Contracting Considerations Of A Tour Operator Tourism Essay

Contracting Considerations Of A Tour Operator Tourism attemptThis narration forget think the curveing considerations of a small to ordinary surface whirl streetwalker in congress to providing a cross found holiday experience for a clientele from socio-economic bands A and B. The report will consider two key elements namely in the orchestrate of registration and other run in the recourse and conveyanceation of an take into account type to and from the resort.In considering a possible solution to providing try-on for the social clubs guests in that office atomic number 18 a go of plectrons open to the small to mediocre sized tour m over. At the hotshot finis of the spectrum the tour streetwalker could consider an pickax of im comp atomic egress 53nt coronation. Such an plectrum would suss out the tour promoter investing in hotels and accommodation facilities which at the end of the investment the friendship would own the facilities which could be i mplementd for both its own guests and for the purpose of undertake out accommodation to other tour hustlers which capacity al low-downs for much(prenominal) an pickings (Holloway et al 2009). However, such(prenominal) an option in the circumstances is an unlikely option for the circumstantial lodge in question. In the first-class honours degree instance the option is an dear(predicate) unitary, investment in hotel and accommodation facilities rout out hail millions in in that respect initial investment or more, this whitethorn be an unsuit commensurate or even unrealisable option for a small to medium enterp set up.Secondly, the corporate objectives of the friendship are to minimise lay on the lines, direct investment however, whitethorn be seen as a considerably risky option for several reasons. In the first case once established, the company will seduce long condition pertinacious costs to meet over a prolonged tip of time, such a problem is not incurred where a contract establish option is undertaken and thence the liability to meet expenses is limited to the agreed contract dot which could be as short as a hotshot season or less. Secondly, long term investment an overseas location besides implies taking on the national risk which are associated with multinational trade including exposure to currency fluctuations, interest rates and changes in fill from the consumer perspective (Griffin and Pustay 2010). Again, where a contracting option is considered such exposures whilst tacit bewilder are limited to a much shorter period of time and thus to a large conclusion offset.A more realistic option for the company in question whitethorn be to consider one of the many contracting options which are available, such contracting options are as well wide and varied in nature and acknowledge both direct and indirect contracts with accommodation providers as well as a mix of options with regard to the space contracts undertaken (Holloway e t al 2009).In the first instance, the company must(prenominal) select between contracting directly with accommodation providers or finished the use of a third base company agency (Cooper et al 2008). negotiation directly whitethorn help the company to save money by excluding the fees of a third party however, the downside is that the company may have to muss with a large derive of accommodation providers each with their own peculiarities and unequaled circumstances. On the other hand, the company could opt to use another intermediary who will undertake such sub-contracting on the behalf of the tour means, for the tour wheeler dealer this reduces complexity in the contracting process in that the tour hooker now has only a exclusive point of contact (Holloway et al 2009). However, on the downside the tour means will now incur additive costs from the fees levied from a third party, in addition the tour mover will also lose a degree of control over the accommodation which is to be provided and arranged by the third party. This may have an impact upon the tour operator whos clientele falls with the A and B social bands and so have very specific requirements in relation to their individual accommodation needs in likeness to other shares of the trade.The side by side(p) consideration from a contracting point of view is to consider the length and take aim of put upload in contracting options. Again the tour operator is presented with a wide range of options, at the lowest level of commitment end of the spectrum the tour operator apprize simply book dwell with accommodation provider in reference to specific levels of demand experienced, such an option means that costs are kept to a lower limit and risks from contractual obligations are virtually eliminated (Cooper et al 2008). thither is however, an additional risk incurring in that whilst the tour operators liabilities are minimised so are those of the accommodation providers, in short should th e tour operator experience a batch in demand and the accommodation providers be unable to meet such a demand do to market forces, the tour operator may be left either having to disappoint customers or have to profit premium prices in order to satisfy the demand.At the other end of the spectrum the tour operator could contract to buy a set number of rooms or even entire hotels for a specific period of time (Holloway et al 2009). In such a case the receipts is that the tour operator has a guaranteed level of availability in a given hotel or resort and thus the risks of not being able to meet demand are off set given that the tour operator has a fixed capacity which it may use as it sees fit. The other major value is one of cost linked to economies of subdue (Johnson et al 2008), by undertaking longer contracts that buying rooms at the spot rate, the tour operator stands to acquire from substantial bulk purchasing discounts as rooms and accommodations purchased over a long period count at a much reduced cost in comparison to shorter periods of hire.However, in such a circumstance the company also incurs several(prenominal) additional risks. Now that the company has entered into a contract for a fixed amount of accommodation the tour operator also has the obligation to pay for the rooms and so needs to be able to fill the accommodation to as close to full capacity as possible passim the year (Holloway et al 2009). In reality this may mean pass significant discounts at certain part of the year so as to attract enough custom to fill the accommodation, alternatively the tour operator could forego full utilisation however, the contract would see the tour operator still having to pay for the accommodation which has been rented in advance.In addition to accommodation, there are other elements of the resort experience which the tour operator may wish to consider contracting out to third party providers. refer elements include the provision catering services, o nsite entertainment and other forms of entertainment and added honour services such as tours and excursions of sites of local interest to the clientele of the resort (Singh 2006).From a glamouration perspective, the use of scheduled outflows has run one of the or so important ways travel operators have been able to take advantage of both the flexibility and speed of behavior travel as part of the holiday megabucks (Holloway et al 2009). Unfortunately due to the constraints of the scenario the travel operator will have look at a number of alternative methods of getting guests to and from the proposed resort of which there are a wide number of options including alternative air ecstasyation options as well as nearly(a) more creative solutions fashioning use of alternative modes of transport.The first and mayhap most feasible option for a tour operator who can not take advantage of scheduled flights to a ending may be to consider using a convey service. Charter services vor tex to schedule an aircraft for the specific use of a client on a given route, subscribe to options may include a single trip rental but more likely a charter provider will agree with a company such as a tour operator a regular schedule of flights for a season or more (Holloway et al 2009, Cooper et al 2008). There are several advantages for the tour operator if such an option is employed in. From the passengers perspective, there is almost no difference to if the tour operator had do use of a scheduled flight, the guest will be transported to their destination on an aircraft which functions in all but the same way as one operating on a scheduled route. Secondly, a charter service operates with more flexibility than that of the scheduled flight, the tour operator can choose deviate from the time table which would not be an option which scheduled options and there is also flexibility of destination which may include local changes such as using an alternative airport or more radica l changes changing the route of the aircraft altogether.There are however, still some drawback of the charter flight option, the main problem would be one of capacity. In the case the scheduled flight the responsibility for filling bottoming room lies with the airline provider and the liability of the tour operator is limited to the number of seats for which they have purchased on any given flight. However, when an aircraft is chartered the cost of the charter becomes a fixed cost and the responsibility for filling seats then becomes the responsibility of the charterer, in this case the tour operator (Holloway et al 2009).The charter option has been a relatively successful option in youthful years for tour operators, in some circumstances the object lesson has become so successful that there has become a mist in the boundaries between scheduled and chartered flights. This has been exhibited in both operative elements in that some charter flights are so regular as to almost for m a scheduled service including the sale of tautological capacity to additional passengers. Secondly many travel operators have desire to consolidate their positions by buying charter aircraft providers and integrating these parentagees into the main business unit (Monarch 2010).If the tour operator still wishes to investigate the scheduled flight option further, there is the consideration that a multi-modal transport operation may be considered. In such a case the tour operator may consider purchasing seats to the nearest airport served by a scheduled flight and then arrange onward transport via road track or water system. In many cases this may be an unattractive option, in particular where distances are significant. Such an option may become and annoyance for guests and add unnecessary costs for the tour operator. There are however, measure when the option may be an appropriate one especially for the upmarket segment. Such circumstances may exist where the tour operator can incorporate the onward transport into the holiday package, this may be possible where the route from airport to resort passes through an area of cracking natural beauty or a luxury transport option can be added such as a river cruise which serves a duel function as transport and entertainment.Air transport however, is not the only option available to a tour operator one other major option to consider is transportation via water. Water transport has mostly declined in recent decades due to the rise of faster and cheaper air transport which also allows access to a wider number of destinations than water establish or land routes (Holloway et al 2009). Despite the decline of the standard oceanic liner as a mode of transport which is now largely confined to summer transatlantic crossings the market for other water based forms of transport has both stabilised and began to grow again in recent years. The most important development has been a rebranding of the cruise, in past times the cruise as a form of holiday had declined as a function of both poor branding and the rise of alternatives. However, significant investment on the behalf of the industry has seen the holiday rising again in popularity amongst consumers.In selecting a transportation mode suitable for a market segment in socio economic roots A and B one option may be to consider providing a hybrid holiday which takes advantage of the rise in popularity of the cruise linked to the facilities present at the destination. From a pragmatic sanction perspective the tour operator could in effect make use of a cruise ship to transport its guests too the resort making the transport via water an essential part of the holiday package as opposed to being a way of getting to the product in the form of the resort. Once at the destination, the tour operator would have the option of providing a re wring journey for guests either via the same method or via an alternative such as a charter flight. The major benefit of such an option is that the tour operator would be able to offer a high value added product in which all elements of the package including transportation are considered a part of the holiday. On the downside, the small to medium size of the tour operator would necessitate the use of a third party to provide a suitable vessel for use. This in turn would add complexity to the operation and there would naturally be a greater limitation on destinations based upon the schedules and services of third party providers as well as the natural constraints imposed by control transport options to water based transport.There is also a rail option open to the travel operator, this has become an option with an increased level of feasibility from the UK since the opening on the channel tunnel back in the 1990s. Whilst, rail transport provides fast and efficient transport from the UK to the major cities in Europe, the real problem with this option is one of flexibility. To a large extent destination s will be limited to the major cities within Europe and it may be considered to access to more remote destinations and resorts becomes infeasible and impractical for users of the service. In addition, the large distances and nature of the rail network means that intercontinental options will be largely off limits to a tour operator if sounding to use rail as a transportation option.Given the objectives of the company which are largely to reduce risk and the consideration of flexibility the recommendation of this report are that the travel operator opts to convey its guests the resort via a chartered air service model. Such a model would see that the company does not have to risks associated with investing in expensive bully items such as aircraft or ships which would increase the risk profile of the company significantly. In addition, by using an air service the company would also maintain the element of flexibility and speed opening up a wider number of destinations than would b e available through land or water based forms of transport. These are both key benefits for the companys target client group in socio economic groups A and B. There are however, still some risks associated with the charter route, whilst the company would not own any specific assets associated with the transport of passengers, the company would still have a fixed capacity of seat for which it would need to fill on each flight so as to keep the cost per passenger for a minimum. The risk here is that during periods of low demand the company may have to offer significant discounts in order to fill flights, this may also create a encroach with the companys generic strategy of focusing on the premium end of the market (Porter 2004, Jobber 2007).