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Text 9 Tour operation management

Planning, negotiating, contracting, marketing and successfully administering a package holiday is a complex management task and takes place over a long period of time. Contracting with hoteliers and airlines can begin two years in advance of the holiday.

Hotel costs are a substantial proportion of the brochure price usually around 40 to 50 % for a typical package holiday. There are two types of contract used. With the so-called allocation (or sale and return) contract, tour operators only pay the hotelier for the beds they use, for example, they may contract 100 beds weekly, but use and pay for 80 beds one week, 70 beds another, and 100 beds the next week. An alternative is the fixed (or guaranteed contract), where the tour operator pays for a fixed number of beds through the peak season, irrespective of how many are sold.

With a fixed contract, the risk to the tour operator is obviously increased. Typically, 50 per cent of contracted beds are fixed, but this can rise to 100 per cent when a destination is in very high demand. Allocation contracts, however, are also popular with hoteliers. They usually do business with several tour operators from different countries, and usually they contract for slightly more beds than they have available. As tour operators vary in their success in selling an individual hotel, the hotelier is able to have a very high occupancy rate, which keeps prices competitive for the customer.

Allocation contracts usually include a clause requiring the tour operator to confirm the number of beds sold several weeks before the customers arrive, at which point the hotelier may take some of the rooms back. This is called the release date. This enables the hotelier to sell off any beds not required or to stop the tour operator from taking late bookings if the hotel is full.

Tour operators have similar contracting arrangements with airlines. However, if the number of passengers booked on the airline is lower than expected, tour operators and airlines may operate a system of consolidation. This is where two planned flights are combined, either with two different operators or two separate departure (or destination) airports.

 

Exercises to Text 9

1) Match the words in the left column with their definitions in the right one:

 

1 allocation a) bringing two or more things together for greater efficiency
2 competitive b) taking more reservations than there are places
3 consolidation c) an official written agreement between two companies
4 clause d) a share
5 contract e) a discussion at which people try to agree something
6 negotiation f) the percentage of rooms sold in a hotel
7 occupancy rate g) a section of a legal document
8 overbooking h) comparing well with other companies offering the same service

 

2) Here are two tour operators describing the type of contract they negotiate with principals



a ‘We take a certain number of rooms and give back those we can’t sell some weeks before the arrival date’

b ‘We take a certain number of rooms and have to pay for them all even if we don’t sell them’.

1 What do you think are the advantages of each contract for tour operators and hoteliers?

2Which of these labels would you use to describe them: allocation / sale and return or fixed / guaranteed?

3 Read the text to check your answers.

 

3) Read the text again and answer the questions:

1 When do tour operators begin negotiations with hoteliers and airlines?

2 What proportion of the brochure price is taken up by hotel prices?

3 What is the advantage of high occupancy rates for the customer?

4 Why do you think tour operators and principals try to avoid consolidation?

5 Write definitions for

· peak season = the time of the year when-------------

· release date = the date when-----------------

6 A tour operator has negotiated a price of $160 per bed per week for 120 beds. They only sell 75% of the beds in one week. How much would they have to pay the hotelier for that week

· if the contract was a fixed contract?

· if the contract was an allocation contract?

 

 

Case study/presentation

 

Think of a company you know, a travel agency/a restaurant/a hotel. Make a presentation using the language of the texts you have studied.

Discuss advantages and disadvantages of working for a family-owned company/ a multinational company/ your own company (being self-employed).

Would you like to run your own company? Why? Why not?

 

 


Date: 2015-12-18; view: 2163


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