Tour Operator Types PDF

TH1804 Definition of Tour Operator A tour operator controls, books, devises the whole trip, and typically combines tour and travel components to create a package holiday. A package holiday...

TH1804 Definition of Tour Operator A tour operator controls, books, devises the whole trip, and typically combines tour and travel components to create a package holiday. A package holiday refers to the arranged combination of at least two (2) of the following travel components: transport, accommodation, and other tourist services that account for a significant proportion of the package. A good example of a tour operator's product is a flight on a charter airline, plus a transfer from the airport to a hotel and the services of a local representative, all for one (1) price. It also organizes conducted tours to the various tourist spots and manages the travel and stay of tourists (Sharma, 2018). Types of Tour Operators There are different types of tour operators categorized based on their nature of business. However, tour operators are not limited to just one (1) type. In some cases, it can be a mix of two (2) or three (3) types in one (1) holiday package. These are broken down as follows: Local Tour Operator (LTO). This type of operator caters to both local and foreign travelers visiting the destination where the tour operator is based. Its clientele is generally off the street and over-the- counter sales and, occasionally, other tour operators in the country. It operates regular sightseeing tours or tour packages to popular destination in the locality. An LTO is primarily a retailer since it directly deals with clients and occasionally acts as a wholesaler when servicing requirements of another tour operator. A good example is ABC Tours & Co. Manila facilitating an Intramuros Tour for Malay expats. Domestic Tour Operator (DTO). This type of tour operator usually provides local associations, schools, companies and corporations and, occasionally, individual travelers their summer outings, out-of-town meetings, and incentive trips to national destinations. The packages it prepares are usually on an ad- hoc (formed/arranged) basis, as and when contracted, are tailor-made to the needs of the client. A good example is ABC Tours & Co. Manila facilitating National Museum of Natural History Tour for the students of STI. Inbound Tour Operator (ITO). This type of tour operator is locally based and works to promote the destination as a whole to non-residents traveling to another country. It makes local arrangements for airport pickup and drop-off, and for activities, hires local guides, attends to all the details of the stay, and helps in times of emergency. A good example is Mr. Park, a factory worker in Korea, who asked ABC Tours & Co. Manila to facilitate a Davao City Tour for him and his family. Outbound Tour Operator (OTO). It is a type of tour operator that designs and assembles tour packages for the residents of a country where the tour operator company is based—either foreign or local, bound to destinations overseas. The popularity of a destination overseas or the specification requirements of the traveler, either groups or individuals, determine the type of package. A good example is ABC Tours & Co. Manila sending Filipino teachers to Cambodia for an Angkor Wat Tour. 03 Handout 1 *Property of STI Page 1 of 3  TH1804 Role and Importance of a Tour Operator The role and importance of a tour operator is to essentially sell accommodation, transport, activities, and transfers in a combined all-inclusive package. These can be broken down as follows: Conceptualizes plans and develops tour packages – This is done to meet the needs of a specific client to address the perceived needs of a target market (regular market). There are two (2) types of tour packages:  Ad-hoc Tour Package is where a tour operator plans and develops a tour package based on a set of specific travel components provided by a specific request. These requests include the number of pax (the number of participants), the duration of the package, the preferred destinations, the category of hotel desired, among others.  Regular Tour Package is where a tour operator puts together a tour package without considering the specific and special interest or requirements of a certain traveler or group. Negotiates with suppliers of travel services – This means having access to negotiated rates (or contracted rates) from travel suppliers who are more competitive than retail prices. These can be negotiated based on the tour operator’s production track record, the market potential of the package being developed, or the influence of the negotiator. This also means that tour operators have special terms and conditions with the suppliers, such as not having to pay the deposit payment to receive confirmation of reservations, having seats or beds allocation, and having reasonable cut-off dates. Assembles and integrates the various travel components into a single tour package – It means that a tour operator acts as an integrator. It contracts the transportation services, such as airlines, bus/car operators, shipping or cruise lines, the hotels for lodging and meals, the restaurants and nightclubs for entertainment, and tour guides. It also contracts the most suitable or competitive travel components of transportation, accommodations, and other services, and combines these into a single tour package that is more competitive than purchasing the services individually. Provides the most convenient option – This refers to the tour operators' capability to provide the most suitable option for the tourists to stay in, visit, or leave the city because most of them own a high volume of travel services across carriers, services, and accommodation. Tour Operator Revenues A tour operator assembles various travel components into a tour package. It has the following sources of revenue: Variable mark-up based on the contracted rate from the suppliers – The contracted rate is negotiated based on the tour operator’s production track record, its market potential, or influence. Seeking and negotiating for favorable terms, conditions, and concessions – Concession means a thing that is granted, especially in response to demands. This means that a tour operator can gain an advantage which may translate to additional revenues or favorable purchase conditions over its competitors. For example, a tour operator may be required to pay a one-night deposit at a lodging establishment before obtaining a confirmation while another tour operator may be exempted from this requirement. A tour operator may have a 60-day credit line, while another may have a 90-day 03 Handout 1 *Property of STI Page 2 of 3  TH1804 credit facility with the supplier. Tour operators may also be given complimentary services from suppliers, which they can include as part of their tour packages for a fee. Sale of optional tours, excursions, and extension stays – Excursion means a short journey or trip; that during the operation of the tour package, additional revenues may be generated by the sale of optional tours or services. This means that the sale of a service which is excluded from the price of the original tour package purchased. At the end of the tour, clients may decide to extend their stay at the end-point (final stage of a period or process) of the tour package, thus generating extra sales for the tour operator. Shopping commission on sales generated – Souvenir shops may grant a tour operator with commissions depending on the number of generated sales. However, it is the tour operator’s responsibility to ensure that those souvenir shops that grant commissions on sales generated will maintain reasonable retail prices that are at par with the other retailers. Organizational Structure of a Tour Operator The ideal organizational setup of the tours department must be developed along the concept that tour operations involve both office activities/operations and field operations—one should complement the other in a manner that the areas of responsibility are clearly defined. Figure 1. Tour Operator Source: Travel and Tour Operations in the Philippines 3rd Edition, 2013. p. 229 References: Claravall, B. G. (2013). Travel and tour operations in the Philippines. Sampaloc, Manila: Accumiro I.T. Solutions. Sharma, S. (2018). Tour operation management in tourism. New Delhi, India: Random Publications. Sugano, D. (2015). Tour operators under state seller of travel and related statutes. Honolulu, Hawaii: Legislative Reference Bureau. Swain, D. S. (2014, February 26). Travel and tour operations management. Retrieved from Pondicherry University: http://www.pondiuni.edu.in/sites/default/files/travel-agency-op-mgt-260214.pdf on 05 March 2018 Tuazon - Disimulacion, M. A. (2016). Principles of tourism 2. Mandaluyong: Books Atbp. Publishing Corp. 03 Handout 1 *Property of STI Page 3 of 3