Introduction to Tour Operators
Tour operators are businesses that combine travel and tourism components to create holiday packages that they sell to customers either directly or through travel agents. They're like the 'wholesalers' of the tourism industry, buying services in bulk and packaging them together to create holidays.
Key Definitions:
- Tour Operator: A company that creates and sells package holidays by combining various travel components such as flights, accommodation, transfers and excursions.
- Package Holiday: A pre-arranged combination of at least two travel services (transport, accommodation, activities) sold at an inclusive price.
- Vertical Integration: When a company owns different businesses at various levels of the distribution chain (e.g., a tour operator that also owns hotels and airlines).
Did You Know?
Thomas Cook organised the world's first package tour in 1841, taking a group of 570 people by train from Leicester to Loughborough for a temperance meeting. The trip cost just one shilling per person!
Types of Tour Operators
Tour operators come in different shapes and sizes, each with their own focus and target markets. Let's explore the main types:
🌎 Mass Market Tour Operators
These are large companies that sell holidays to popular destinations in high volumes. They focus on offering affordable packages to mainstream holiday destinations.
Key features:
- Sell large volumes of holidays
- Focus on popular "sun, sea and sand" destinations
- Benefit from economies of scale
- Often operate charter flights
Examples: TUI, Jet2Holidays, On the Beach
🎯 Specialist Tour Operators
These operators focus on specific types of holidays, activities, or destinations that appeal to particular market segments.
Key features:
- Focus on niche markets
- Offer specialised knowledge and expertise
- Often charge premium prices
- May cater to special interests or specific demographics
Examples: Exodus (adventure holidays), Saga (over-50s), Club Med (all-inclusive resorts)
🏡 Domestic Tour Operators
These operators create holiday packages for people travelling within their own country.
Key features:
- Focus on local attractions and destinations
- Often include coach travel or self-drive options
- May specialise in short breaks or staycations
- Knowledge of local culture and attractions
Examples: Shearings, National Holidays, Great Little Breaks
🛬 Incoming Tour Operators
Also known as inbound tour operators, these companies specialise in bringing international tourists into a country and arranging their accommodation and activities.
Key features:
- Deep knowledge of local destinations
- Often work with overseas tour operators
- Provide ground handling services
- May offer specialist guides and interpreters
Examples: JAC Travel, Kuoni Destination Management, Tour Partner Group
Products and Services Offered by Tour Operators
Tour operators create value by bundling together different travel components to create a seamless holiday experience. Here are the main products and services they offer:
✈ Transport
Tour operators arrange transportation to and from destinations, which may include:
- Flights (scheduled or charter)
- Coach travel
- Rail journeys
- Cruise ships
- Airport transfers
🏨 Accommodation
A range of places to stay, including:
- Hotels and resorts
- Apartments and villas
- Campsites and glamping
- Cruise ship cabins
- Unique accommodation (treehouses, ice hotels, etc.)
🎫 Excursions & Activities
Additional experiences to enhance the holiday:
- Guided tours
- Adventure activities
- Cultural experiences
- Theme park tickets
- Special events access
Additional Services
Tour operators also provide a range of supplementary services to enhance the customer experience:
- Resort Representatives: Staff who meet customers at their destination and provide assistance throughout their stay.
- Travel Insurance: Many tour operators offer insurance packages alongside their holidays.
- Visa Services: Help with obtaining necessary travel documents.
- Foreign Currency: Some operators offer currency exchange services.
- Car Hire: Options to rent vehicles at the destination.
How Tour Operators Create Holiday Packages
Creating a successful holiday package involves several key steps:
The Package Creation Process
- Market Research: Identifying popular destinations and customer preferences.
- Contracting: Negotiating with suppliers (hotels, airlines, etc.) to secure services at wholesale rates.
- Package Design: Combining components into attractive holiday packages.
- Pricing: Setting competitive prices that include a profit margin.
- Brochure Production/Online Listing: Creating marketing materials to promote the packages.
- Sales and Distribution: Selling directly or through travel agents.
- Operation: Delivering the holiday experience to customers.
- Evaluation: Gathering feedback to improve future offerings.
Case Study Focus: TUI Group
TUI is the world's largest travel and tourism company, operating in over 180 destinations worldwide. It's a perfect example of vertical integration in tourism, as it owns:
- Tour operations (package holidays)
- Nearly 400 hotels and resorts
- A fleet of over 150 aircraft
- 16 cruise ships
- Thousands of retail travel agencies
This integration allows TUI to control the entire holiday experience and achieve economies of scale, keeping prices competitive while maintaining quality control.
The Changing World of Tour Operations
The tour operator sector has undergone significant changes in recent years:
💻 Technology Impact
Technology has transformed how tour operators work:
- Online booking systems have replaced paper brochures
- Dynamic packaging allows customers to build their own holidays
- Social media is used for marketing and customer service
- Virtual reality previews of destinations
- Mobile apps provide on-the-go information for travellers
🌱 Sustainability Focus
Tour operators are increasingly focusing on sustainable practices:
- Reducing carbon footprints
- Supporting local communities
- Protecting natural environments
- Offering eco-friendly accommodation options
- Creating responsible tourism policies
Key Challenges for Tour Operators
Tour operators face several challenges in today's market:
- Direct Booking: More travellers are booking components separately online.
- Global Events: Pandemics, natural disasters and political instability can disrupt operations.
- Economic Factors: Currency fluctuations and economic downturns affect holiday spending.
- Competition: The market is highly competitive with thin profit margins.
- Changing Consumer Preferences: Travellers increasingly seek authentic, personalised experiences.
Impact of COVID-19
The pandemic severely affected tour operators worldwide. Many had to:
- Process unprecedented numbers of cancellations and refunds
- Adapt to changing travel restrictions
- Implement new health and safety protocols
- Offer more flexible booking terms
- Develop domestic holiday options when international travel was restricted
This demonstrated the importance of adaptability and crisis management in the tour operations sector.
Summary
Tour operators play a vital role in the tourism industry by creating package holidays that combine transport, accommodation and activities. They come in various types, including mass market, specialist, domestic and incoming operators, each serving different market segments. By buying services in bulk and packaging them together, tour operators can offer convenient and often cost-effective holiday options for travellers.
The sector continues to evolve in response to technological advances, changing consumer preferences and global challenges. Understanding the different types of tour operators and how they function is essential for anyone studying travel and tourism.
