Tour Operators Business

Tour Operators Business

UK tour operations Market

In 2008, UK outbound tourism expenditure (excluding expenditure on travel fares to and from the UK) totalled £36.52bn, a 4.3% increase compared with 2007. Expenditure on domestic tourism (excluding day trips) stood at £21.11bn, which represented a 0.6% reduction on 2007. Combined, the total UK resident tourism market rose by 2.5% compared with the previous year. Moreover, in 2008, the turnover of travel agents and tour operators slightly increased. The global recession and its impact on travel and tourism mean that the industry is currently facing its most difficult trading climate for many years. Many of the leading tour operators have been forced to reduce their capacity or the number of holidays they offer customers(Keown 2001 pp.98-101). Consumers are also booking their holidays later, reducing the number of holidays taken and rejecting shorter breaks outside the main holiday season. This in turn may have lead to significantly reduced booking levels for tour operators outside the peak holiday periods. In the year ending 31st March 2009, there were over 40 failures of licensed tour operators in the UK, a considerable increase on previous years. The failure of these tour operators, and especially that of the XL Leisure Group, resulted in the number of Air Travel Organisers' Licensing (ATOL) protected passengers, who needed repatriating from abroad, rising significantly — the number of customers entitled to refunds also increased. As a result of the substantially higher costs from tour operator failures, the ATOL Protection Contribution (APC) rate has been increased to £2.50 per passenger from October 2009, up from £1 per passenger. Had this increase not been introduced, the Air Travel Trust Fund (ATTF) that underpins ATOL may have become bankrupt. 2009 is expected to be a difficult year for the UK travel and tourism market with both the outbound and domestic sectors continuing to be affected by the worldwide recession. The market in 2010 is again expected to remain difficult although with some slight improvement, and it may be 2011 until a more substantial recovery is witnessed. (Parnwell 2001 Pp.121-123).

Structure

A tour operator is defined to be a company which negotiates with hotels, transportation companies, and other suppliers and combines these vacation components into a package tour. This package tour is then marketed through the travel distribution system to the consumer. The tour operator acts as an intermediary between the suppliers and the travel agent, or the suppliers and the consumer. This section will begin by addressing the question of why the tour operator industry is needed. There are two main reasons for the existence of tour operators. First, they increase occupancy or usage rates and reduce promotional costs for suppliers. Second, they reduce the cost to travel agents and consumers of locating information on the destination. Transaction costs are also reduced since communications and bookings with many different suppliers are reduced to one (i.e., with the tour operator). A return visitor who has more information about the destination is less likely to purchase a \ package tour (Sofield 2003 pp.47-59). The tour operator negotiates with suppliers at the destination, and receives ...