Handout 4

Question 1

is the process of determining the actual cost of a tour package by detailing its various components (accommodation, transportation, tours, meal plans, tour guide, and tour coordinator services)

Answer 1

Costing

Question 2

on the other hand, is the process of determining the selling price after a mark-up (the value that tour
operators add to the price of their products or margins measure of profitability to the costs

Answer 2

Pricing

Question 3

Before costing tour packages, tour operators identify first if air transportation must be involved.

Answer 3

Costing Ad Hoc and Regular Tour Packages

Question 4

(domestic airfare combined with the international airfare to be quoted altogether)

Answer 4

inclusive tour package

Question 5

(domestic airfare and international airfare are quoted separately)

Answer 5

land arrangements

Question 6

(remain constant regardless of the number of participants)

Answer 6

fixed costs

Question 7

(determined by the number of participants availing of a travel component.)

Answer 7

variable costs

Question 8

are calculated based on the inclusive number of meals (hotel and restaurant) and packed meals, and entrance fees and non-and transfers transportation costs and transfers/transportation and lodging costs are excluded in FOC cost.)

Answer 8

Free-of-charge (FOC) costs

Question 9

would only be applicable in calculating for tour guide services if a tour guide would have to stay overnight with the clients.

Answer 9

Rest Over Night (RON)

Question 10

Transportation costs by scheduled air, sea, or land transportation are based on per pax fare. Therefore,
these remain constant regardless of the number ot pax.

Answer 10

Costing for Transportation Components

Question 11

(within its break-even load factor of 50-60% of the total number of seats for passengers)

Answer 11

prorated cost

Question 12

Transfers cost may be prorated, except, for a regular airport shuttle service, which would be fixed and is on a per pax basis.

Answer 12

Costing Transfer Services

Question 13

mini packages that include transportation, tour guide services, entrance fees, entertainment activities, and sometimes snacks and meals.

Answer 13

Costing Sightseeing Tours

Question 14

When hotel accommodations are included in the tour package, the rule is that two (2) pax must share a room (twin-sharing.)

Answer 14

Costing for Accommodations

Question 15

The cost of a tour escort's transportation, accommodation, and meals are prorated among the paying participants. As a rule, the suppliers' concessions are always applied to the tour escort, or the first FOC entitlement is given to him/her. These costs do not include the salary paid by his/her employer.

Answer 15

Costing Tour Escort Services

Question 16

is a list of products and services of a tour operator with corresponding prices. It is usually posted on the websites of tour operators that can be viewed by potential clients or tourists.

Answer 16

Rate sheet

Question 17

transport clients from point "A" to point "B" within the destination and with no sightseeing or entertainment en route.

Answer 17

Transfer services

Question 18

are day tour packages (with no overnight stays) that entail transportation to the attractions and the sites of interest in the locality, the services of a tour guide to provide pertinent commentaries, and walking visits or tours and/or entertainment.

Answer 18

Sightseeing tours

Question 19

as they directly book with hotels

Answer 19

free and independent travelers (FIT)

Question 20

would be treated as ad hoc tour arrangements

Answer 20

group inclusive tours (GIT)

Question 21

When costing a rate sheet, the golden rule is to "negotiate for the best available contracted rate" from the suppliers. In other words, the most competitive rate without compromising the quality of the supplier's products and services.

Answer 21

Rate Sheet Costing