WEEK 3

2.7 Tour Packaging

Package holidays, popularly known as a tour package or simply the word ‘tour’ in
the travel and tourism industry refers either to a package tour escorted or not escorted by
the tourist guide.

Holloway defines a tour package as “a total tourism product consisting of

transportation from the market area to the destination, accommodation at the destination
and recreational activities promoted by the tourists.”

According to Gregorg “a tour package is advertised journey including specific

features, arranged and promoted with tour literature by a tour operator and paid for in full
by the tourists before starting the tour.”

Technically, a package tour/tour package is a total tourism product as it generally

includes transport from the origin place to the destination, accommodation at an en route
place or at the destination and other recreational or travel services. These components are
purchased by an individual, firm or company called the ‘tour operator‘. He combines all
the travel components in a package and sells them at all-inclusive prices to the clients.

2.7.1 History of Tour Package

The term ‘tour’ was in vogue as early as 1670. The Britishers traveled to widen their
knowledge of the continent, especially to study the culture and social life. This
practice was gradually adopted by other lovers of cultural centers.

The result of the process was that many European historic and cultural centers were
opened to the British tourist. By the early 1730’s the small fishing resorts around the
British coast begin to attract tourists seeking to their diseases by drinking the sea-
water or by immersing themselves in it.

The introduction of a rail link between the major centers in 1830, had a profound
impact on the pleasure travelers for the first time. Many entrepreneurs began to
inspire rail travel by organizing excursions for the public at discounted offers.
However, to ‘the origin of package tour’ the credit goes to Mr. Thomas Cook in 1855,
Cook, extended his business operation to different countries by introducing the first
‘inclusive tour‘ to Paris.

Mr. Cook put together all the components of tourism products and sold them as
‘inclusive tour’ to the tourists. His pre-packaged tour inspired other tour organizations
in the travel industry to organize similar tours to all parts of the globe.

Most of Cook’s tours were a linear tour i.e., the person went from place to place on a
single destination. Basically, Mr. Cook developed the concept of ‘grand tour and
escorted tour’, the concept which is still used.

Incidentally, World War II has tremendously developed the package tour concept
because of the following reasons:

 Social and Economic Conditions

 Lower Cost
 Increase in Aircrafts
 Marketing Conditions
 Legal Requirements
 Integration took place.

Today, package tours are a vital segment of the world’s travel and tourism industry.
According to WTTC, the package tour sales generate $25 billion annually in the
United States, $18 billion in Europe, $19 billion in Britain, and $21 billion in Asia.
Today tour sales represented 50 percent of all leisure travel sales and 35 percent of all
travel agency revenues.

2.7.2 Types of Tour Packages

A travel agency/tour operator deals with variety of ‘tour packages,’ catering to the
diverse needs of tourists such as adventure, beach, architecture, cultural, business,
conference, incentive tours, ayurvedic packages, Buddhist, religious, incentive tour,
special interest tours, cruise tour group tour, educational tour, heritage, monuments,
wildlife lovers, etc. These are broadly classified into five categories:
  Independent Tours
 Escorted Tours
 Hosted Tours
 Incentives Travel/Tours
 Freedom Tours

Independent Tour

Independent tours are prepared/formulated for those tourists who want to travel
independently. The components of such tours are air travel, air transfer, accommodation,
travel documents, sightseeing, boat riding, entertainment, and other travel services.

However, in some cases, the tourists are free to purchase every single component
separately. Thus, this type of tour provides the tourists considerable freedom to plan the
activities according to their own choice.

An independent tour may or may not be an all-inclusive tour. Therefore, tour price varies
depending on the type of air travel, air transfer, accommodation and is inclusive of other
tour components. The foreign independent travel (FITs) and domestic independent travel
(DITs) are examples of an independent tour.

Escorted Tour

When a travel agency includes the services of a well educated and trained tour manager
in its package, the tour is called an escorted tour. Basically, escorted tours are meant for
those travelers who are planning to visit a foreign country first time.
The escort’s responsibilities and duties are to provide comprehensive information and
assistance to the group or individual traveler, at the origin, en route and the destination
place. The excursion tours are the example of escorted tours.

Hosted Tours

A hosted tour means when an agency utilizes the services of another agency at a
particular destination. Suppose a group of French tourists is coming to India. When the
group arrives in India, they are greeted at the airports by TCI, which assists them in
clearing their baggage and transfer them to the hotel.

Their tour-host (TCI) is available to offer device and information about the local
attractions and entertainment. Further, when the group arrives at another designation in
India, a different travel agency greets them at each tourist spot. Thus, a hosted tour
provides the tourists maximum level of pre-arranged and personalized services.

Incentives Travel/Tour

It is a motivational programme or a fully paid holiday which is given to the employees by

the enterprises as a reward. Mostly in medium and large-scale companies and usually too
distant destinations to spur them in maintaining their track record, to increase output,
improve the image and moreover to earn the long period loyalty of the employees.

There are a number of the other packages offered by a tour company such as a custom
tour an excursion tour, an adventure, and special interest package tours.

Freedom Tours

Freedom tours are becoming very popular these days among the working class. These
tours are designed as per the choice of tourists. The tourist is free to choose and plan how
they want to travel and enjoy their holidays. These types of tours are meant for that kind
of people who like to decide how, when, and where to travel.

This tourist may an individual, family, group holidays for families and group travel for
business. These tours are promoted and developed by the ORBIT.

Components Of Tour Package

What is to be included in a package tour largely depends and varies from one tour
organization to another, or from the one country to another, or from one destination to
another and from one market to another market. But there are certain well-defined travel
services which always turn a part of a package tour irrespective of the tour operator/travel
agency, destination and even the market condition.
If we study and see the package tours offered by Thomas Cook and Sons Ltd., Cox and
King Ltd., and other international travel companies, we find that a package tour has two
major components. Therefore, a standard package tour has two basic components
namely:

 Travel
 Ground Arrangements

Travel industry experience has shown that the first component, i.e. ‘Travel’ is directly
bought by the agency from the principal providers like airlines and transport operators
and for ground arrangement, the travel agency management asks the ground operators.

The reason behind buying ground arrangement from a handling agency is that it
represents as a ground operator at a particular destination for the numerous tour
organizations. Secondly, the price offered by it are much lower than an individual agency
obtain. Thirdly, it is very difficult to get credit from the supplier and finally, it ensures
professional travel services.

Factor Affecting the Tour Package Formulation

Generally, the business of package tours involves great risk, high breakeven, high-quality
product, and competitive prices. Therefore, the tour management requires in-depth tour
planning and market survey. However, before a tour is designed the tour manager should
take into consideration certain factors which are crucial in the formulation process.

These factors have a profound impact on the tourist’s satisfaction. The main factors are:

Purpose of Tour
Choice of Destinations
Tourist Budget
Legal Requirement
Types of Tourist Accommodation
Tour Period
Departure and stay information
Tour price; inflationary condition
Tour Reference Tools
Tour Features – political stability
The relationship between the host and tourist generating nation

2.7.3 Tour Package Design and Selection Process

The quality of a package tour is entirely based on the above factors. Essentially, to
design/formulate a travel product, the tour manager has to take the biggest responsibility,
intuitiveness, imagination, and innovation coupled with a lot of business activities which
range from finding new exotic destinations and planning, organizing or promoting such
tour.

The following are the main stages in the tour design and selection process:

1# Initial Research

(i) The Destination Research

The decision to develop and formulate a new package is a multi-stage process that
involves various positive and negative points/steps. Normally, the idea for a new product
comes either from the tour executive within the company due to a review of the
questionnaire completed by the previous tour members because of the political, economic
and social development in a particular area.

When a tour manager see that a large number of old clients are interested in taking a trip
to particular destinations, naturally, those destinations become the nucleus of a new ‘tour
concept’.

(ii) Market Research

Since tour package is a complete tourism product, obviously, before

formulating/designing this product, market research needs to be analyzed and assessed in
a systematic manner. Market research provides us the answer to the following questions:

What is the size of the tourism market?

Who are the existing clients?
Where do they live?
Who will be their potential buyers?
Who are their competitors – their strategy and area of business leisure?
How many tourist ones want to cater?
What price will the clients accept?
What facilities are available and required?
What are the constraints viz., license, permission, finance, restrictions, taxes, and others?
Once we know the basic components of the package tour, distribution channels, market
conditions, constraints in the tourism market, we can develop the marketing strategy. It
enables the smooth functioning of the agency and also offers a clear picture of the tour
programme. Practically, market research is conducted by the private tour companies/
private tourism enterprises in order to penetrate the market.

2# Itinerary Preparation
By itinerary one means the designing of a programme which one wants to sell and it
includes destinations, stopping points, number of days and the travel services that are to
be included in the programme. Whether it is a lean season or an offseason, escorted or not
escorted, consumer-oriented or readymade tour programme, the itinerary is prepared to
identify the origin, destinations, stopping points, accommodations, sightseeing and other
travel services on travelers’ trip.

3# Handling Agency or Destination Company

The appointment of handling agency not only ensure excellent travel services to the
tourist but also make the operation smooth and profitable. It is a matter of great
significance as the success of travel business largely depends upon the clients are actually
taken care of during the tour.

It is a positive match between the promised services and tourist’s actual experiences or
feelings. Thus, the tour operator should consider the experience of the handling travel
agency in the business, the area of operation, reputation, credibility, professional staff,
credit facilities and the competitive price in appointing a handling agency.

4# Negotiation

It is another important management decision area in tour designing and planning. Once
the decision has been made regarding the destination’s concerning their date, duration
and number of clients to be carried during the trip, the tour management starts
negotiations with the principals’ suppliers for a normal contract.

Negotiation means talk between the travel companies and the principal suppliers for the
terms, conditions, and prices of the components of a tour package. When both parties are
satisfied, it leads to a formal or informal contract between them. The tour company
negotiates with the following tour vendors/suppliers:

Airlines
Accommodation
Transport Operations- Rail and Road
Ground Operators
Cruise Companies
Car Rental Companies
The overseas representatives
Ancillary Service Organizations

5# Coasting and Pricing a Package Tour

The cost of a package tour encompasses the air ticket, the hotel room, car rental,
entertainment charges, administrative costs, promotional costs, and other travel services.
The confidential tariff helps the travel company in preparing the cost sheet which will
enable the concern to determine its price strategy.

Tour pricing is a big factor in the success of the company’s tour programme. The price of
a package tour is, whether it is an escorted, independent or hosted the tour, often lower
than the combined costs of the same components purchased separately from the
principals. However, the purchase price of a travel product is based on three factors:
Cost, competition, and demand.

Every tour package sold by a vendor has a quantifiable cost. To produce profit the price
paid by the tourists must be greater than the agency’s cost.

6# Tour Brochure

The tour package is an intangible product which has to be purchased by the

tourists/clients without inspection and sometimes even without adequate knowledge. In
these circumstances, the brochure becomes the principal instrument to perform the major
tasks to inform the clients about the products and to pursue them to purchase it.

Designing, printing, and distributions of tour brochures require necessary skills and
knowledge about the components of the tour package. Basically, in the era of
specialization and intense competition, tour brochure creates awareness and provides the
description of the holiday programme.

Thus, tour management should consider various pros and cons while preparing a tour
brochure. A brochure should contain the following information:

 Name of the Travel Company

 Means of transport
 Details about destinations
 Itinerary
 Accommodation, types, location, meals
 Name of the overseas representative
 Duration of each tour
 Booking, reservation and cancellation conditions
 Details of other services – insurance, currency, entertainment Travel documents
required
 Details of price

7# Development of Reservation System

The next step in tour formulation process is reservation system. The agency management
in order to put a package into operation must develop and implement a scientific
reservation system. The system depends on whether the reservation is to be handled
manually or with a computer working on the distribution method.

Whatever method the agency may adopt, the agency management should always keep in
mind the sole objective of the reservation system.

8# Marketing of Tour Package

Once a tour package is ready, travel agency management has to make a careful decision
regarding promotion and marketing of the particular package tour. The basic objective of
management is to make a tour package widely known to make it more and more
attractive.

To achieve these objectives, the management must consider the budget available,
promotion mix, potential market, easiest and most effective media, campaigning through
the international, regional or the public/private sector etc.

The promotion of a package tour means increasing its sales potential and creating an
awareness of the existing and potential markets. The following methods are commonly
used to promote package tours:

Middlemen – Retail Travel Agents, GSA, consolidators

Familiarization tours
Building Brand Loyalty
Encouraging Potential Buyers
Competitive Market
Courier

9# Tour Handling/Actual Tour Operation

After the successful marketing and achieving target sales, the next and final step in the
process of tour designing is tour handling. It means an actual operation of tours, which
generally includes administrative work and passenger handling like maintaining
reservations, handling deposits, sending advice to ground operators, arranging travel
representation, analyzing the feedback received from clients/escorts/ground operator and
so on.

All this is not an easy task. At every stage, one has to face different types of queries and
problems due to lack of coordination and communication.
2.7.4 Significances of Tour Package

Tour package is beneficial to travel companies, travelers, destinations and other

organizations which are directly or indirectly involved in the tourism business. The main
benefits are:

Time Saver
Increase the seasonality of a destination cost/price
Earn foreign currency
Better quality of products professional services
Wide-variety of the tour package
Provide bulk business to organizers

2.8 Possible Product Diversification Opportunities

A destination presents numerous tourism product development opportunities, and

there is almost an infinite variety of ways to combine and create new products. The
following listing was adopted from Ontario Resource-Based Tourism Diversification
Opportunities Report and illustrates this point.

Nature Appreciation

Example
1. Astronomy
2. Bird watching
3. Bird migration
4. Bird nesting
5. Forest

Land Adventures

1. Abseiling
2. All- terrain vehicles
3. Backpacking
4. Biking
5. Bungee jumping

Water Adventure
1. Banana boat
2. Canoeing
3. Cruises on rivers, canals, lakes
4. Fishing
5. Fly fishing
Air Adventure
1. Air safaris
2. Ballooning
3. Flightseeing
4. Hang gliding
5. Sky diving

Cultural Experiences
1. Agri-tourism
2. Anthropology
3. Antiques
4. Art
5. Architecture

Another means of adding value to the tourism experience is interpretation. Interpretation

should achieve a balance between information and humor so a tour is not only
educational but also entertaining. The tour guides and boat men at the Puerto Princesa
Underground River and the dive master at the helmet diving sites in Boracay have
humorous ways of delivering information. However, they need to have more technical
/scientific knowledge of their products in order to really educate the tourists.

Customer service is yet another way. Tour guides should strive to provide the “hi touch”
approach to customer service is an integral part of tourism, (especially in nature tours )
where groups are often small in size.” An often overlooked facet of customer service is
the pre –trip contact. The pre-trip contact is when customers are supposed to be provided
with information related to their forthcoming trips. This helps to prepare them for the
experience, and consequently enjoy it. Pre –trip advice should cover the following:
 List of activities to be undertaken
 Level of skill required to undertake the activity (such as for caving ,
white-water rafting, mountaineering)
 Highlights of the areas to be visited
 Types of equipment and infrastructure that will be used
 A code of ethics for the area to be visited( Dos and Don’ts)
It is also very important to thank the customers at the end of the tour.

2.9 Example of Product development Practices

How do we create tourism products? The following are illustrations of how places have
developed their tourism products:
1. Design activities that are suitable for the place’s natural assets. Numerous
examples are water rafting in Cagayan de Oro; Surfing in siargao. In Boracay
where the primary tourism resources are water and wind, they invested in
equipment for; Snorkeling, canoeing, pedal boating, etc.

On featuresless plains like the one in Angeles, Pampanga, they have ultralight,
flying, skydiving, and hot air ballooning. In Bontoc, they have developed
paragliding. Hang gliding is also possible in such areas.

Where there are hills and mountains, they offer trekking and camping. Structures
must be designed to take advantage of natural assets, such as the glass floors at El
Nido resorts so guests can see the fish in the water.
2. Take advantage of the terrain and other natural features, such as zipline or hanging
bridge on a hilly area. Ziplines have become the “in –thing” and many destinations
offer this attraction, promoting their zipline as the highest , longest, fastest,
thelongest over water; there is even zipline which runs like a roller-coaster.
3. Take advantage of man-made features. For example, lunch by the dam at villa
Escudero.
4. Turn disasters into a tourist product. Example ; Dark tourism, disaster tourism,
volunteer tourism, storm watching.
5. Create products from events. An example is accommodation packages for ‘first
sunrise of the New Year;” volcanic eruption viewing ; New Years eve countdown.
6. If the place has no distinctive natural assets , develop man-made attractions such
as them parks, zoos, gardens, and replicas of world-famous landmarks.
7. Hi-touch strategy. Personalize service quality and develop service style s.An
example is using bamboo for plates and servicing dishes; preparing food on the
customers’ tables, river cruise with lunch and cultural presentations.

Learning Activity

1. Give Concrete examples of tourism product concepts.

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2. Give Examples of tourism product diversification strategies.

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2.10 Product Life Cycle Tourism Area Life Cycle (TALC)

• Like all products, a visitor attraction goes through a Life Cycle (remember Business
Planning)
• These different stages require different strategies
• It is called a Product Life Cycle (PLC)

Over the years, people who study tourism have come up with theories to explain how a
tourist destination begins, grow, and changes- and how it changes the entire region
surrounding it.

A well-known, useful theory is the Tourism Area Life Cycle, developed by Richard
Butler in 1980.

Tourism planners and managers still use this theory today to help guide their decisions.
According to this theory, a tourist destination undergoes six stages.

Fig. 1 stages of tourist destination

 1. Exploration – A destination begins as a relatively unknown and adventurous
visitors initially come in small numbers restricted by lack of access, facilities and
local knowledge. The natural surrounding s are unspoiled, which is usually a
major reason tourists are attracted. plants and animals native to the place are
thriving The local people earn their living in ways that are traditional to them and
are not focused on tourism.

2. Involvement- Local investment in tourism and tourism advertising start. Visitor

number begin to increase and government agencies start to develop the
infrastructure. Local residents starts a tourist related businesses. Small hotels and
few restaurants are built; maybe a taxi service is started to get people to find and
from airport .The destination is still unspoiled and relatively unknown.

3. Development- There is a rapid growth in visitor number as the destination becoming

known and advertised. The amenities are increased and improved. Investors and
tourist- related companies get involved because they recognize that they can make a
good profit. Suddenly, the local people are being hired by outsiders to tend to tourist.
 Controls the area is no longer in the hands of its residents.
 A building boom begins: big hotels, restaurants, bars, and entertainment
transform the area into one centered on tourism.

4. Consolidation- During this stage tourism becomes a major part of the local
economy and of increasing political importance. Rates of visitor growth may have
leveled off and some facilities may be in need of upgrading.

5. Stagnation-visitor numbers have peaked, facilities are no longer as appealing. If a

tourist destination hasn’t recognized that it has reached it’s limits during the
consolidation stage. It becomes inescapably in this phase.
Aspect of the destination show signs of wear and tear; many hotels become run-
down.
Local environment is polluted and many species can no longer survive.
Tourist looking for package deals and inexpensive options would still visit a
destination in this phase.

6. Rejuvenations- new must see facilities are built which attracts more visitors. Area
or becomes smarter and economy grows.

7. Decline – fewer visitors come as the facilities fail to attract interest. Area becomes
run down and economy suffers. This means that tourist
destination is no longer profitable and will either close up or turn into another type
of business.