since they are buying large numbers of airline seats or hotel rooms, they can acquire these at a lower price to make profit while allowing travel agencies and other tour operators to add their own price mark-up. Consolidators are brokers working within the airline industry who purchase tickets directly from airlines, enabling them to resell to travel agents or consumers at discounted rates. Accommodation sector Principals Attractions Principals Transport Ancillary services Level 1 Tour operators Wholesalers Brokers Wholesalers Consolidators Travel agents Direct Retailers Retailers Online travel agents Call centers Business Level 2 Consumers Leisure Visiting friends and relatives Figure 1. Chain of distribution Source: Tour Operators and Operations: Development, Management and Responsibility, 2017, p. 51 There are two (2) levels of the chain of distribution, as illustrated in Figure 1. Level 1 distribution is also known as direct distribution. It is considered to be the simplest form of distribution because this is where tour operators (wholesalers) sell their package holidays and other travel products directly to the consumers. Here, there is no need for the assistance of coming from an intermediary (retailers). Therefore, there is no need for 01 Handout 1 *Property of STI  [email protected] Page 3 of 4  TH1910 tour operators to give commissions to any retailer, which means greater profit for tour operators. Level 2 distribution, on the other hand, is where intermediaries (retailer) come into play, selling and promoting the package holidays and other travel products of tour operators. In turn, commissions are given to those intermediaries for every product or service sold. The Need for Integration Horizontal integration occurs when companies (tour operators or travel agencies) buy or merge with other companies at the same level in the chain of distribution. The most usual form of this integration is between companies offering similar products. An example would be a tour operator purchasing another tour operator or a tour operator merging with a travel agency. One of the benefits of this type of integration for tour operators is that by increasing their demand from suppliers, they gain further economies of scale (a proportionate saving in costs gained by an increased level of production) through bulk purchasing as well as integrated marketing and awareness campaigns. Vertical integration occurs when a company develops its own operations or takes over or merges with another component from a different level within the chain of distribution. An example would be a travel agency promoting package holidays purchased from a tour operator, or may have purchased the tour operator instead. Another would be a tour operator purchasing a charter airline or a hotel. This type of integration provides its user a competitive advantage by ensuring that it has control over the supply and standardization of service quality through the alignment of service values and competencies. It can also enable global or regional expansion. For instance, a miniple travel agency may position itself in a niche market by partnering with a hotel with spa. Diagonal integration occurs when a travel business (tour operator or travel agency) tries to enter another service that may assist its package holidays and other travel products. An example would be a tour operator offering its consumers or clients to purchase separately travel insurance and vehicle insurance to support their chosen package holiday. The types of integration mentioned are what tour operators and travel agencies integrate to survive in the travel industry and sustain themselves as a form a travel business. These integrations have their respective pros and cons. It is up to the users how they would deal with the different circumstances that may come along the way while incorporating any of those integrations. References: Claravall, B. G. (2013). Travel and tour operations in the Philippines. Sampaloc, Manila: Accumiro I.T. Solutions. Holland, J. & Leslie, D. (2017). Tour operators and operations: development, management and responsibility. Boston, MA: CABI. Robinson, P., et al. (2016). Operations management in the travel industry (2nd ed.). Boston, MA: CABI. Traveldepot. (2019). In-depth training course on travel agency operations. Author. 01 Handout 1 *Property of STI  [email protected] Page 4 of 4