TIP lectures 5, 6 & 7 Flashcards
When will a Tour Operator/Contract Department start the planning & contracting?
On average 6-18 months before the start of the ‘season’.
When will the calculations be done?
2-6 months before the start of the ‘season’ and are calculated for the whole season.
What does a package deal consist of?
- Transport
- Accommodation
- Additional
How is the calculation of a package deal constructed?
Transport
Accommodation
Additional
____________________+
= Net cost price
(Gross) Margin
____________________+
= Net selling price
(Agent) Commission
______________________+
= Gross Selling Price
This is ALWAYS per person!!
What is the Net Cost Price?
The exact amount that the tour operator needs to pay to the suppliers of this package deal.
What transport will be used for a package deal?
In most cases, the transport part will be an airline. For tour operators:
* Or charter flights: risk calculation due to Empty Legs
* Or scheduled FSCs: no risk calculation, IT fares.
What do you have to keep in mind for transport (in a package deal) as a tour operator?
Commission paid by the airline? Then deduct commissions which we receive as a tour operator. Take notice of airport tax (is this included or not?).
What is an empty leg?
An empty leg is a one-way flight that is scheduled to fly back without passengers, these operate when an aircraft needs to reposition or return for a charter.
What is meant with published vs contracted flights?
- How many flights (as a TO) do I have to PUBLISH for my customer (traveller)?
-How many flights (as a TO) do I have to CONTRACT from my supplier?
What information is needed to make calculations for the transport?
- Flight sector = return flight (no one-way)
- Number of seats per flight
- Price for the return flight ( includes everything ..crew, meals & aircraft)
- Any additional cost like taxes per pax/per seat
- Number of flights during the season (on a weekly basis)
- Proportion of the 1, 2 and 3-week tours, based on DATA!
- Planned occupancy
What are overhead costs?
Salary, rent, destination costs, brochure costs, inventory, automation, complaints handling, etc
The tour operator may very well sell the tour at the net selling price because all costs are covered and his profit has also been taken into account. But why won’t he?
Because the “intermediary” (who will be selling this tour) also wants to make a profit. (=commission)
What department(s) take care of the pricing/calculations?
The contract and sales department.
What is override/overwrite commission?
A commission paid on the sales someone else makes.
What is capped commission/maximum commission?
A maximum amount that a salesperson can earn in commissions for a specific period of time, regardless of how many sales they make.
Why is capped commission used?
To ensure that salespeople do not earn excessive amounts of money, or to control costs for a company.
What is currency risk?
Currency risk is a form of risk that arises from the change in price of one currency against another.
What is a currency conversion factor?
This means every time you go to a bank or a foreign exchange kiosk, you will lose 1% to 2% at an unfavourable exchange rate.
What are changes in the travel industry?
- Internationalisation & globalisation
- Changes in technology (CRS to GDS)
- Legislative environment
- Rise in consumer spending
- The emergence of new consumers
- Changes in products
- Marketing, research and information
What are the political and legal factors in the travel industry?
- Safety issues & Political instability
- Rules and regulations
- Economic implications
What are the economic challenges in the travel industry?
- Recovery from the pandemic
- Inflation/Rising prices
- Revival of the travel agent
- Upcoming markets
Name factors in economy & the customer.
- The buying/spending power (important indicator)
- Trust in the economy (important indicator)
- Changes in the world economy
- Influences of exchange rates, oil/energy prices etc.
Name conclusions for the future on the demand side of tourism.
- More frequent, shorter and further travel
- Increase in outbound travel, in participation as well as in frequency
- More flexibility in all aspects
- More active & adventurous travel (segmentation)
- More thematic travel (segmentation)
- An intensive increase in the use of ICT
- More individual travel (tailor made, dynamic packaging)
- Multi-, Cross-& Omnichannel
What is the definition of corporate social responsibility?
Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns into their business operations and interactions with their stakeholders. (3Ps)
