Travel Agency and Tour Operation Management, Compiled by Nafyad Tadesse Kene.

2012 E.C

CHAPTER ONE
OVERVIEW OF THE TOURISM INDUSTRY AND INTRODUCTION TO THE
TRAVEL TRADE BUSINESS
1.1 Introduction
The travel and tourism industry is the world’s largest and most diverse industry. Many nations
rely on this dynamic industry as a primary source for generating revenues, employment, private
sector growth, and infrastructure development.
1.1.1 Definitions
The World Tourism Organization (WTO), the major intergovernmental body concerned with
tourism, has led the way in establishing a set of definitions for general use. In 1991, the WTO
and the Government of Canada organized an International Conference on Travel and Tourism
Statistics in Ottawa, Canada which adopted a set of resolutions and recommendations relating to
tourism concepts, definitions, and classifications. The following definitions are based on the
WTO definitions and classifications and explain the various types of visitors.
Tourism - The activities of persons traveling to and staying in places outside their usual
environment for not more than one consecutive year for leisure, business, and other purposes.
Tourist - (overnight visitor) visitor staying at least one night in a collective or private
accommodation in the place visited.
Same Day Visitor (Excursionists) - visitor who does not spend the night in a collective or
private accommodation in the place visited.
Visitor - any person traveling to a place other than that of his/her usual environment for less than
12 consecutive months and whose main purpose of travel is not to work for pay in the place
visited.
Traveler - any person on a trip between two or more locations
Unfortunately, there is still confusion over these very basic definitions. Even within the same
country such as the United States, for example, different states may use different definitions for
data gathering and statistical purposes.

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1.1.2 Forms of Tourism

There are three forms of tourism at any level, in relation to a given area, e.g., domestic region,
country, or group of countries:
• Domestic tourism, involving residents of the given area traveling (as visitors) only within that
area;
• Inbound tourism, involving non-residents traveling as visitors in the given area;
• Outbound tourism, involving residents traveling as visitors in an area other than the given
area.
If a country is the area of reference, the terms “domestic,” “inbound” and “outbound” tourism
can be combined in various ways to derive the following categories of tourism:
• Internal tourism, which comprises domestic and inbound tourism;
• National tourism, which comprises domestic tourism and outbound tourism;
• International tourism, which consists of inbound tourism and outbound tourism.
1.2 Travel Intermediaries
A variety of service providers are classed as travel intermediaries, including travel agents, tour
wholesalers, and online booking agents. The role of an intermediary is to facilitate transactions
between the consumer and travel service suppliers, in exchange for a commission or profit.
Travel, whether for business or pleasure, requires arrangements. The traveler usually faces a
variety of choices regarding transportation and accommodations; and if the trip is for pleasure,
there are a variety of choices regarding destinations, attractions, and activities. The traveler may
gather information on prices, value, schedules, characteristics of the destination, and available
activities directly, investing a considerable amount of time on the Internet, or possibly money on
long - distance telephone calls, to complete the trip arrangements. Alternatively, the traveler may
use the services of a travel agency, obtaining all these arrangements for a fee. Travel
intermediaries in travel and tourism business can be found, in broadly speaking, in to two forms-
travel agency and tour operator.

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1.2.1 Historical Background

Today’s travel distribution system can trace its origins to the 1840s when Thomas Cook, an
Englishman, organized what could be called the ancestor of today’s tours. An ambitious
entrepreneur and innovator, Cook also introduced several types of tours including the first
pleasure tour to North America in 1866 and the first around-the-world tour in 1872. In the
nineteenth century, tours were almost exclusively for the upper classes, but Cook tried to reduce
the cost of traveling by chartering entire ships and booking blocks of rooms in hotels. In
1874, Cook was also the first to introduce circular notes to be used by travelers. These were
accepted by foreign banks and hotels and relieved travelers from carrying large amounts of cash.
They were a simple version of the traveler’s checks of today.
Before the introduction of the travel agencies at the end of the 19 th C, it was common for hotel
porters to make steamship and rail reservations on behalf of hotel guests. Hotels usually were
built close to rail stations and ports where hotel porters were sent to make reservations and bring
back the tickets in return for a commission by the supplier and a delivery charge from the client.
To compete with the railroads, commercial airlines starting operations in the 1920s also used
hotel porters as their agents, paying them a five percent commission. Later, airlines began
establishing their own sales offices in hotels in an effort to avoid paying out commissions.
As international and leisure travel increased following World War II, the travel agency business
expanded rapidly. Tours also dramatically increased in popularity with the introduction of jet
aircraft in1958. The advent of wide-bodied planes in the 1970s further reduced the price of air
travel which increased the affordability of tour packages. The demand for tours also expanded as
the disposable incomes of people in the U.S., Europe, and parts of Asia rose, and consumers
became aware of the advantages of buying a complete tour package instead of organizing their
own itineraries and bookings.
1.2.2 Travel agent
Travel agent is a person or organization selling travel services (such as transportation,
accommodation and inclusive tours) on behalf of principals (such as carriers, hotels and tour
operators) for a commission.
ð A travel agent is a middleman, acting on behalf of the client, making travel arrangements
with suppliers (airlines, hotels, tour operators) and receiving a commission from the
suppliers and/or a fee from the client.

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ð The agency functions as a broker (bringing buyer and seller together) for the other
suppliers, such as hotels, car rentals, ground operators, and tour companies.
ð Most travel agents also normally provide ancillary services, such as obtaining passports
and visas, traveller’s cheques (traveler’s check), currencies and travel insurance.
ð The principal functions of the travel agent are:-
 to provide access for a principal (hotel, transport companies, tour operators) to
the market
 To provide professional advice about the travel and destination for the
customer to buy travel services.
1.2.3 Tour operator
Tour operators undertake a distinct function in the tourism industry. They purchase separate
elements of tourism products or services and combine them in to a package tour which they sell
directly or indirectly to tourists.

It is an organization, firm or company who buys individual travel components separately from
their suppliers and combines them in to a package tour, which is sold with their own price tag to
the public directly or through the middlemen. It is one who has the responsibility of putting the
tour ingredients together, marketing it, making reservations and handling actual operations.

Tour operators are often described as the wholesaler in the tourism system, operating between
the producer and the retailer.
Advantages
1. For travelers-wholesalers’ offer tour packages to the traveling public at prices lower
than an individual traveler can arrange.
2. For principals- Wholesalers provide advantages to the suppliers of tourist products who
enjoy the financial security of having advance sales commitments for large blocks of
rooms, seats, or other products.
3. For agents and travelers- Wholesalers also make a significant contribution to the travel
agent and customer alike by developing and making available an array of tour packages
to satisfy different travelers’ tastes and income levels.

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1.2.3.1 Types of tour operators

Tour operators may be classified in to different categories based on the nature of their work i.e.
the market area being handled and specialized by each one. It may categorize as follows:
1. Outbound Tour Operators
Tour operators who promote tours to foreign destinations, may be business tours or leisure
tours, are known as outbound tour operators. For instance, ‘Qeranio’ tour promotes offers and
sells pilgrimage tours to Israel for Ethiopian pilgrims.
Out bound tour operators may design and operate their own trips, working with partners in the
destination, or they may choose trips already designed by overseas inbound operators and simply
market these to their own clients. Outbound operators generally have an in depth knowledge of
what their customers are looking for and what their travel requirements are, and are thus able to
design travel products that meet those needs.
2. Inbound Tour Operators
Technically, the operators who receive guests, clients/tourists and handle arrangements in the
host country are called inbound tour operators. They provide local services for tourists at
destinations, such as hotel transfers, car hire (rental) and sightseeing.

For example, if a group of American tourists is coming to Ethiopia through Greenland Tours and
the company makes arrangements and handles the group in Ethiopia, then Greenland Tours is
an inbound tour operator.
Customers in countries far away generally do not have in depth knowledge of a destination or the
service providers in that destination, may not speak the language, and may not feel comfortable
making their own arrangements. Inbound tour operators serve these customers by taking the
guess work out of planning a holiday, and may offer experiences that would otherwise be
inaccessible to independent travelers making their own arrangements.
Inbound operators operate their own tours, although the services of many local companies may
be packaged by outbound tour operators and resold as part of this tour. Inbound operator usually
specialize in one country or region

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3. Domestic Tour Operators

ð Domestic tour operators are those who assemble, combine tour components in to
inclusive tours and sell it to the domestic travelers.
 In general, these tour operators provide travel services within the tourists’ native or home
country.
 The domestic tour operators operate within the boundary of home country and offer
package tours to travelers.
4. Ground Operators/ Destination management companies:
ð Ground operators are providers of travel products and services in their own countries or
regions.
 These are commonly known as handling agencies and their main function is to
organize tour arrangements for incoming tourists on behalf of overseas operators.
 Sometimes inbound tour operators also are referred to as ground operators, but
the term is usually applied to companies that do not actively market their services
directly to overseas customers.
 These operations focus on providing travel services like accommodations, local
guides and equipment rental on the ground, and activities like horseback riding,
boat trips or guided diving tours etc that form part of a larger experience or
packaged tour.
Why ground operators? Ground operators are necessary because overseas operators have the
following limitations.

 No close contact with suppliers

 Language problems
 Government regulations
 Company can’t establish its own branch

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1.2.4 Package Travel, Group Travel, and Independent Travelers (FIT)

ð Package travel (holiday, tour) - refers to travel services sold as a package, where many
services are bundled together for the convenience of travelers who don’t wish to spend
time making their own arrangements. Package travel may be sold both to group travelers
and independent travelers.
ð Group travel- refers to package holidays that have a set itinerary and an allocation of
seats (e.g. in airplanes, cruises train) or spaces (in accommodations). Customers
purchasing the package join the group.
ð Independent travelers (FIT and DIT) - refer a traveller who organizes his or her own
trips, without buying package holidays. These kinds of travelers usually prefer not to
travel with a group, unless it is a self-formed group. They prefer to have flexibility in
their travel arrangements and may have done some research and have specific interests
which dictate what they want to do and see on a trip. Sometimes they prefer not make too
many advance plans, but in other instances they may carefully plan a custom tour that fits
their own interests, working with either a travel agent or tour operator (but often with the
travel agent) before leaving home.
ð Independent travelers may purchase package travel services, but they will choose their
own dates or request a private departure rather than traveling with a group.

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CHAPTER TWO
SELECTED TERMS AND ABBREVIATIONS USED IN THE TRAVEL TRADE
BUSINESS

The following terms are considerably indispensable for your career in the travel and tourism
business. These abbreviations are commonly used and appeared on various service providers’
reservation records and are universally known. These terms or abbreviations are standard and
used by travel, tourism and hospitality industry in the internal as well as external
communications, such as reservations, timetables and ticketing. These include the following.
FIT Foreign Independent Tour

An international tour planed exclusively for a client by a travel agent

It is a form of unescorted trip itinerary abroad prepared by a travel agent for the independent
traveller.
Itinerary Description of a journey, showing dates and times, mode of transport, places visited
and activities.
DIT Domestic Independent Tour

A custom-made tour of a part of Ethiopia planed exclusively for a client by a travel

agent

MICE Meetings, Incentives, Conference and Exhibitions

The arrangements of convention centers, hotels, sightseeing and so on for the participant
of international business travelers.

RQ Request

WL Waiting List

A roster of those waiting to obtain spaces

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A list of passengers wishing to join a flight, sailing or tour, which is fully booked;
sometimes also used by hotels when full. Those on this list may then be accommodated
in case of cancellations or no shows.

OB Overbooking

Reservation of more seats by a transport carrier or rooms by a hotel than there are
available. Tourism service providers often overbook spaces in order to sell more seats of
rooms than are available. Airlines and Hotels are afraid of someone’s cancel, so they
sometimes make reservations beyond their capacities.
Pax Number of Passengers

FD Full Day

HD Half day

MT Meeting with guests (mainly at airport)

TRF Transfer

Local transportation from one carrier terminal to another, from terminal to hotel, or from
hotel to activity.
S/S Sightseeing

Visiting a location or locations during the course of journey or as a point of the journey to
look at objects (monuments, cultural performances, art, building, etc.)

HTL Hotel

RCFM Reconfirm

Meal BB: Breakfast, LL: Lunch, DD: Dinner

FB Full Board

Inclusive terms for hotel stays in which all meals are include (BB, LL and DD) and room
during staying. Also referred to as American Plan (AP).

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HB Half Board

It also referred to as Demi-pension or Modified American Plan (MAP) hotel tariff which
includes room, breakfast and one main meal per day.

EP European plan
Hotel tariff which includes room only and no meals
T/L Tour Leader

A person employed by a tour organizer and escorting a group tour, who may also act as a guide.
In North America, more commonly described as tour conductor, director, leader, or manager.
FOC Free of Charge

CIQ Customs, Immigration, Quarantine

Quarantine - Isolation imposed by health authorities on persons or animals that might

spread infectious disease, for instance to control the transmission of Avian Flu, H 5N1
Virus, Ebola etc.
Customs- The government agency responsible for collecting duties on imports,
including goods acquired abroad and brought into a country by visitors and returning
residents. Hence, customs duty, the duty levied on imports, and customs declaration,
the process of declaring such goods to customs and also the official document used for
the purpose.
Air Reservation and Ticketing
Airline Code:

Each Airlines have own Airline Codes based on IATA’s rule. Two-letter airline designators
assigned and published by the ICAO, for use in reservations, timetables and ticketing, as well as
other inter- and intra-industry applications.
For example, Ethiopia Airline is ET; British Airways is BA, KQ for Kenya Airways, YUfor
Dominair, QF for Qantas Airways, etc.

Airport Code:

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It is three-letter location identifiers assigned and published by the ICAO for use in timetables,
ticketing and other communications.

Each Airport have own Airport Codes based on IATA’s rule. For example, Addis Ababa is
ADD, ACA for Acapulco (Mexico), AMS for Amsterdam (Netherlands), AUH for Abu Dhabi
(UAE), RIO for Rio de Janeiro (Brazil), and STO for Stockholm (Sweden), etc.

Gondar is GDQ; Bahir Dar is BJR, LLI for Lalibela, AXU for Axum, etc.

OW One Way

Involving or allowing travel in only one direction. E.g. ADD/GDQ

RT Round Trip (return ticket)

A journey from one place to another and back again (ADD/GDQ/ADD)

CT Circle Trip (ADD/BJR/GDQ/LLI/AXU/ADD）

A trip including more than one destination and return to origin

Ethiopia Airlines (ET) has several discount fares for Circle Trip (CT) Travelers.

OJ Open Joe (ADD/BJR//GDQ/ADD）

Some tourist moves to another city without using airplanes.

CRS Computer Reservation System

Recently, all Airlines use the Computer Reservation System (CRS) to manage their
records. Large-scale Airlines such as United Airline (UA) have their own reservation
systems, but small-scale Airlines use other airline’s reservation systems.

PNR Passenger Name Record

PNR includes Name (Family Name / First Name), Flight Segment and Status. PNR are
made by CRS.

VIP Very Important Person

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Reservation or guest who warrants special attention and handling.

Flight Segment

Flight Number, Date, Departure and Arrival City, Departure and Arrival local time, and
Status

Ticket Status

OK Confirmed

RQ Request

NSNo seat for infant

SA Stand by
Referring to a ticket sold at a lower price shortly before the departure of a flight when
there are empty seats remaining on the aircraft.

Class of services available on flight

Supersonic (R), First (F), Business (C, J), Economy (Y, S.), etc. There are many Class
Categories up to Airlines and Fare Bases.

Fare Base

There are various prices of tickets. Some kinds of tickets are limited the term of validity,
but the price is cheaper than normal fares.

ð Normal Fare: Basic Tour Fare

ð IT Fare: Inclusive Tour Fare (GIT, ITX)
ð PEX Fare: Special Excursion Fare
ð APEX Fare:Advance Purchase Excursion Fare
ð Child Fare: For 2-11 years old, 67% of Adult
ð Infant Fare: For 0-1 years old, 10% of Adult, NS
ð Youth Fare: For 12-26 years old
ð Student Fare: For student

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ð Add-On Fare: Surcharge for an additional Flights

Seat Assignment

Window Seat, Aisle Seat

Air Report

Weekly Sales Report for Airlines

TL Time Limit

Airlines make a time limit to issue the ticket after reservations. If the ticket is not issued
until TL, the reservations will be canceled.

Local Contact Abbreviation is not unified.）

Airlines need the contact telephone numbers in both of the departure and arrival places.

SSR, OSI

Request for Airlines from users

SSR: Special Service Requirement

OSI: Other Service Information

RMKS Remarks

Massage for Airlines from users

FFP Frequently Flyer Program

A program that awards travelers free-travel, discounts, up-grade for flying a certain
number of miles on a single airline; Sheba Miles/ET

Hub A central airport used by an airline as a connecting point to route passengers to their
destinations

MCT Minimum Connecting Time

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Minimum time to transit at the airport for passengers

ROE Rate of Exchange

Air fares are based on local currency. So, NUC is used in the case which itinerary sits
astride in 2 or more countries. Therefore, we must convert the every currency into NUC
to use ROE.

NUC Neural Unit of Construction

Numerical value used only for fare calculation

MPM Maximum Permitted Mileage

The longest mile with the official fare

TPM Ticketed Point Mileage

The mile between the areas that is written to the air ticket

GI Global Indicator

There are some kinds of air fares for one-way in the Tariff, because the air fare differs
by the rout. GI shows the routing ground.1

TC1: Tariff Conference 1

Western Hemisphere; America Continent etc.

TC2: Tariff Conference 2

Eastern Hemisphere; Europe, Middle East, Africa etc.

TC3: Tariff Conference 3

Asia Area other than TC2; Asia, Oceania etc.

Hand baggage and Excess

1
EH: Eastern Hemisphere, WH, AT: Atlantic, PA: Pacific, AP: Atlantic and Pacific etc.

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Passengers can carry their personal luggage with them on FOC. This limit is 20kg for
economy class passenger; 30kg for business class; 40kg for first class on IATA’s rule,
but some airlines make their own limits such as Ethiopian Airlines (30kg for Y, 40kg for
C, 50kg for F). Normally, Excess fare is 1% of the first class normal fare.

No-Show

A person who makes a reservation but fails to use it without notifying the carrier.

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CHAPTER THREE

INTERNATIONAL TRAVEL FORMALITIES

Passport and Visa

This system was established internationally after the First World War. Passengers travelling
overseas need to have valid travel documents. Everyone always needs a passport, often a visa,
and less frequently vaccination certificate tomeet health regulations.

Passport

Passport is a necessary official document when the individual travels foreign countries and it is
issued only for the person who has the nationality of the country ordinary. It proves the
nationality and personality of the holder and it is an inevitable thing to receive the protection and
convenience of the country consul. It is the license for the possession person leaves or enters
his/her country also.

The custom that issues the passport is derived from the right of nations. The right is that every
nation can reserve the privilege that passes the territory for foreigners. Originally, Passport was
the official license that admitted to pass the territory for foreigners. However, it became a custom
that the travelers who try to enter abroad acquire the certificate of the nationality from their
government for the convenience on procedure and host countries have come to approve this
certificate as Passport.

Visa

The visa is the proof that the government of the host country authorities approved the passport
officially. In other words, the government authorities of the host country examine the passport
and admit the efficacy. And Visa is the certificate that is suited in the law to visit the country for
the Visa possession person.

There are many kinds of Visa by the usage in a present such as. The kind of the visa is not
international common and each government can decide independently.The maintypes of visa are:

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tourist, transit, immigrant, diplomatic,entry visa, business visa, employment visa, school
attendance visa, spouse visa and so on.

If you are a travel agent applying on behalf of your client, allow plenty of time because at peaka
holiday time there is often a backlog. If your client is applying, advise them of thepossible
delay.Not all visas have to be stamped in passports. In some instances the information isstored
electronically. Biometric data can be used, including a fingerprint code or a scanof the iris of the
eye. This is not as futuristic as it sounds. Hand biometrics is used atmany US airports, and
various other airports are conducting trials with iris and retinabiometrics. Where relevant, make
sure your client knows the cost of obtaining apassport and visa as this can considerably increase
the cost of the holiday.

Foreign Currency

Cash

Each nation is issuing an original currency generally in a present and the currency is circulating
domestically. When international tourists entered into the host country, they need exchange their
own currency to the currency of the host country. However, the financial institutions in the host
country are not able to correspond to the currency of all in the world. Therefore, most of the
international tourists are usually to purchase the international currency such as US dollar and
Euro within their country. In any case, the first deed of international tourists begins from the
exchange of their currency.

Many travel agencies have their own foreign exchange department. It makes alucrative
contribution to the revenue of an agency, and is very convenient for theclient.When dealing with
foreign currency it is important to know the difference betweenthe buying and the selling rate of
exchange. Think of it this way. Any retailer willbuy something at a certain price and sell it at a
higher price in order to make a profit.It is exactly the same for buying and selling foreign
currency.

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It is important to keep in mind when dealing with foreign currency that many countries impose
export and import restrictions. Also, exchange rates fluctuate, so be sure that the correct rate is
being used for the business transaction.

Travelers’ Cheques

What are the benefits of taking travellers’ cheques? They are the safest method ofcarrying money
whilst travelling at home or overseas. Most of international tourists are carrying
travelers’cheques other than cash. travellers’ cheques are the check of a trip exclusive use for
private persons. Travelers’cheques are used like cash in the country such as US etc. However,
Travelers’cheques, as currency, must be exchanged with financial institutions in most of
countries.

The user need to make his/her signature in 1 place on the surface when he/she purchases
travellers’ cheques and same signature are necessary on other places on the occasion of use for
him/her, furthermore. Namely, others are not able to use it because the same signatures are
needed in 2 places for using travellers’ cheques. The surpass point of travellers’ cheques is that it
is able to be reissued on the occasion of robbery and missing comparing with cash.

Credit Card

Credit cards offer credit to a preset limit depending on the card holder’s income.There may or
may not be an annual fee. The card holder can settle each monthlystatement in full, or take credit
to a preset limit at a monthly interest rate, subject tospecified minimum monthly repayment.

American Express Card, Dinners Club Card, Master Card, Visa Card and JBC Card are
representative for Credit Cards. The price of the shopping in the foreign countries is settled with
the bank account of the home country of the card holders in this system. Therefore, the card
holders are released from the trouble of exchange and the risk they have cash.

However, the use of Credit Cards is limited because there are many countries where the diffusion
of this card is not going. This card can be used at Ethiopia Airlines Office, Sheraton hotel, Hilton

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Hotel etc. in Addis Ababa. Furthermore, the Credit Card companies take the fee from both of the
card users and sellers generally.

CIQ (Customs, Immigration, Quarantine) Documents

Health Card

Some country’s governments require Health Card for the international tourists to enter their
counties, because they afraid that the international tourists bring to fatal diseases from foreign
countries.

Some countries require travellers to present a certificate of vaccination for certaindiseases.For

example, some international tourists need “International Certificate of Vaccination or
Revaccination against Yellow Fever” which is certificated by World Health Organization
(WHO) to enter into Ethiopia.

Custom Declaration Card

You must receive customs examination when you enter all countries. The goods that becomes
the object of taxation is various by a country.

You usually go on to a green sign counter when customs report are notnecessary and a red sign
counter when customs report is necessary. In most of countries, you are requested to hand this
card to a custom office only when a custom report is necessary recently.

Entry Card

Some government requests the submission of an entry card to travelers when they enter some
country. Thus, the government of host country can refuse the entry of persons who are
unfavorable for them. Recently, the country that is omitting this system for the vicinity nations is
increasing for the purpose of simplification of entry.

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Travelers fill out the personal information such as name and trip purpose in an entry card. An
immigration office does examination of the qualification of entry to these travelers comparing
this information with passport.

The government of host country can know the nationality and trip purpose etc. of the tourists by
this entry card. Every country’s government is taking the statistics regarding foreigner travelers
by this card.

Exit Card

Tourists need to hand a departure card to an immigration office on the occasion of departure
from a country. The government of host country can know the length of visit etc. of the tourists
by this exit card.

Travel Insurance

Travel Insurance is essential to cover theft, loss and medical problems. A variety of policies is an
available. You have to check that the policy includes all activities you want to do when you
make an application of your Travel Insurance. It usually excludes dangerous activities such as
white-water rafting, rock climbing, motorcycling and diving. Sometime even trekking is
excluded. Special contracts can cover these risks but some kinds of them are very expensive. For
example, there is ‘Abyssinian Flight Service’ in Ethiopia.

What is included in a travel insurance policy?

 Medical expenses In the event of sickness, medical expenses can be very high in most
countries. The medical condition may mean spending months in an overseas hospital or
being sent home by air ambulance.
 Cancellation charges As the date of departure draws closer, so cancellation charges
become greater. In the event of your client cancelling the travel arrangements for ‘reasons
beyond their control’ the insurance company will pay those charges.
 Personal baggage and personal money Considering the volume of traffic in the tourism
industry, very little baggage is actually lost, stolen or damaged. Comedians like to joke ‘I
went to Florence but my baggage went to Sydney!’ and if this really does happen to your

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client they will tell you it isn’t very funny. Even small items can be expensive to replace
and a change of clothing is definitely necessary.
 Personal accident The risk of personal accident is greater when on holiday than when
following one’s usual routine. Young people skiing or mountain climbing, elderly people
dancing the night away – we often tend to put a lot of energy into enjoying ourselves on
holiday!
 Personal liability This covers your client’s liability in respect of accidental injury to
third parties or accidental damage to their own property during the trip or holiday.
 Medical emergency, repatriation and associated expenses.
 Missed departure Due to public transport not running to timetable or vehicle policy
holder being involved in an accident or breaking down.
 Departure delay Compensation if flight, international train or sea vessel is delayed at its
departure point. Small payment is usually made for several hours’delay. £20 for every 12
hours’ delay is a typical amount of compensation.
 Hijack or mugging This is one section everyone hopes never to claim against.
 Catastrophe cover Catastrophe cover is for occurrences such as fire, flood,earthquake,
avalanche or storm during the journey. If accommodation is notinhabitable as a result,
extra accommodation and any transport costs involved willbe provided for under
catastrophe cover.
 Avalanche closure At the ski resort.
 Homecare This will cover emergency repairs necessary to secure the homefollowing a
burglary/robbery, or damage caused by serious fire, storm, flood, explosion,subsidence,
vandalism, fallen trees, impact by aircraft or vehicle at the policyholder’s home when on
their journey.
 Legal advice and expenses cover.
 Scheduled airline failure.
 Weddings There has been an increase in marriages taking place abroad and thissection
will cover gifts, fragile items and so on.

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We can say that insurance offers peace of mind to the traveller . . . if the traveller is fully
covered.The traveller may wish to have increased coverage – and therefore pay a higherpremium
– to include all hazardous sports which may be enjoyed during the holiday. All pre-existing
medical conditions must be disclosed on taking out thepolicy.

Specialist insurance: Should your client have a pre-existing medical condition, does that mean
that theywill be unable to obtain travel insurance? No. Most insurance companies provide
insurance at a higher premium, bearing in mind that the risk of a claim is greater.

International Driving License

You must make an International Driving License in the case that you want to drive a car in
foreign countries, because the driver's license of your country is effective only the domestically.
（However, there are a few exceptions for Tourism Promotions.） If you have the license of your
country, you can receive an International Driving License on the basis of your license
fundamentally.

ISIC（International Student’s Identification Card）

This student's identification card was developed by the student organization of Europe originally.
Especially in Europe and North-America, this has a big effect. If you have ISIC, you can receive
the discount of the lodging, the airline and train tickets and the admission fee of a museum and
national park. For example, the admission fee of Ethnographic Museum, Institute of Ethiopian
Studies in Addis Ababa.

GO25（International Youth Traveler’s Card）

When the persons below 25 years old trip abroad, they can receive the youth discount with
GO25. If you have GO25, you can receive the discount in proportion to ISIC. However, there is
much restriction compared with ISIC.

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CHAPTER FOUR

TRAVEL AGENCY TYPES, ROLES AND FUNCTIONS

“The traveler used to go about the world to encounter the natives. A function of travel agencies is
now to prevent this encounter. “Daniel J. Boorstin.
4.1Introduction
We live in a world in which travel has become increasingly important and complex in its variety
of modes of choices. Travelers must depend on travel agencies and others in the industry to
guide them honestly and competently. It is estimated that worldwide almost 70% of all
international travel and 45% of domestic travel are arranged by travel agents.
The European Commission has defined travel agents as retailers to leisure and business
travellers, selling flights (charter or scheduled), accommodation, car hire, foreign currency,
travel insurance and other travel services. They are generally paid a commission by the supplier
of the service or, in the case of a package holiday, by the operator.
The travel agent acts as an intermediary, conveniently linking customers with the providers of
travel products. Providers of travel products are often termed principals. Principals own specific
travel elements such as hotels or airlines, as well as tour operators, which put together packages
that combine several travel elements.

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The travel agent, as retailer, can access products either from a wholesaler (the tour operator) or
direct from the principal or manufacturer (such as a hotel or airline).
The important difference between the travel agent and a traditional retailer is that the travel agent
never purchases services ahead of a request by a customer and therefore never holds stock. The
retail travel agent, unlike most other retailers, does not carry an inventory or stock of travel
products in his premises.

N:B:-The main thing to remember about travel agents is that they are not retailers in the
traditional sense. They do not hold any stock and act as agents for their customers only by
purchasing products on their behalf from principals or tour operators. Therefore, the contract of
sale is not between the customer and travel agent but between the customer and principal.

4.2 Roles and Functions

The travel agent acts as the retailing arm of the travel industry, linking both the tour operators
and the principals, or direct providers of travel-related products to the traveller or holiday-maker.
Therefore, the role of travel retailers within the travel and tourism chain of distribution is to sell a
variety of travel products to the general public.
Legally, the travel agent is a commissioned “agent” or an authorized representative who is
approved to sell the products of a company in a certain geographic area. In terms of distribution,
the travel agent maintains a delicate balance between serving the client and promoting the
interests of the principal the agent represents.
A travel agent has to use knowledge and expertise in responsible ways to successfully plan and
secure a safe and enjoyable trip. This may involve carrying out numerous detailed activities
including but not limited to:
• preparing individual itineraries,
• informing about travel insurance, documents, and immunization requirements, as well as
• Giving descriptions of destinations, hotels, and local customs.
Hence, it is the responsibility of the travel agent to act on behalf of prospective travelers and
understand their desires in order to satisfy them by arranging the necessary parts of the trip.

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The main role of the travel agent is to seek suitable and available travel products on behalf of the
customer. This means providing a convenient location for the purchase of various elements of
travel such as transport, accommodation and several other ancillary services associated with
holiday travel. They act as booking agents for holidays and travel and disseminate information
and give advices on such services.
The roles can be summed up as follows:
 Providing advice to the potential tourist on the merits of alternative destinations. In
order to give advice to potential customers, they must possess knowledge, expertise and
up-to-date information about the destinations.
 Making necessary arrangements for a chosen holiday which may involve booking of
accommodation, transport or other relevant services associated with the visitors’ travel.
To perform this, travel agents have close contact with service providers.

The scope, range and functions of travel agency operations/services would depend on its size. If
the company is large in size, the range of activities will be more comprehensive and all-
rounded. The field of experiences is quite large and is constantly growing with the fast changing
travel needs of the people. Although vary based on their sizes, the functions of all-rounded
travel agencies are described as follows:
I. Provision of travel information
One of the primary functions of a retail travel agent from the point of view of the tourist is to
provide necessary information about the travel. This information is provided at convenient
location where the intending tourist may ask certain question and seek clarification about the
proposed travel.
This is a very specialized job and the agent should be a specialist having excellent knowledge of
various travel alternative plans. The agent should be in a position to give up-to-date and accurate
information regarding various services and general information about the travel.
A good travel agent is something of a personal counselor who knows all the details about the
travel and also the needs and interests of intending traveler. The person behind the travel
counter should be able to communicate with the customer his language.
II. Preparation of itineraries

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A tourist journey is characterized by an itinerary using various means of transport to link one
locality with another. Preparation of different types of itineraries is another important function of
travel agency.
The travel agent gives advice to potential travelers on the type of programs which they may
choose for their holiday or business travel. The study and realization of the itineraries call
for/demand perfect organization (technical and administrative) as also knowledge of the desires
of the public for a holiday and the tendency to receive tourists by the receiving localities.
III. Ticketing
Selling tickets require thorough knowledge of schedules of various modes of transport. Each
transport companies have hundreds of schedules and the agent should acquaint with all theses.
The range and diversity of international airfares is very complex and varied.

There are several different types of fair combination, change in international and local air
schedules and addition of new flights from time to time makes the agents’ job in constant
challenge. Up-to-date information about various schedules is very essential.
However, CRS has in recent years rather inspired the reservation system both for air and rail
seats, and also a room in a hotel. This system comprises a computer network that can be used by
travel agent to reserve an air or rail accommodation as also accommodation in a hotel. Through a
wide network, confirmations of reservations are available in second/s.
V. Provision of foreign currencies and travelers’ cheques
Provisions of foreign currencies to intending travelers are another specialized activity of travel
agents.

Provision of foreign currencies requires detail knowledge of foreign currencies, their cross-value,
and above all, their complexities of exchange control regulations, which vary from country to
country.

Some of the travel agencies deal exclusively in the provision of foreign currencies, travelers’
cheques, etc. this is an important facility to intending travelers as it saves them a lot of time and
energy in avoiding visits to regular banking channels.

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VI. Insurance
Insurance, both personal accidents risks and of baggage, is yet another important activity of the
travel agency. Some of the larger travel agents maintain sizable shipping and forwarding
departments, aimed at assisting traveler, to transport personal effects and baggage to any part of
the world, with a minimum of convenience.

Irrespective of their sizes, however, travel agencies perform the following functions:

 Handling of and giving advice on the many details involved in modern day travel, e.g.
travel and luggage insurance, language study materials, travellers’ cheques, foreign
currency exchange, documentary requirements (visas and passport) and health
requirements (immunizations),
 Possession of professional knowledge and experiences, as for instance, schedule of air
and train connections, rates of hotels, their quality, whether rooms has baths, etc. All of
this is information on which the traveler, but for the travel agent, will spend days or
weeks of endless phone calls, letters and personal visits,
 Preparation of individual pre-planned itineraries, sale of package tours, selling of
tickets,
 Making arrangements for hotel, motels, resort accommodation, meals, car rentals, S/S,
TRF of passengers and luggage between terminals and hotels, and special features such
as music festivals and theatre tickets,
 Arrange of reservation for special interest activities such as conventions, conferences,
and business, and business meetings and sports, events, etc.

Roles of travel agents-from all-rounded to niche product and market

The aforementioned roles and functions of travel agencies are all-rounded that provide full
range of services. Such all-rounded agency that is attempting to provide a full range of services
to the public would sell:
• air tickets,

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• cruise and ferry tickets,

• rail and coach transport,
• car hire,
• hotel accommodation and
• package tours (which might include domestic travel), and
 Additional services, such as
• travel advice to potential customers
• travel insurance,
• traveller’s cheques,
• foreign exchange,
• arrange travel documentation (such as arranging visas) for their clients, and
• some will even deal with theatre tickets.

Such all-round agents are, however, rapidly disappearing in the face of commercial pressures.

Owing to the small amount of revenue achieved on the sale of air, coach and rail tickets, many
agents are now forgoing sales of these types, although some still believe that it is better to offer a
full range of services, even if some offer little or no profit, on the grounds that customers may
return to buy other travel arrangements later.

An alternative to providing a full range of products is for the agency to specialize in a niche
product, such as cruising. Agents may specialize not only in the selection of products they offer,
but also in the markets they serve. The clearest distinction is between those that focus on
business travel (serving the travel needs of the local, and in some cases national, business
community) and those that concentrate on leisure travel.

The technological advancements, which can substitute agents’ services, result in minimizing
the amount of commission gained from principals. Since the customer can book services online
directly from the principals, some travel agents prefer to focus on particular products and
markets so as to widen their profit margins?

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4.3. Types of travel retailers

The traditional all-round travel agency selling a broad variety of products is now a rarity, while
the sector is characterized by a different types of outlet. Broadly speaking, there are two main
types of travel retailer:
1. Business travel retailers/agents
Business travel retailers are specialist agencies that meet the particular needs of business clients
locally, nationally and internationally. They specialize in arranging accommodation and transport
specifically for the business traveler. Some large companies have their own travel agencies at
their headquarters to organize the travel needs for the company.

Business travel is very different and requires different skills. Reservations have to be made
quickly, and confirmed to the client promptly. The business traveler will often have many
meetings in various parts of the world to arrange.

Unlike the holiday traveler who needs a convenient location to make travel arrangements, the
business traveller will make the reservation by computer or telephone (i.e. holidaymakers will
need to go to a location that is conveniently situated and take time discussing the travel
arrangements).

2. Leisure travel retailers/agents

This category can be subdivided into:
I. Holidays hops, typically owned by a tour operator, which concentrate on selling package
holidays.
II. Specialist retailers, focusing on particular types of products or markets.

A further characteristic of the sector is the distinction between:

ð Independent travel retailers:- small privately owned businesses with no or only a few
outlets, and
ð Multiples: -travel agency chains with multiple outlets, often under the ownership of the
major tour operators.

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Several tour operators sought to take control of the retailing element of their business so they
established large networks of outlets called multiples. These multiples could achieve business
advantages (over the independents) through their:
 centralized marketing activities,
 negotiating higher commission rates based on sales across the group,
 reduced costs through mass development and purchasing of key resources (such as
computer systems), and
 offering package holiday with discount prices.

As a consequence, independent travel agents have realized that, in order to compete, they need to
collaborate with other travel agencies. Hence, independent travel retailers frequently combine
into alliances, such as consortia or franchise groups, in orderto compete with the multiples.

4.4. Travel Agencies’ Commission

Commission is payment by a supplier to an intermediary as a reward for services, usually
determined as a percentage of the value of the transaction. The percentage, however, varies
between products and services and to some extent also between countries and operators.

An agency’s income is derived almost entirely from commission, unless they also sell products
such as travel guides or basic travel accessories. The revenues received by a travel agency are
from commissions paid by vendors. When an agency sells an airline ticket, it receives a
commission from the airline. Likewise, hotels, wholesalers and car rental companies pay
commissions for bookings made by a travel agency. The commission is deducted from- not
added to – the purchase price or fare.

Nevertheless, a commission payment from the principal has been reducing, particularly form
airline tickets. At present, some airlines eliminate commissions to travel agents.

To offset the loss of commissions, agents developed new sources of income. The most readily
available source is service fees. The vast majority of travel agencies (94.3 percent) now charge
service fees because of the airlines’ move to zero base commissions. Today, over 94 percent of

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the travel agencies charge fees compared with 64 percent in 1998. In addition to charging fees,
agents have shifted to emphasis on special market and/or product.

4.5. Phonetic Alphabet

Although the trend for phone communications is slowly dropping while the Internet increases,
phone continues to be the number - one way for agents to conduct business. Agents report they
conduct an average of 65.8 percent of total business over the phone.

Often travel agents are dealing with cracking lines and with people whose accent is unfamiliar.
In order that there should be less confusion, and more clarity, travel agents use a phonetic
alphabet. The Phonetic Alphabet is a means of giving correct information such as a client's
details with a much reduced possibility of error. By giving names to each letter of the alphabet it
is possible to relay information accurately. Practice using the Phonetic Alphabet as often as
possible so that you become totally familiar with its application. The phonetic alphabet is as
follows:

A ALPHA J JULIET S SIERRA

B BRAVO K KILO T TANGO
C CHARLIE L LIMA U UNIFORM
D DELTA M MIKE V VICTOR
E ECHO N NOVEMBER W WHISKY
F FOXTROT O OSCAR X XRAY
G GOLF P PAPA Y YANKEE
H HOTEL Q QUEBEC Z ZEBRA
I INDIA R ROMEO

Illustration:
The following client's name needs to be transmitted accurately:
John Brown
Using the phonetic alphabet it will be given in the following way:
Juliet, Oscar, Hotel, November.

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Bravo, Romeo, Oscar, Whisky, November.

CHAPTER FIVE

TYPES, ROLE AND FUNCTIONS OF TOUR OPERATING COMPANY

5.1What is Tour?

A ‘tour’ represents an attempt by the traveler to discover something about a place s/he visits.
S/he may desire the following:

 to see himself/herself something he has heard about,

 to learn about business opportunities,
 job possibilities,
 health advantages,
 educational benefits,
 environmental assets,
 recreational properties, etc

5.2 Tour operation

The tour operators play an important role in the marketing and selling of a tourist product. They
purchase separate elements of transport, accommodation and other services and package these
for subsequent sale to travel agents or to customers. They are also called as wholesalers. Even
though these two terms describe similar types of intermediaries, a distinction should be made in
order to avoid confusion.

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First, in basic terms a wholesaler is defined as one who purchases goods and services in large
quantities on his own account and resells it in smaller quantities as required. He does not alter the
product but sells the same product without altering it. In travel trade, these operators perform the
first two jobs as of the wholesaler but they do not change the products sold by packaging them.
They buy number of individual items of tourist services and package them into a single product.

Second, in contrast to a wholesaler who designs and offers a large number of tours, the tour
operator can offer only a limited number of tours on a yearly basis.The tour operator can be
thought of as a tour wholesaler with a smaller scale of operations.

While the wholesaler will typically include transportation to and from a destination, the tour
operator offers his/her services only atthe destination itself. The tour operator’s defined business
is to make the land arrangements, which encompasses hotel transfers, accommodations,
sightseeing, prepaid admissions, and other special arrangements at the destination.

Similarity: Much like the wholesaler, the tour operators are free to design and offer their own
packages which can be geared to all travelers.

5.3 The Role and Functions of Tour Operating Company

5.3.1 Offering Package Tour

As a starting point, it is essential to understand what tour operations actually are. The best way to
do this is to think in terms of what tour operators’ produce – that is, the package holiday or
inclusive tour.

A package holiday is simply defined as the pre-arranged combination of two or more

components of a holiday, such as transport, accommodation and other services (for example,
local sightseeing tours). Package holidays are, therefore, assembled tour operators that buy
products from producers (principals), combine them into a single product (the holiday) and sell
them on to the customer.

Technically, a package tour 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

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other recreational or travel services. Tour operators purchase these components, combine them in
to a package and sell them at all-inclusive prices to clients.

5.3.1.1 Components of a package tour

What is to be included in a package tour largely depends and varies from one tour organization
to another, or from 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, destinations and even market conditions.

A standard package tour has two basic components, namely:

1. Travel/transportation-road, rail, water and air (to/from destination)

2. Ground arrangements-accommodation, sightseeing, events, trade fairs, entertainment,
etc.

It also may produce other ancillary services such as:

 Transfers – between air/sea ports and hotel and vice versa at destination
 Guide and escort services
 Car rental – for business and leisure purposes,
 Insurance – and others

So as to design/create a package tour, a tour operator usually obtains volume discounts from
airlines, hotels and car rental companies. A volume discount is a price reduction for the sale of a
large number of units, such as airline seats or rooms in a hotel.

5.3.1.2 Significance of package tours

Package tours are beneficial to travel companies, travelers, destinations and other organizations
which are directly or indirectly involved in the tourism related business. The main benefits are:

a. Time savers,
b. Less cost/price,
c. Convenient (one-stop shopping), reliable (tested and proven through experiences)
d. Earn foreign currency,

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e. Better quality of products,

f. Professional services,
g. Wide opportunities to select among the alternative tours, and
h. Provide bulk business to organizers.

5.3.2 Bulk Buying of Components for discount

I. Air
Many airlines allocate a predetermined quantity of seats on selected flights that can be sold by
tour operators. Such flights usually operate between a major gateway and a popular tour
destination.

Depending on airline, flight and season, up to 30% of the seats may be available for sale by tour
operators. A large tour operator might charter2 its own flights or guarantee to purchase a large
block of seats on selected flights operated by an airline.

Another source of low-cost air space is a special class of discount fares, called ‘Net Fares’. Net
Fares are available to retail travel agencies as well as tour operators, but to the general public.
When the ticket is purchased at a Net Fare, the full price appears on the ticket, regardless of the
actual fare paid by client. The tour operators or travel agents can sell the ticket at any price they
choose. Net Fares are offered by most international airlines.

II. Land
Low-cost hotel space and car rentals are obtained in the same manner as discount air space.
Many hotels, especially resorts in popular leisure destinations, keep predefined/delimit number
of rooms, called a ‘Room Quota’, which can be sold by tour operators. A room quota is a

2
the act of hiringof an aircraft, ship, train or bus transport for a special purpose

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preset/fixed number of rooms that must be sold during a specified period, such as six months or a
year.

In some cases, a tour operator may negotiate with a specific hotel to obtain a discount rate. If a
special rate is negotiated, the tour operator may be required to meet a room quota in order to
receive the same rate in the future. Some tour operators guarantee to purchase a large room
block at selected properties/assets in order to obtain a discount rate. If a room block is
guaranteed, the tour operator is obligated to pay for any unsold rooms.

Illustration- function of tour operator

Suppose a tour operator receives a 30% discount airfare offered by ET and 50% discount on
normal room rates in Quara hotel. Assume the normal round trip (ADD/GDQ/ADD) airfare is
4,000 ETB and the normal room rate for three nights is 3,000 ETB. Based on the value of
discounts, the operator could pay the airline 2,800 ETB for passenger ticket and 1,500 ETB for
accommodation. The tour operator’s total cost for this package is, therefore, 4,300 ETB. Assume
the tour package is offered to the public at retail price of 6000 ETB. If the operator pays the
travel agency a 15% commission, the wholesaler will earn a profit of 800 (600-(4,300+900)) and
the agency will earn a commission of 900 ETB. However, if the client had arranged his travel by
himself; he would have paid 7000 ETB.

5.4 Types of Tour Operators

Tour operators may be classified in to different categories as follows:

1. Outbound Tour Operators

The outbound operator arranges packaged travel for tourists who wish to travel to destinations
outside the country where the operator is located.
 Unlike the inbound operator, the outbound operator does not usually focus on a single
destination, but may offer a wide variety of packages and destinations.
2. Inbound Tour Operators
The inbound operator arranges tour packages for tourists visiting the country where the operator
is based.

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 They provide local services at destinations- hotel transfers, car hire) and sightseeing
 They operate their own tours
 Usually specialize in one country or region
3. Domestic Tour Operators
 Designs and packages tours for local residents who travel within the country where the
operator operates.
4. Ground Operators/ Destination management companies:
 Providers of travel products and services in their own countries or regions.
 Commonly known as handling agencies and their main function is to organize tour
arrangements for incoming tourists on behalf of inbound operators.
 Sometimes inbound tour operators also are referred to as ground operators,
 But the ground operator is usually applied to companies that do not actively
market their services directly to overseas customers.
 Their operations are providing travel services:
• accommodations,
• transfer,
• local guides,
• equipment rental on the ground, and
• Activities like horseback riding, boat trips or guided diving tours etc that
form part of a larger experience or packaged tour.
Why ground operators? Ground operators are necessary because overseas operators have the
following limitations.

 No close contact with  Government regulations,

suppliers,  Company can’t establish its own
 Language problems, branch.

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CHAPTER SIX

HANDLING/DESIGNING PACKAGE TOURS AND TAILOR-MADE TOURS

One of the major functions of a tour operator is organizing tours (both package and tailor-made
tours).

6.1. Package Tour - Types

A. Independent package tour

Independent package tours are designed for clients who desire to travel independently. Most
such tours consist of airfare, hotel accommodations, and either airport transfers or a car
rental. In some cases, airfare may not be included, or may be offered separately. An independent
tour provides travelers with considerable freedom in planning their activities. The total package
cost may vary depending on the type of tour, the selection of hotel, the departure date, and
optional activities.

An independent tour provides travelers with the cost benefits of a package vacation with a
maximum amount of free time.

B. Hosted package tour

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A hosted tour is a package tour that utilizes the services of a representative, called a host, at each
destination. The tour representative is available at specified times every day to provide travel
active and assistance. A typical hosted tour may involve several stops or single destination.
Hosted tours provide travelers with the advantages of a pre-arranged trip and the services of a
personal adviser at their destination. Thus, a hosted tour provides the tourists maximum level of
prearranged and personalized services.

As an example, assume a retired couple purchases a hosted tour to London, Amsterdam, and
Paris. As with an independent tour, each hosted tour includes round-trip airfare, hotel
accommodations, and airport transfers. However, when the clients arrive in London, they are
greeted at the airport by an English tour host, who assists them with claiming their baggage and
making their way to their hotel. After checking in, the clients are on their own until their next
scheduled departure. However, their tour host is available to offer advice about local attractions
and entertainment, book a car rental or bus tour, or recommend a restaurant.

When the travelers arrive at their other destinations, Amsterdam and Paris, a different host greets
them at each airport.

C. Escorted package tour

An escorted tour includes the service of a qualified tour manager, or escort. The clients travel
together in manageable groups and may be accompanied by their escort on all or part of the
itinerary. Escorted tours are especially popular with travelers who are planning to visit a foreign
country for the first time. The escort’s job is to provide comprehensive assistance to the group,
from airport check-in to hotel room assignments. Escorted tours provide travelers with a
maximum level of prearrangement and personal assistance in a package vacation.

6.2 Tailor-Made Tours/Custom Tour

A tailor-made tour is an independent tour designed to meet the needs of an individual client. At
one time, tailor-made tours were called FIT, for “foreign independent travel,” or DIT, for
“domestic independent travel.” In recent years, the term FIT has become so widespread that
almost any type of tailor-made tour is referred to as an FIT.

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In a typical FIT, every detail of the traveler’s itinerary from departure to return may be planned
in advance. Sight-seeing tours, sports programs, theater tickets, or other activities may be
included in the tour. Package tours are often used as building blocks in creating an FIT.

Wealthy and affluent travel as and when they like and travel individually, they take tailor-made
tour. These types of tourists get their tours tailored by their travel agents. They know where they
want to go and how many days they want to spend at each place and what category of hotel and
transportation they want.

6.3 Important Stages in Tour Design

Essentially, to design/ formulate a travel product, the tour manager has to take the biggest
responsibility, initiatives, imagination and innovation coupled with a lot of business activities
which range from finding new exotic destinations and planning, organizing or promoting such
tours. The following are the main stages in tour design and selection process.

1. Research and planning

The destination research

The decision to develop and formulate a new package is a multi-stage process that involves
various steps. When a tour planner/ manager sees that a large number of old clients (through
questionnaire or other means) are interested in taking a trip to particular destinations, naturally,
those destinations become the nucleus of a new tour concept.

Some important consideration during destination research might include- make an in depth
comparison of alternative destinations, decide on capacity of each tour, duration and departure
dates,

Market research

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Since package tour is a complete tourism product, obviously, before formulating or designing
this product, market research need to be analyzed and assessed in a systematic manner. Market
research provides us answers to the following questions:

a. What is the size of tourism market?

b. Who are the existing clients?
c. Where do they live?
d. Who are their competitors-their strategy and area of business?
e. How many tourists one wants to cater?
f. What price will the clients accept?
g. What facilities are available and required?
h. What are the constraints, licenses, permission, finance, taxes, restrictions, etc?

Once we know the basic components of package tours, distribution channels, market conditions,
constraints in the tourism market, we can develop the marketing strategy. Market research is
conducted by private tour companies to penetrate the market.

2. Negotiations

It is another important management decision area in tour designing and planning.

Once the decision has been made regarding the destinations, date, duration of trip and number of
clients to be carried during the trip, the tour management starts negotiations with the principal(s)
for a normal contract.

Negotiation means talk between the travel companies and the principal(s) 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 and suppliers.

a. Airlines
b. Accommodations
c. Ancillary service organizations- it is necessary to make contracts with ancillary service
organizations to determine the exactprice of a package tour. It includes surface and water

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transportations, overseas representatives, etc.

3. Handling agency/destination company/employment of overseas rep.

The appointment of a handling agency not only ensures excellent travel services to the tourists,
but also makes the operation smooth and profitable. It is a matter of great significance as the
success of travel business largely depends upon how the clients are actually taken care of during
the tour. Thus, the tour operator should consider the experience of the handling agency in
business, area of operation, reputation, credibility, professional staff and competitive price in
appointing it.

4. Itinerary preparation

By itinerary, one means the designing of a program 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
program. Whether it is a lean season or an off season, escorted or not escorted, consumer
oriented or readymade tour program, the itinerary is prepared to identify the origin, destinations,
stopping points, accommodations, sightseeing and other travel services on the travelers’ trip.

5. Costing and pricing a package tour

Assembling the cost of a package tour and setting price for it is another important function of a
tour operating company. While setting the tour price, the tour operator will take in to
consideration factors such as: the costs of flight, HTL, handling agents’, transfer, marketing,
administrative, etc.

6. Marketing of tour package

Once the tour package is ready, the tour operation management has to make careful decision
regarding promotion of the particular package tour. The basic objective of management is to
make a package tour widely known and make it more and more attractive. To achieve these
objectives, the management must consider the budget available, promotional mix, potential
market, easiest and most effective media, etc.

7. Tour handling/ actual operation

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It generally includes administrative work and pax handling like maintaining reservations,
handling deposits, sending advice to ground operators, arranging travel formalities, tour
escorting, local representation, etc.

6.4. DESIGNING AND HANDLING TOURS

6.4.1. Designing Package Tours

Some of the factors to be considered in designing and selection of package tours are:

 Purpose of trip  Destination

 Length of stay  Features, options and activities
 Clint budget desired
 Accommodation desired
i. Destination

The package tour for popular destinations has the competition with the other companies. So,
these profits rate are restrained low. However, we can get many clients. In this case, arrangement
activities are more important than others.

There is little competition with other companies as for the package tour for rare destinations. So,
these profits rate are possible high. However, there are few numbers of clients. In this case, sales
activities are more important than others.

Generally, large scale tour operators show tendency to deal with popular destinations and small
scale tour operators do with rare destinations.

The trip to Ethiopia hits to latter in the world market. Each tour operator is raising high profits
from a few clients. Even in the case of Ethiopia interior, although scale differs, this concept is
almost correct. The popular destinations are famous areas where it is designated in World
Heritage Site, such as Axsum, Lalibera and Gondar and the rare destinations are areas so-called
the unexplored regions.

Yet, the former is desirable from the point called the economic returning to host countries.

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ii. Purpose of trip

Each tourist has the different purpose individually. Recently, it is increasing the demand to the
trip for various experiences and studying other than the leisure and business purpose. For
example, some tourists want to help farmers in farm villages and others want to visit orphanages
to support children.

When tour operators design package tours, the development of new merchandise becomes
possible by considering the trip purpose of such clients.

iii. Length of stay

When Tour operators design package tours, they must consider carefully about the setting in the
trip periods. It is important not only to research the market but also to do it, because it is easier to
sell trip merchandises in a short term in the market. However, there is low profit from the trip
merchandises in a short term.

On the other hand, although there is good profit from the trip merchandise in long time, it is not
easy to design the trip merchandise fitted with demands, because desires of the clients are
various.In a recent trend, clients order some Optional Tours based on independent Package Tour.
Then, tour operators are correspondence to the various desires of their clients.

iv. Client budget

The budget of clientaffects the length of stay, type of accommodation and range of activities
included in the tour price. The least expensive tours include the fewest number of features (e.g.
minimum room rate at any economy or limited-service hotel).

v. Accommodation desired

Some travelers prefer only basic, economy class lodging and plan to spend more money
available on meals and activities. Others are willing to pay a higher price to obtain a superior
level of luxury. The type of accommodation desired by the visitors also determine the cost and
price of the package tour.

vi. Features, options and activities

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The activities available at a destination can have a strong influence on client satisfaction. Some
visitors may prefer to explore a destination independently; others may interest in organized S/S
tours, sporting events and others.

6.4.2. Handling Package Tours

 Arrangement

i. Stocking Seats: Airplanes

Tour operators must get a preset quantity of seats on selected flights for package tours.
Therefore, they have to negotiate with airlines about the number and the price of seats. Usually,
this negotiation is carried out once in a half year. By the way, tour operators must sell many seats
in basic season to secure in seats in the peak season.

ii. Stocking Rooms: Hotels

It is the same as the above, generally speaking. However, as for a negotiation, there are many
once cases in a year.

iii. Land Arrangement

Tour operators make a reservation of the restaurants, secure the vehicle and assign the guide in
according to the designed arrangements previously. The land arrangements are carried out on
occurrence basis usually.

In the case of the trip that tour operators of origin countries arrange, they request arrangements to
tour operators of host countries.

 Sales (Sales through Agents / Direct Sales）

i. Preparation of 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

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 To persuade them to purchase products

A brochure should contain the following information:

 Name of the travel company

 Means of transport
 Details about destinations
 Itinerary
 Accommodations-types, locations, meals
 Name of the overseas representatives
 Duration of each tour (days/nights)
 Booking and cancellation conditions
 Details of other services-insurance, currency, entertainment
 Travel documents required
 Details of price

ii. Distribution of Tour brochure to Travel Agency

Tour operators entrust the sales of package tours to travel agencies, usually. And travel agencies
handle package tours of varioustouroperators. Therefore, tour operators expect that their
brochure is eye-catching. The position on the shelf is very important to cause brochure
conspicuous. To secure a good position, tour operators make an effort to build goodrelation with
travel agencies.

iii. Advertisement for Public

 Correspondence to Travel Agent and Clients

i. Information Offers: Details of the tour, Local information etc.

ii. Preparation and delivery of Travel Documents

Confirming Passport, Visa, Travel Insurance, Air Tickets, Travel Voucher, Final Schedule, CIQ
Document, Name Tag etc.

iii. Reconfirmation

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The reconfirmation to each relation organizations is necessary previously before clients’

departures.

6.4.3. Designing Tailor-made Tours

Designing tailor made tours require considerable research into client needs as well as the
availability of travel components. If foreign destinations are involved, the process is potentially
time-consuming and expensive. However, many clients still prefer tailor-made tours, hoping to
combine the benefits of a tour with maximum flexibility. Studies indicate that clients who
purchase FITs had a higher satisfaction rate than clients who purchased package tours.

6.4.4Handling Tailor-made Tours

 Consulting

i. Destination

Travel agents need the concrete(definite, clear and real) destination of their clients. If their
clients don’t have the concrete destination, they have to recommend some destination after
getting more information.

ii. Period

Travel agents have to know the client’s travel period, because there are many kinds of air-tickets
based on the period such as 10 fix, 30 fix, 2M open, 1Y open and so on. The price and
bookingpriorities of air-tickets are decided by the period. And if time-consuming is not enough
for the client’s distinction or the period, travel agents encourage changing the destination or the
period to their clients.

iii. Budget
Travel agents have to grasp the client’s budget for their travel. If their budget is fix and is
notenough for the client’s distinction or the period, travel agents encourage changing the
destination or the period to their clients.

iv. Trip Purpose

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When any of the above 3 points do not fill the demand of the clients, the travel agents propose
other destinations to their clients after the period and budget are considered. It is important for
travel agents to grasp the trip purpose the client in this case.

v. Selection of the Airlines

The price of air ticket differs by the airlines in competition lines. However, all the clients do not
necessarily purchase the cheapest air ticket. For example, there are clients who like the service
that the airlines offer or other clients who want to use the particular airlines because they are the
member of FFP of the airline.

vi. Selection of Accommodations

There are many types of accommodations such as hotels, Inns, camps and so on. Every clients
want comfortable for accommodations, but the concept of comfortable differs by clients. Some
clients want to stay deluxe hotels which have 5 stars to enjoy their hotel life, but other clients
want to stay economical hotels to serve their money.

Agents have to grasp the client’s the concept of comfortable and recommend them some hotels
matching with their tastes.

vii. Airport Transfer

A city area is far from an airport usually. There are public transfer systems or taxi services which
access to a city area from an airport. However some clients cannot use them by themselves. For
example, they are clients who have no experience to go abroad.In this case, agentspropose them
to arrange the airport transportation services in an advance to secure the relief and safety of
clients.

viii. Activities in Host Country

Most of the FIT travelers aren’t satisfied with the contents of package tours, because the contents
are excessive and also be shortage.

Travel agents needdiscover the desires of their clients with the interview and construct the
contents which they are satisfied with.

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ix. Estimation

Of course, travel agents need estimate the tour fee for a client; because a tailor-made tour is
ordinalmerchandise for each client.

 Arrangement

i. Airline Reservations

Agents check the seat status of the flight about the date, the time and the airlines company that
clients request with CRS. When the seats are available, they reserve it. When the seats are not
available, they make records on a waiting list. At the same time, they prepare some alternate
plans and propose these to clients. In the case that the change of the charge results in, they notify
it to clients without fail.

ii. Hotel Reservations

Agents make a reservation of hotels according to the requested date from clients. Although there
are some hotels of which agents can know unused room situation on online such as CRS, they
must inquire that to hotels usually. It is general that hotel arrangements of foreign countries are
reservedthroughtouroperators in foreign countries, because they have good contracts with hotels.
So, Hotel reservations are on request basically. Agents tell the result to clients as soon as they
accept replies from tour operators. They prepare some alternate plans when the reservation was
not confirmed.

iii. Land Arrangements

Agents make a reservation of the airport transfer and the activity in the location for clients after
the detailed meeting with clients. It is general that these are reserved through tour operators in
foreign countries. These are on request basically. Agents tell the result to clients as soon as they
accept replies from tour operators.

 Correspondence to Clients

i. Information Offers: Details of the tour, Local information etc.

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ii. Preparation and delivery of Travel Documents

Confirming Passport, Visa, Travel Insurance, Air Tickets, Travel Voucher, Final Schedule, CIQ
Document, Name Tag etc.

iii. Reconfirmation

The reconfirmation to each relation organizations is necessary previously before clients’

departures.

6.5. DEVELOPMENT OF TRAVEL CIRCUIT

The development of a travel circuit/tour route (a way to be followed toget to a destination)

involving visits to more than one destination and return to origin. requires three major steps:
 Identification of attractions,
 Identification of main services and
 Coordinating attractions and services. These will be discussed in brief below.
6.5.1. Identification of major Attractions
 Attractions of a particular area are the features and related activities of that area which
draws the tourist to visit the area.
 Attractions relate closely to the travel motivations because the tourist must want to visit
and experience the attractions.
 The success of particular attractions may change through time as travel motivation and
fashion changes. (Please refer Butler’s ‘Destination Life Cycle’ from your Sustainable
Tourism Management materials).
 Tourism can be more successful in an area if more than one type of attraction exists or
can be developed. (Refer your Sustainable Tourism Management materials).

An attraction is a thing which acts as a pull factor:

 The basis for developing tourism

 Form the most essential part of the tourism product
 Draws visitor
 Satisfies recreational needs

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1.5.2 Types of Tourist Attractions

Generally, tourist attractions can be grouped in to two broad categories, namely manmade and
natural.

I. Natural Attractions: attractions related to natural environment viz.

a. Climate
 Generally tourists from the colder climate, especially cold winter, seek warm/sunny,
relatively dry climates.
 People from hot/humid may seek cooler climate.
 In many countries, seasonality of climate determines seasonality of tourist.
 Some tourist seeks different climate for health reasons.
b. Landscape beauty, unusual characters and unique features.
 Natural landscape beauty and characters such as mountains, valley, rivers, lakes and
deserts etc. related to activities such as sightseeing, trekking, camping, rafting, boating,
and photography.
c. Beaches and shoreline: Beach tourism is the activities such as sun bathing, swimming,
beach walking.
d. Floras and faunas: Interesting representative and sometimes unusual vegetation and
animal life including birds.

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ð Unique and endangered species to be preserved for scientific purposes.

e. Parks and Reserves (officially protected): Conservation (preservation and protection)
of important natural environment is essential for both scientific and tourism reasons.
II. Manmade: attractions related to culture, entertainment and special manmade features.
i. Cultural patterns and life style:
a) especially interesting to many tourists as an experience of cultural tourism
b) Includes – traditional cultural patterns, lifestyle and customs.
c) Include modern life style, which is different than that of the tourist.
ii. Festivals and events: various types of festivals and events related to the local
traditions and arts, and religious festivals can be major attractions.
iii. Archaeological and historic sites and monuments:
a. All types of archaeological or pre-historic sites including marine archaeologyand
special features such as industrial archaeology.
b. All types of historic buildings, structures and areas including buildings of
representative traditional and historic architecture and building techniques.
c. Sites of important historical events such as battle fields
d. Monuments to important historical events or people.
e. Unusual and striking manmade structures such as large dams and bridges.
iv. The art and handicraft
 Includes visual art of paintings, carving, etc and performing arts of dance, drama and
music
v. Museums: e.g.: National Museum, Addis Ababa. These/museums are special features,
which exhibit and explain aspects of history, culture, arts and handicrafts technology,
natural, historical and other special areas of interest.
vi. Sports activities and events:
 Many sports events are of local tourist interest and some of national and
international interest
 Includes participatory sports such as snow and water skiing, tennis, golf, scuba
diving are becoming increasingly popular although popularity of some specific
sports changes as current fashion.
vii. Entertainment:

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 Includes dance/drama/films and music performance related to either traditional or

modern culture.
 Night life, especially night clubs and discos with dancing and music
 Gambling like casinos
 Development require facilities such as theatres, cinemas, stage performance, cultural
shows, casinos with adequate access and parking facilities
viii. Shopping:
a. Usually secondary attractions but in some areas may be primary attractions
(Important part of itineraries)
b. Important means of tourist area to make money from tourism
c. It includes shopping for locally made clothing, arts and handicrafts, furniture and
locally processed items such as gems and stones)
d. Duty free items such as cameras and electronic equipment
e. Antiques
ix. Dinning and Cuisine:
 Most people/tourists require good quality but not necessarily high priced food. Many
and some tourists like to try local food at least once and some tourists consider good
quality food as a major attraction. High quality restaurants can become important
attractions in some areas.
6.5.3 Identification of main services
i. Accommodation:
 All types of accommodation – hotels, motels, holiday villages, guesthouses,
residential (self-catering) units, youth hostels, camping, etc. should be surveyed and
evaluated. Identify kinds of facilities, services and quality levels.
ii. Other facilities and services:
 Eating and drinking establishments
 Shopping and personal services
 Money exchange and banking
 Medical facility and services
 Public safety
 Postal services

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iii. Transportation and other infrastructures: air transportations, road and rail way
networks.
iv. Facilities and services: health institutions,banks,security
v. Other infrastructure:
 Water supply for tourist attractions
 Electric power
 Telecommunication
 terminals
6.5.4. Coordination of attractions and services
After clearly identifying the attractions and services which are available at the destination
then, it is easy to develop travel circuits.
It is a matter of coordinating the attractions and services. But due attention should be given
that the tourist attractions are worth visiting and the services available meet the expectations
of tourists.

6.6 PLANNING ATOUR ITINERARY

 Itinerary: description of a journey, showing dates and times, mode of transport, places
visited and activities.
 An itinerary is a day to day plan of a journey. It includes all the activities and destinations
that the tourist will engage in or visit during his or her journey.
 It is a list of the origin, destination and stopping points on a traveller’s trip
 Each portion of an itinerary is called a segment.
 The first city or airport in a segment is called the board point or departure point; and
the second city or airport is called he off point or arrival point. Together the points
make up a city pair.

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 A segment that represents air transportation is referred to as an air segment: and a

segment that represents land transportation is referred to as a surface segment
 A non-stop flight is does not make any stops between the origin and destination
 A direct flight does not require the Pax to change planes, but may make one or more
stops
 Two or more flights between the origin and destination are connecting flight
 A point in connection where a change of aircraft occurs is called a connecting point
 A point that is not a connecting point is called stopover point
 An itinerary that involves only points in a particular country is called domestic itinerary
 If any p0int in an itinerary is outside that country, the itinerary is called an international
itinerary
Example:
A Pax will travel from Addis Ababa to New York connecting in London. After attending a
meeting in New York, he will return on non-stop flight to Addis.
Therefore:
The pox’s itinerary consists of the following segments.
1. Addis Ababa-London
2. London- New York
3. New York -Addis Ababa
 London is a connecting point, New York is a stopover point
 The initial segment from Addis to London is called the outbound segment
 The last segment from New York to Addis is a return segment

Basic requirements in itinerary planning

Familiarity with airline timetable and OAG is a basic requirement for employment in many
segments of the travel industry, including, travel agencies and tour operators. Two types of
printed references are very useful in itinerary planning.
1. Time-tables: is a schedule of departure and arrivals of a particular airline. It consists
of information about:
 Departure city (FM)  Departure Time (DEP)
 Arrival city (To)  Arrival Time (ARR)

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 Flight number (FLT)  Days of Operation (FRQ)

 Aircraft Type (EQP)  Number of stop (ST)

N:B- Departure and arrival times are given in local times

2. Official Airline Guides: OAG is an international edition that covers all other flights,
including flights between the US and Europe, Africa, South America, Asia as well as
flights between points in foreign countries.

It has been noticed that most of the tour companies prepare multiple itineraries for the same
tour. In reality, a tour company needs to develop/prepare separate and distinctive itineraries for
the tourists, tour managers, tour escorts, vendors and tourist guides. However, different
itineraries are based upon an individual expansion of the tourist itinerary.

Essentially two dominant itineraries are used

1. General Itinerary that is aimed at and marketed to awide variety of clients; and may
often be priced as a total package tour when provided by a tour operator,
2. Personalized Itinerarythat is specially drawn up for aspecific client according to that
clients’ needs and interests. Here, each component may be individually priced if an
independent tourist uses a travel agency or books directly with the services provider.
Tips for preparing an itinerary
The following information should be kept in mind whenplanning an itinerary
 Always have an interesting and attractive heading for youritinerary
 Show the date and time clearly
 Always break your itinerary up into paragraphs/rows with new dates
 Provide as much information about the attractions andactivities included in your tour
plan, as possible
 Always us the 24 hour clock, i.e. 01h00 to 24h00
 Allow sufficient time for each activity
 Place each activity in logical order. Remember you need tosave your client traveling time
and cost
 Try to finish each day with a special activity, if possible

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 Never make promises in your description that you may not beable to keep, (e.g. don’t
say, “you will enjoy aglorious sunny day at the beach”, it could pour with rain onthat
day).

 Write clearly and to the point. The client must want to travelimmediately to their
preferred destination when they readyour itinerary. It must however leave the client
wanting totravel in order to discover the destination for themselves.
 Givethem just enough information to wet their appetite.
 Never use the word etc in an itinerary
 You must be clear about accommodation, transport,attractions, and activities that the
tourist is paying for.

Factors considered in itinerary design

The quality of itineraries is based on itinerary-mix-planning. Generally, the tour planner takes
in to consideration the various ingredients while preparing an itinerary such as:
 right type of transportation,  professional tour conductors and a
 right type of accommodation correct marketing approach;
 right type of destinations;  maximum entertainment in the right
 right amount of sightseeing; amount;
 quality of meals;  reasonable free time,
 Customers’ interest  documents required and so forth

NB: To develop the best possible combination of tour ingredients, it is imperative to review and
analyze the comment sheet of past tourists and incorporate suggestions received from the
current tourists. Thus, whatever the approach the tour planner/manager should adopt, he must
develop an itinerary that attracts the tourists.

Time zone
Itinerary planning requires the knowledge of time zones and the ability to calculate elapsed
flight time. An airline route system may cover several time zones. In flight schedule, departure

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and arrival times are stated in local time. If a flight crosses one or more zones, the time change
must be taken in to consideration when elapsed flight time is calculated.

The civil day now begins at midnight, local time. In ancient times, the Babylonian day began
with sunrise and with sunset among the Athenians and Jews. The day is still often regarded as
starting with sunset in ecclesiastical (particularly Jewish ecclesiastical) usage; until recently, the
astronomical day started at noon, and the Julian day still starts at noon.

In common usage day, as distinct from night, is the period of natural lightbetween dawn and
dusk. The period of daylight, most nearly constant near the equator, varies with the latitude and
the season, reaching a maximum of 24 hr in the polar zones in summer, a phenomenon known as
the midnight sun.

Time differences and elapsed flying time

Next, let’s look at time differences and elapsed flying times. First, it is essential to befamiliar
with the 24-hour clock.

1200 hours 12.00 noon (mid-day)

1300 hours 1.00 pm
1400 hours 2.00 pm
1500 hours 3.00 pmand so on
2400 hours midnight
2359 hours one minute to midnight
0001 hours one minute past midnight
0100 hours 1.00 am (early hours of the morning)
0200 hours 2.00 am
0300 hours 3.00 am

Using the 24-hour clock eliminates mistakes or uncertainty about whether the timeis am or pm.
For instance, by ‘8 o’clock’ do we mean 8 o’clock in the morning or 8o’clock in the evening? By
using 0800 hours or 2000 hours the time is perfectlyclear.

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Time differences

The world is divided into 24 time zones, each of 15° longitude, with the Greenwich Meridian
being point zero (GMT). The time used in each country, whether it is the time of the
corresponding time zone or modified, is an hour fixed by law. Time is known as legal time,
standard time or local time. Certain countries modify their legal time for part of the year,
especially in summer.
You can study the international time calculator from your Official Airline Guide3.

Examples
 Imagine it is now 1500 hours (3.00 pm) in Tokyo on 22 December. What time is itin
Copenhagen?

Denmark’s standard time is GMT + 1, and Japan’s is GMT + 9. It istherefore 8 hours earlier in
Denmark than in Japan. Subtract 8 hours from 1500 hoursto arrive at 0700 hrs in Denmark on 22
December.

 It is 0800 hours in Athens on 12 October. What is the time in Barbados? Check the
international time calculator: Greece + 2, Barbados – 4. Add 4 and 2 together to make it 6
hours earlier in Barbados than it is in Greece. Then deduct the 6 hours from 0800hours to
reach the answer – it is 0200 hours (2.00 am, early hours in the morning) in Barbados.

Some large countries, such as the USA, Brazil, Australia and the Russian Federation, do not have
the same standard time throughout the country. Details are published in the official Airline
Guide.

3
Today, the OAG brand is recognized as the most accurate, single source of airline information. Its
suite of multi-media products and services all originate from its comprehensive proprietary databases.
OAG is best known for its airline schedules database which holds future and historical flight details for
over 1,000 airlines and more than 4,000 airports. This aggregated data feeds the world’s global
distribution systems and travel portals, and drives the internal systems of many airlines, air traffic
control systems, aircraft manufacturers, airport planners and government agencies around the world.
Travel planners rely on OAG to deliver all scheduled flight options for efficient itinerary planning,
choices and changes.

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How long does the journey actually take?

In the Airline Guide, you will find a table giving average journey times between major cities.
This allows you to see quickly the approximate flying times between two cities, but you might
need to work them out for individual journeys.

Then find the actual flying time for a journey where the city of departure has a time different
from that of the city of arrival. You will need to convert both times into GMT.

Step One: Establish the departure and arrival times in local time. These are published in the
timetables.

Example travel is in August:

Depart Rome 1415 hours

ArrivePort au Prince 1915 hours (Haiti)

Step Two: Look at the international time calculator to establish the time variance toGMT.
Rome – Italy = GMT + 2 (Daylight Saving Time March – September)[Daylight Saving, system
of setting clocks aheadso that both sunrise and sunset occur at a later hour, producing an
additional period of daylight in the evening. In the North Temperate Zone clocks are usually
set ahead one hour in the spring and set back to standard time in the fall. Until the year 2007,
daylight-saving time begins at 2 AM on the first Sunday of April and ends at 2 AM on the last
Sunday of October in most of the United States and Canada.]

Port au Prince – Haiti = GMT – 4

Step Three: Convert local times to GMT

Depart Rome 1415 hours + 2 hours convert to GMT (–2 hours) = 1215 hours
Arrive Haiti 1915 hours – 4 hours convert to GMT (+4 hours) = 2315 hours

Now that you have both departure and arrival times in GMT it is easy to work outthe actual
flying time:

From 1215 hours to 2315 hours = 11 hours

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A word about the International Date Line

The International Date Line is a time zone boundary. It is an imaginary line extending from the
North Pole to the South Pole and separating one calendar day from the next. Along most of its
length, the International Date Line corresponds to the 180th meridian of longitude.

The International Date Line lies at the 180° meridian on the opposite side of the earth from
Greenwich and divides the eastern and western time zones. The timedifference between each
side of the International Date Line is 24 hours.

 A traveler moving eastward across the line sets his or her calendar back one day, and
 One traveling westwardsetsthecalendar a dayahead.

Look at the map for the Fiji Islands and Hawaii in the Pacific Ocean. They are not agreat
distance from each other and yet there is a 22-hour time difference. This is because Fiji is at the
eastern extreme of the time zone (GMT +12) and Tahiti is at thewestern extreme (GMT – 10).
When we travel across the International Date Linegoing from the
 Eastern hemisphere to the western hemisphere we gain a day; and
 Travelling from west to east, we lose a day.

Procedures for effective itinerary design and development

Tourist itinerary is a crucial ingredient of a package tour. Preparing an effective and market-
oriented itinerary is not an easy task. It requires

• experience, • imagination and

• knowledge, • exposure
• ability,

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As per the tour operation industry environment, a tour planner should adopt the following step by
step procedure:

Identify market/tourist requirements and their budget

Select the destination/s

Negotiate with DMC and give them importance to ensure quality

Identify ARNK4segments

Study and understand the use of worldwide city to city schedules

Study and follow itinerary planning tools- OAG and

time zone calculation

Emphasize in right kind of sightseeing

Include optional ingredients with free time

Consider views of past tour participants (interest of current tourists)

Itinerary format

There are no hard and fast rules for itinerary format. But, the following are some formats used by
tour operating companies.

4
When air segments are interrupted by surface travel, such as rail or ship travel it is called
ANRK

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DET 001-Historic route by Surface

Overview Itinerary

M
R
Tour Code: Meal
DET – 001 Day 1: Arrive Addis Ababa. O/N Sheraton Hotel Plan

Category:
Historic Day 2: Drive Addis to Debre Markos. Visit Debre
Libanos Monastery &Blue Nile Gorge. O/N FM FB
Transport:
Hotel
Land
Duration:
Day 3: Drive to Bahir Dar & Sightseeing tour.
14 Nights, 15 Days
Visit Open-air Market and panoramic view of the
city. O/N D/Anbessa Hotel

Contact us for more

Day 4: Bahir Dar. Visit Blue Nile Fall &
information:-
Monasteries of Lake Tana O/N D/Anbessa Hotel

Day 5: Drive Bahir Dar to Gondar. VisitCastle

compound, Bath of Fasildes, Debre Berhan Silassie
church and Quskuam monastery. O/N Goha Hotel

Day 6: Drive Gondar to Axum. Visit the

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magnificent mountain scenery. O/N Goha Hotel

Day 7:Axum. Visit archeological sites &

Church .O/N Goha Hotel

Day 8: Drive Axum-Adigrat. VisitYehaTemple&

Debre Damo Monasteries. O/N XYZ Hotel

Day 9: Drive to Mekele. Visit rock-hewn churches.

O/N ABC Hotel

Day10: Drive to Lalibela. Visit spectacular

Mountains scenery. O/N Yeha Hotel

Day 11: Lalibela. Visit rock-hewn churches. O/N

Yeha Hotel

Day 12: Excursion from Lalibela to Asheton

Mariam or Yemrehane Kirstos. Visit rock-hewn
churches. O/N Yeha Hotel

Day 13: Drive to Addis.O/N Sheraton Hotel

Day 14:Enjoy your free time. O/N Sheraton Hotel

Day 15:At 09:00- Cheek-out from Sheraton Htl

and TRF to Bole int’l airport.

Sample Itinerary-1

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Sample itinerary-2

Day 1
Late evening arrival at Dubai international airport. Bilingual guides after meet and greet escort
guests
through immigration and baggage reclaim out to luxury air -conditioned coaches. Welcome
banner
arranged outside the airport.
One person can be sped ahead to the hotel and dressed in the local national costume (in this case
the
national Arab costume) to greet the group. A special check-in room should be decorated again as
a
traditional room (in this case decorated as a Majlis) and cocktails and canapes should be served
as the
local traditional ban welcomes the guests.
The guests receive a personalised welcome envelope with the itinerary in their native language
and
English, a general information sheet about the country which have information like dos and
don’ts,
public holidays, working hours of government and private offices, places for currency exchange,
etc.
Day 2
Buffet brunch at hotel poolside.
In the afternoon a fascinating city tour will afford visitors the chance to sample the culture and
history
of bygone Dubai. The routes takes the to the museum, housed in a 150 year fort, through the
bastakia
district of old wind – towered and mud – walled houses, into the souks of gold, silks and spices,
past

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magnificent palaces and across the creek on and on a water taxi to gaze on the modern
metropolis that
is Dubai’s centre. Return at hotel at approx. 1830 hrs.
Dinner at the Dubai world trade – club, overlooking the city from a dramatic vantage point on
the
thirty – third floor of the world trade centre, the tallest tower in gulf.
Day 3
Following breakfast at the hotel, guests will be escorted to the hotel car park to board helicopters
for
transfer to the majestic high dumes of Liwa for sand skiing (equipment will be provided by the
tour
operator). Transfer to hotel for lunch.
Afternoon at leisure. A coach driver and guide available for guests who wish to go for shopping.
Guests collected by coach and escorted to a luxury restaurant specialising in traditional Arabic
cuisine, followed by a night on the town – at a disco or maybe an Arabian night-club.
Day 4
Breakfast at poolside. Transferred at 0845hrs to the creek for an exciting fishing trip in the gulf
in anArabian Dhow. Guests will be provided with traditional Arabic hand lines.
Catches will be cooked and lunch served on board. Return to hotel around 1430hours.
Afternoon: shopping trip, the first stop is Karama, famous for its bargains. Then to Al Fahidi
Streetwhere the best buys are electronics, videotapes and watches. Finally, a short walk into a
textile Soukwith material for both men and women and a host of tailors ready to make your
purchases intofashionable clothes.The evening is spent at one of the Dubai’s popular restaurants,
perhaps specialising in Tex - Mex.food, with music from a live band. Late evening return to
hotel.
Day 5
Guest will be taken to the Dubai camel racetrack for a camel race if scheduled.
Following the race, breakfast will be served in a tent behind the track. Guests then split into two
groups. Group 1 will leave for the hotel’s private beach club to avail themselves of the beach
facilities, while group 2 will leave for their desert driving course and return to hotel at 1800hrs,
while

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group 1 spend the afternoon on the beach.

Prior to dinner at the hotel, guests will be pres ented with their desert driving course certificates.
Day 6
Morning departure for the Hatta Fort Hotel, at the foot of the Hajar mountains which form the
backbone of the emirates. The journey is spectacular. The sand dumes become taller and turn a
beautiful amber – red colour until they merge with the mountains. Among the facilities of the
award –
winning mountain – lodge – style hotel are archery and clay pigeon shooting, where a
“sharpshooter’schallenge” has been arranged.
Champagne will be served and lunch will be at banquet in the gardens. There will be plenty of
time
for a refreshing dip in the pool with piped underwater music.
101Mid – afternoon the group leaves in a fleet of powerful four –wheels – drive vehicles. After
somespectacular dume – driving, the cars emerge over a dume to find a champagne bar lit by the
sun.
Nearby is a Bedouin camp. Everyone is given traditional Arab dress for the grand celebration. A
localband alternates with western music. The goat hair tents are set out with low tables and full
silverservice.
After dinner, the sound of hooves is heard. The lights swing and three camels come into view.
Themiddle camel carries only a rolled up Persian carpet. The riders of the two others present the
carpet to
a member of the group as a toke n of appreciation from the sheikhs. Ceremoniously, the
Bedouins
present a traditional dagger of “khanjar” to cut the string binding the carpet. The carpet
unravelsacross the sand to reveal a beautiful belly dancer. A perfect end to the evening.
Departure back to hotel at approximately 2200hours.
Day 7
Breakfast at the hotel. Baggage transferred to airport for check – in formalities.
Guests transferred to the airport for return flight, giving ample time for last minute shopping at
thefamous Dubai Duty Free Shopping Complex

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6.7 COSTING TOUR PRODUCTS

6.7.1 Introduction
‘Cost’ in simple word means the sum total of all expenses. Normally, it is measured in terms of a
monetary sacrifice involved.

Tour cost means the total cost incurred or attributed to a tour product service or tour cost is the
sum total of costs incurred to create or formulate a tour package. Since a tour company does not
manufacture a complete tourism product itself, hence, it is a process of assembling or purchasing

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the various elements of tourism products in bulk from the real owner. Therefore, the cost of
package tours is determined according to the client requirement or company strategy.

The methods to be used for the ascertainment of cost of a package to be sold are different from
one tour company to another. This is because the components, which are the part of package
tour, are different from organization to organization. Generally, a package tour includes two
components-travel and ground services. Thus, the cost components of a package tour are:

a. Research and development cost (first time)

b. Travel cost-air, road, rail and sea
c. Accommodation costs
d. Transfer costs
e. Food and beverage costs
f. Sightseeing and activity costs
g. Marketing costs
h. Administrative costs
i. Miscellaneous costs

The sum total of cost components of a package tour is known as the cost of package sold.

6.7.2 Components of Tour Cost

1. Research and development cost

It is also known as personal and research cost and is often underestimated by tour companies. It
includes the cost of tour planner, manager and staff of the company who are involved in tour
planning. It also includes the cost of “FAM Tours” and any other costs incurred to develop a new
or old package tour.

2. Travel cost

This cost includes the cost of air travel or travel through other modes from the original point to
the destination point, and the destinations to be covered during the tour. In other words, it is the
total cost of travel ranging from departure to arrival at the original point. This cost is to be
calculated on the basis of air ticket costs and the contract with transport operators.

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3. Accommodation costs

Accommodation cost means the price paid to acquire room in a hotel or resort. It depends on the
negotiation between the hotel management and the tour manager/planner and other elements of
the hotel product like food, beverage and amenities, etc.

4. Transfer costs

Transfer cost is incurred for transferring the client from the airport to the hotel and vice-versa.
The cost is according to the contract with transport operators or if the travel company has its own
transport buses, the cost will be charged on mileage or duration basis. The costs will also be
different depending on the type of car the tourist wants to use.

5. Sightseeing and activity costs

This cost constitutes a major part of total cost and it is a high cost area which makes the clients
satisfactory or unsatisfactory. The tour planner must select the activities sightseeing or
excursions that could be offered to clients. This cost is calculated by taking the per person cost
for all activities and adding them up. The destination vendors usually offer these activities less
expensively to a group. This can and should be negotiated with ground operators.

6. Administrative costs

It is an indirect cost incurred by a tour company in formulating the policy and strategy for
directing the organization and controlling the operations. Administrative expenses/costs are thus
incurred in the general and financial management of a travel business such as office expenses,
salary to staff, insurances, audits, financial or legal expenses and so forth. These expenses are of
fixed nature, so these should be treated as period costs instead of product costs. Usually, it
occupies 15 to 20% of the cost of sale.

7. Marketing costs

Marketing cost includes advertising expenses, market research, reservation of hotels, air and
railway tickets, commission to travel agents and ground operators and distribution expenses.

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8. Miscellaneous costs

The miscellaneous costs vary from organization to organization. These costs include portage at
airports, tips at airports, literature and other materials and gifts given to a tour member. It will
more for a new tour company than an old one.

The tour cost can be classified in to two main groups: fixed and variable costs.

Fixed Costs

Fixed costs are those which are incurred even when one is selling or not selling any tour
package. Or when a client/ tourist or a group of tourists go on a tour, one has to incur some
expenses such as Fam Tour, research and development expenditures, marketing expenses, tour
manager’s and tour planner’s cost, etc. these are incurred as fixed costs. Fixed cost is also known
as period cost because it is dependent on time rather than output. These costs can be controlled
by management in the long run.

 Are the costs of production that stay the same Examples: rent for facilities,
management salaries, interest on loans.
 Don’t change with volume sold (up to some limit).
 Don’t change regardless of whether you produce a lot, a little bit, or even if you
produce zero.
 Firms have no control over fixed costs in the short run. For this reason, fixed costs
are sometimes called sunk costs.
A fixed cost is a cost whose total dollar amount remains constant as the activity level changes.
Your monthly basic telephone bill is probably fixed and does not change when you make more
local calls.

Variable/operating costs

Tour variable costs are those which vary with the number of tourists participating in the tour. For
example, food and beverage costs, insurance premiums, literature provided to tourists, room
costs, etc. The variable cost is also known as product cost because it is based on product rather
than on time.

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 Vary as you produce more or less. Examples: construction materials, packaging, sales
commissions
 Are unit costs that remain more or less constant on a unit basis
 In other words, total variable costs increase at a constant rate with increases in units
produced and sold
 Producing more adds to Total Variable Costs. Producing less reduces them.
 Variable costs are costs that vary in total directly and proportionately with changes in the
activity level.
 A variable cost is a cost whose total dollar amount varies in direct proportion to changes
in the activity level. Your total long distance telephone bill is based on how many
minutes you talk.

Look at the following formula for your knowledge of cost.

1. Fixed Costs = Total Costs – Variable Costs

2. Variable Costs = Total Costs – Fixed Costs
3. Total Variable Costs = Unit variable costs * Units Sold
4. Unit Variable Costs = Total Variable Costs / Units Sold
5. Total Revenue = Unit Selling Price * Units Sold
6. Average Costs = Total Costs / Units Sold
7. Total Costs = Total Fixed Costs + Total Variable Costs
8. Total Revenues – Total Costs = Profits (losses)
Breakeven: Definition: the volume of sales needed to at least cover all your costs. Break-even
means zero profit, but not a loss.Once you know what your variable costs are, as well as your
overall fixed costs for the business, you can determine your breakeven point.

6.7.3 Factors affecting the tour cost

Determination of accurate tour cost is the main task of the tour planner/ tour costing planner. The
total should be designed in such a way that it must generate an adequate profit for survival.
Before costing a tour, the tour costing manager considers the following factors, which have a
profound impact on company’s profitability position:

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 Seasonality
 Exchange rate movements
 Increase in other costs-e.g. gas price fluctuations

To start costing and pricing of a tour package:

 Identify the tour components

 Identify the cost of each tour component
 Segregate total cost in to fixed and variable costs
 Find out costs per Pax
 Multiply the total cost by budgeted percentage of profit

6.7.4 Economics and Cost Components of Tours

6.7.4.1 Outbound Tourism
Package Tour sales through Travel Agency

The profit of tour operators is 15-25% (approximately) of the selling price from the package tour
usually. However about 10% in these are paid as the commission to travel agencies. So, the final
profit is about 5-15% (approximately). Also, there is the cancellation charge income in the case
that the clients cancel the package tour with their circumstances after applications. The
cancellation charge is based on the cancellation policy and decided by the time when clients
cancel it. The income from here is very many usually because the cancellation charge reaches
10-100% of the selling price.

Furthermore, tour operators sell the seats of airplanes and the rooms of hotels to travel agencies
because they stock these components with contract for a year and are afraid that their
merchandise is left unsold. The seats of the airplanes are sold as discount air-tickets and the
profit from this is about 5% of sales price. The rooms of hotels are issued as the hotel vouchers.
As for the profits distribution from there, the same system is adopted as package tours usually.

Next, we consider the costs. Tour operators need

 Commission of the package tour for travel agencies,
 Payment of the block seats fee to the airlines,
 Payment of the block rooms fee to the hotels,

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 Foreign currency transfer of the land arrangement cost,

 Payment of the sponsorship insurance cost to an/the insurance company,
 The preparation cost of tour brochures,
 The advertisement outlay of package tours,
 Business activity expense to travel agencies,
 The Refund for clients（complain, cancellation etc）
 A fixed cost such as the rent,
 Communication fee and consumer goods in the office etc.

Package Tour sales to Clients directly

In this case, the profit from the package tour is final profit for tour operators, because tour
operators

don’t pay the commission for travel agencies. Also, they can get sales commission from
insurance companies when they sale Travel Insurances for their clients. Of course, they can get
cancellation charge without paying commission for travel agencies.

Regarding the costs, they don’t need the commissions and the sales activities for travel agencies.

Profit
 Sales of package tour
 Commission from travel insurance
 Cancellation charge
Costs
 Purchase of Airlines Block Seats
 Purchase of Hotel Block Rooms
 Land Arrangement Fee
 Insurance for Tour Sponsorship
 Producing Tour Broacher
 Producing Give Away
 Advertisement
 Refund

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 Fixed Cost
 Others

Travel agency
Regarding to selling of package tours, the profit of travel agencies is the
 Commissions from package tour sales.
 They can accept
 Cancellation charge shared with tour operators.
 They get commission from insurance companies when they sale Travel Insurances for
their clients.

Regarding the costs, there are a fixed cost and others

However, when travel agent arranges tours for FIT, the Profit

generate from:

 Air Tickets sales,  Travel Insurance and

 Sales of Hotel Rooms,  Cancellation Charge.
 Land arrangement,

Regarding the costs, travel agencies need:

 Payment of purchasing Airlines Tickets,

 Payment of Hotel Voucher,
 Foreign currency transfer of the land arrangement cost,
 Producing FIT Tour Tariff, (tariffs of various FIT components)
 The preparation cost of Give-away such as tour vouchers, name tags
 The advertisement for clienteles such as direct mail,
 Sales Activity to Companies, Schools etc.,
 The Refund for clients(complain, cancellation etc）,
 A fixed cost such as the rent,
 Communication fee and consumer goods in the office etc.

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6.7.4.2 Inbound tourism

Land Arrangement receiving from abroad company:
Income from Foreign Companies’ & Souvenir Shops’ Payment

This case is the model of tour operators in a host country, especially in capital city.

The profit is the fee from land arrangements including hotel arrangements mainly. Furthermore,
the commission from airlines is added to the profit when domestic flights arrangement is
included.

Besides, tour operators can get profit from the commission of their clients’ shopping at souvenir
shops. The rate of commission changes by the thing that clients purchased. In this case, tour
operators make contract with souvenir shops in an advance and souvenir shops sell souvenirs on
fixed prices for their clients. In other words, as for souvenir shops, don’t present higher charges
than the usual selling price for these clients.

Regarding the costs, operators need

 Purchase of Domestic Airlines Tickets,

 Purchase of Hotel Rooms,
 Car Rental Fee,
 Payment for Guide,
 Payment for Restaurant,
 Insurance for Tour(e.g. Contract with Abyssinian Air Service）
 Sales Activity to Tour Operators and Travel Agencies in Foreign Countries(Foreign
country business trip）,
 Refund for Tour Operators and Travel Agencies in Foreign Countries (Mainly complain:
The income decrease is taken even from the refund usually because the settlement is done
after tour completion.
 A fixed cost such as the rent,
 Communication fee (fax, mail, telephone, etc) and consumer goods in the office etc.

6.8 PRICING TOUR PRODUCTS

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6.8.1 Introduction to Pricing strategies for tourism businesses

Setting pricing for tourism businesses is a strong mix of marketing strategy and financial
analysis. Is there a formula for developing pricing for tourism businesses?

Not really – tourism products are very rarely identical, often because of location, but also
because of the people and the components that make up the experience you provide a traveler. It
can be incredibly diverse and pricing strategies can evolve as a tourism business develops its
brand and market share. Even star ratings for accommodation only give a general guide for
travelers on what the pricing will be – there are not set criteria.

So the purpose of this article is not about helping you with a formula to devise your pricing, but
more of an outline of the things you should consider, components of your pricing strategy,
different pricing types and ways to stimulate demand.

It is through pricing that the tour operator recovers the costs of the ingredients of the marketing
mix plus the cost of creating the product and of course the profit for the operator.

Elements of pricing: the factors taken for cost oriented operation are: flight cost, hotel cost,
handling agents’ fee, transfer cost, gratuities and portage etc. fees, commissions to travel agents,
marketing costs, administrative cost, research and planning costs and profit.

Factors affecting future tour pricing

 Exchange rate fluctuations

 Inflation rate in destination country
 Increase in fuel or other costs

Context for Price Development

 Pricing is an art. It requires creative judgment & understanding of buyers’ motives

 Pricing is not a onetime decision but must be constantly reviewed
 Must be consistent with overall strategy, objectives and marketing strategy
 Must decide whether you are competing on price or non price variables

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 Non price competition must rely on differentiation

Things to consider when setting your pricing strategy:

 How unique is your business? The more unique your tourism product, the more
flexibility you will have to decide your pricing.
 What value added services do you provide inclusive of the experience?
 What market do you want to attract and what positioning in the market do you want to
establish? Where the organization seeks to be in terms of customers’ and retailers’
perceptions of its products and the values in its mission statement. Includes choice of
corporate image and branding in relation to competitors.
 What are your operating costs (fixed and variable)? Using your costs, get your
accountant to help you calculate your break-even point and therefore what your minimum
pricing should be for profit goals (estimates of revenue, occupancy rates, etc will be
needed).
 For most tourism businesses, setting prices will be more market based – that is, what do
competitors with similar products and services charge within your market? Be careful,
however, you must be aware of your own financial position (debt levels, cash flow, etc)
before you can decide whether you should compete in this way. Ideally, being
competitive is not price driven, it’s product driven.

Where to start

Knowledge of your break-even point is an important place to start, but on launch of a new
tourism business it may be that pricing is set lower than your longer term pricing expectations in
order to attract volume, credibility and establish your brand. Then as you become more
established with a regular booking base you can consider increasing prices.

6.8.2 Pricing Approaches

The price that company charges will be somewhere between one that is too low to produce a
profit and one that is too high to produce any demand. Product costs set a floor for the price;
consumers’ perceptions of the product’s value set the ceiling. The company must consider

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competitor's prices, and other external and internal factors to find the best price between these
two extremes. Companies set the prices by selecting a general pricing approach that includes one
or more of these sets of factors.

1. Cost- Based Pricing: It is the simplest pricing method (adding standard markup to the cost of
the product).Business managers often use cost-plus pricing method.Cost as a percentage of
selling pricing is another commonly used pricing technique in the tourism industry.

2. Break-even Analysis and Target profit pricing: Another cost oriented pricing method
approach is break-even pricing, in which the firm tries to determine the price at which it will
break even. At Break-even, total revenue matches with total cost (zero profit).

Some firms use a variation of break-even pricing, called target profit pricing which targets a
certain return on investment.

3. Value-Based Pricing: Value-based pricing uses the buyer's perception of value, not the
seller’s cost, as the key to pricing. The marketer cannot design a product and marketing program
and then set the price. Price is considered along with other marketing-mix variables before the
marketing program is set. The company uses non-price variables in the marketing mix to build
perceived value in the buyer’s minds, setting price to match the perceived value. Any company
using perceived-value pricing must learn the value in the buyer’s minds for different competitive
offers. The best way to hold your customers is to constantly figure out how to give them more
for less.

More and more marketers have adopted value-pricing strategies. They strive to offer just the
right combination of quality and good service at fair price. This can result in redesigning existing
brands to provide more quality or offer the same amount of quality for lower price.

4. Competition-Based pricing: A strategy of going-rate pricing is the establishment of price

based largely on those of competitors, with less attention paid to costs or demand. The firm
might charge the same, more, or less than its major competitors. Firms feel that holding the price
will avoid harmful price wars.

6.8.3 Pricing Strategies

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A. New product pricing Strategies

Pricing strategies usually change as a product passes through its life cycle. Several options exist
for pricing new product: Prestige pricing, market skimming pricing, and market penetration
pricing.

1. Prestige pricing: producers seeking to position themselves as luxurious and elegant will enter
the market with a high price that will support this position.

2. Market Skimming Pricing: Price skimming is setting high price when the market is price
insensitive. It makes sense when lowering the price will create less revenue. It can be an
effective short-term pricing policy.

3. Market penetration pricing: Rather than setting a high initial price to skim off small but
profitable market segment, other companies set a low initial price to penetrate the market quickly
and deeply, attracting many buyers and winning a large market share.

B. Existing-product pricing Strategies

The following strategies can be used for existing products.

1. Product bundle pricing- is combining several of their products and offer the bundle at a
reduced price. Example- hotels sell specially priced weekend packages that include room, meals,
and entertainment and other services.

2. Price Adjustment Strategies: Companies usually adjust their basic prices to account for
various customer differences and changing situations: discount pricing and allowances,
discriminatory pricing, etc.

A. Volume Discount: Most producers have special rates to attract customers who are likely to
purchase a large quantity of products, either for single period or throughout the year.

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B. Discount based on time of purchase: A seasonal discount is a price reduction to buyers to

purchase services out of season, when the demand is lower. Seasonal discounts allow the
producers to keep the demand steady during the year.

C. Discriminatory Pricing: Discriminatory pricing refers to segmentation of the market and

pricing differences based on price elasticity characteristics of these segments.

3. Last-Minute Pricing: although last-minute pricing provides an out-let for unsold inventory, it
is not a substitute for effective marketing and a well-devised pricing strategy.

4. Psychological Pricing: Psychological aspects such as prestige reference prices, round figures,
and ignoring end figures are used in pricing. Consider the psychology of prices, not simply the
economics.

-$99.99 to $100; -was $500, now $315.50; Most Attractive; Better Value?

 Psychological reason to price this way?

5. Promotional Pricing: They temporarily price their products below its price and sometimes
even below cost, for special occasions such as introduction of the product or festivals.
Promotional pricing gives guests a reason to come and promotes a positive image for the
company.

Sample pricing

First, we study the estimate of the tours that are set up in an advance. That is, the estimate for the
completed itinerary.

******************************* Sample Itinerary *******************************

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1st day: ADD

・MT and TRF to HTL

・HD ADD S/S (National Museum, Holy Trinity Cathedral)

Meal: BB: ------, LL: ------, DD: City Restaurant

2nd day: ADD/GDQ

・TRF to APT for SD/OUT ------ ET138 ADD/GDQ

・MT and TRF to HTL

・FD GDQ S/S (Royal Enclosure, Fasiladas’ Bath, Debre Berhan Selassie Church)

Meal: BB: HTL, LL: City Restaurant, DD: HTL

3rd day: GDQ/ADD

・TRF to APT for SD/OUT ------ ET139 GDQ/ADD

・MT and TRF to HTL

Meal: BB: HTL, LL: -------- DD: HTL

4th day: ADD

・TRF to APT for SD/OUT

Meal: BB: HTL, LL: ------, DD: ------

HTL: ADD/Hilton, GDQ/Goha

Guide: Hosted

Transportation: Private

*************************************************************************

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Let's try to estimate “Net Price” from the above ‘Sample Itinerary’.5

 Car Rental Fee

Sedan （1-2 Pax） $30.00/day

Van （3-7 Pax） $50.00/day

Mid bus （8-19 Pax）$100.00/day

Big bus （20 Pax up）$150.00/day

 Guide Fee
FD $20.00/day

HD $10.00/day

TRF only $5.00/day

 Admission/entrance Fee
National Museum $2/pax

Holy Trinity Cathedral $4/pax

Royal Enclosure and Fasiladas’ Bath $8/pax

Debre Birhan Silassie Church $3/pax

 Hotel
Hilton（Contracted, BB and Tax ICLD） $80.00/room for DBL/Twin,
$60/room for SGL

Goha（Contracted, BB and Tax ICLD） $60.00/room for DBL, $50/room for

SGL

 Restaurant
BB include in Hotel Fee

5
These prices are just for this exercise and will differ from the actual.

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LL $6.00/time and pax

DD $8.00/time and pax

 Domestic Air Ticket

ADD/GDQ（RT） $100.00/pax

For 2 pax

Items Contents Price in $ Times Number Sub-total in

$
car sedan 30 6 1 180
Guide FD 20 1 1 20
HD 10 1 1 10
TRF 5 4 1 20
Admission NM 2 1 2 4
HTC 4 1 2 8
GC 8 1 2 16
DBSC 3 1 2 6
Hotel Hilton DBL 80 2 1 160
Goha DBL 60 1 1 60
Restaurant LL 6 1 2 12
DD 8 3 2 48
Domestic air ADD/GDQ 100 1 2 200
(RT)
TOTAL/ 744
GROUP
TOTAL/PAX 2 372

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Sedan: 1st day ADD 1 time, 2nd day ADD 1 time and GDQ 1 time, 3 rd day GDQ 1 time and ADD
1 time, 4th day ADD 1time; 1 Car

Guide: 1st day ADD HD 1 time, 2nd day ADD TRF 1 time and GDQ FD 1 time, 3 rd day GDQ
TRF 1 time, ADD TRF 1 time, 4th day ADD TRF 1 time; 1 Guide

Admission Fee: each 1 time for 2 pax

Hotel: Hilton 2 NT, 1 RM, Goha 1 NT, 1 RM

Restaurant: LL 1 time for 2 pax, DD 3 times for 2pax

Domestic TKT: 1 time for 2 pax

The Gross price needs some profit added to this Net price. For example, the gross price is
$422/pax in the case that the profit is $50.00/pax.

Next, the example of the tariff preparation is shown for each constituting element. The contents
are as follows based on above ‘Sample Itinerary’.

 Airport Transfer (OW) $17.50/pax

 HD S/S in ADD $26.00/pax
 FD S/S in GDQ including Lunch $42.00/pax
 Dinner Arrangement including transfer service$25.50/pax
 Dinner Arrangement inside Hotel $8.00/pax
 Hotel Arrangement (ADD/GDQ; per room) $80.00/$60.00
 Domestic Air Ticket $100.00/pax
In this case, we have to quote for each item.

For example, “Airport Transfer” needs a car and a tour guide, so the total amount is
$30.00(Sedan) plus $5.00(Guide) equal $35.00. Net price per pax is $17.50 for 2 pax.

Similarly, when the charge of the half-day sightseeing in Addis Ababa is calculated,
$30.00(Sedan) plus $10.00(Guide) plus $6.00×2pax (Admission) equal $52.00. Net price per pax
is $26.00.

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The full day sightseeing in Gondar is $42.00 per pax. (Car + guide+LL+ admission fee). i.e.
30+20+12+22=84 for two pax. Therefore, 84/2=42/pax.

The car and the tour guide become necessary to arrange the meal in the city restaurant. So,
$30.00(Sedan) plus $5.00(Guide) plus $8.00×2pax (Dinner) equal $51.00. Net price per pax is
$25.50.

Dinner Arrangement inside Hotel is $8.00 per pax.

Hotel Arrangement is each $80.00 and $60.00 per room per night.

Furthermore, we add the profit to each Net price. Therefore, the Gross price becomes as follows.
The profit supposes as $5.00 to each item.

 Airport Transfer (OW) $22.50/pax

 HD S/S in ADD $31.00/pax
 FD S/S in GDQ including Lunch $47.00/pax
 Dinner Arrangement outside Hotel $30.50/pax
 Dinner Arrangement inside Hotel $13.00/pax
 Hotel Arrangement (ADD/GDR; per room) $85.00/$65.00
 Domestic Air Ticket $105.00/pax

When ‘Sample Itinerary’ is calculated on the basis of the above Gross price:

Airport Transfer (OW): $22.50 × 4 times × 2pax ＝$180.00

HD S/S in ADD: $31.00 × 1 times × 2pax ＝ $62.00

FD S/S in GDQ including Lunch: $47.00 × 1 time × 2pax ＝ $94.00

Dinner Arrangement outside Hotel: $30.50 × 1 time × 2pax ＝ $61.00

Dinner Arrangement inside Hotel: $13.00 × 2 time × 2pax ＝$52.00

Hotel Arrangement in Addis Ababa: $85.00 × 2 times × 1 room ＝$170.00

Hotel Arrangement in Gondar: $65.00 × 1 time × 1 room ＝$65.00

Domestic Air Ticket: $105.00 × 1 time × 2pax ＝$210.00

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Total Gross price is $894.00 and $447.00 per pax.

CHAPTER SEVEN

ESTABLISHING CONTACTS AND NEGOTIATING WITH

TOURIST SERVICE PROVIDERS

7.1 Negotiate the price

Making a contract
Negotiations are first step for making contracts for all businesses. This fits to the tourism
industry.

Negotiations are made with the principals to formal contracts:

 Negotiation with airlines: negotiate on conditions such as cancellation of chartered

flight and its penalties, the price, the flight plan, date and frequency of operation, airport
to be used, the times of arrival and departure, etc
 Negotiation with hotels: spell out the conditions for the release of unsold rooms with
penalties, number and type of rooms, catering provisions, special facilities for special
need/interest guests, language spoken by hotel staff, system of payment, safety and
security provisions. The tour operator should also check the alternative accommodation
of a comparable standard in the local neighbourhood, in the event of overbooking.
 Negotiation with ancillary services: such as locally based incoming operators, car hire
companies. Local operator (DMC) should be reliable and honest. Terms could include:
about sightseeing excursion, qualified guides, competency of staff, types of cars with
their respective prices, etc

When tour operators negotiate with hotels, airline companies and others about their contracts, it
is clear that the existing sales achievements are most important for negotiations. After all, it is
necessary to make negotiation partners think that you will be the prospect customer.
Furthermore, it is better to show your tour brochures, statistical materials and recommendations

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from a third party to negotiation partners. However, the contract in the highest condition is not
able to expect from the beginning.

If the companies have no existing achievements at the time of business, they must be devoted to
sell the merchandise of other Tour Operators. At first, it is important to obtain trust, to make
some connections and to build the achievement from these activities.

Renewal of a contract and Improvement of the conditions

Airline companies and hotels expect tour operators to sell their seats or rooms voluminously. In
other words, they don’t make a contract with poor prospect customers. Regarding airlines
companies especially, they have few distribution agents of each country – of course; there is not
restriction in the reservation and issue of regular tickets.

Airline companies and hotels examine each tour operator from the sales quantity of the former
period. Then they decide the next conditions of a contract on the basis of the examination.

Mechanism and Structure of Negotiation

The structure of negotiations is various. There is the case that the airlines company may have
overwhelming power, but there is another case that the plural airlines companies are joining the
same flight rate and the specific gravity of power may be big to distribution agencies. Below, is
the structure of negotiations.

 Number of the negotiation participants

Negotiation between 2 groups: In this case, it is easy to grasp the negotiation partner and
establish the strategy, so the negotiation is simple.

Negotiation between 3 or more groups: In this case, groups whose interest is the same benefit
connect each other, so negotiation is complicated with the element of “Power Game”.

 Position of the negotiation person

Simple layer negotiation: In this case, an actual negotiator can come to a conclusion directly.
Therefore, the negotiation is simple.

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Double layer negotiation: In this case, a negotiator is just the representative of an organization.
A conclusion needs the agreement inside the partner organization. Therefore, negotiation is
complicated.

 Power distribution of the negotiator

Symmetric negotiation: In this case, each negotiator has equal power.

Non-symmetric negotiation: In this case, some negotiator has strong power and another has
weak power such as the negotiation between parent and child. The weak must know the lowest
compromise point clearly at the negotiation.

Tactics of Negotiation
You have to use the tactics corresponding to each negotiation to negotiate efficiently.

 Threat
The threat is the simplest negotiation tactics. For example, the direct threat has a big effect for
the hotel such as “We will make a reservation to other hotel if you do not offer rooms cheaply”.
However, this tactics is effective in only when the relation between the hotel and you is perfect
casual situation and there is an alternate plan abundantly, because it is certain to get damaged to
the confidential relation with the partner when you use this tactics. Therefore, the threat is a last
option.

 Reputation establishment tactics

This is the tactics that establishes a reputation by accumulating an achievement and tries to
proceed with a negotiation advantageously. You can obtain the trust of a partner if you get the
reputation that has not betrayed a partner in the past. Therefore, your negotiation goes ahead
smoothly.

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 Good Cop/Bad Cop Tactics

This is the method for a hard negotiation without deteriorating the human relations. You make a
negotiation partner think that you are a friendly person by making other bad fellows
intentionally. For example, say, “I think this attaches conditions enough but my boss doesn’t
agree with this." As a result, you can obtain the compromise of a partner easily.

 Ratification tactics
This means that you have a ratification procedure before making a final conclusion such as
resolution/decision of a board of directors meeting. Thus, you can avoid the risk that has made a
contract with the pace of a partner. This tactics is effective to take a rest and keep your coolness
before making a contract officially.

Contracting
There are three main types of contracts used in tour operating:
1. Commitment/guarantee – where the tour operator guarantees to pay for a certain
number of bed spaces.
2. Allocation and release back – where the tour operator agrees an allocation of a certain
number of bed spaces with the hotel and agrees to give back any that it has not sold by a
certain date.
3. Ad hoc – this is the most flexible arrangement, when a tour operator agrees a contract
(discounted) rate with a hotelier and makes bookings as and when required.
Negotiations on contract terms usually start a year before the holidays are sold

7.2 Booking’s confirmation

Confirm both the amount and method of payment. Always confirm and reconfirm what was
said. It is all too easy, on either side, to hear “B” as “V”. To avoid this and other spelling errors,
it is advisable to learn the international phonetic alphabets.

Confirmation of tour components

 Airport transfer-guide and car
 Restaurants-menu offered, quantity of food and position of good seat

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 Hotel arrangement-check-in and check-out time so that rooms can be ready for tourists
upon arrival, rooming list such as single, double and twin.
 Air reservation-departure not changed? Make double reconfirmation: the first is based on
the airline rule, and the second is on the previous day of departure date.
7.3 Quotations’ amendment
Quotation is about setting price for the tour product. So, quotation amendment is necessary. You
have to adjust the price of the tour product based on your negotiations with the different
suppliers such as accommodation establishments, car rental agencies and other suppliers.
7.4 Itinerary adjustment
Based on the negotiations and adjustments in price, make also adjustments in your itinerary.
Your itineraries should always be updated.

CHAPTER EIGHT
PROCESSING RESERVATIONS AND GUEST FILES

Recently, it is general to use the travel business management software when we control
reservations. However, the software is based on a classic reservation control method. Therefore,
we will study a classic reservation control method here.

Origin Country

1. Name and Title of a client: Enter it with the turn of Family name, First name, Title

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without fail. In case that the spelling even one character is wrong, airlines sometimes
refuses the boarding of the passenger. Especially, the spelling mistake is fatal on the
occasion of overbooking.
2. Age of a client: Airlines requires passenger’s age for reservation of the domestic airline’s
ticket in some countries.
3. Passport data of a client: Passport Number, Date of issue and Date of expire. Name and
birthday of the client are recorded in a passport exactly, so it is desirable to obtain the
copy of a passport if it is possible.
4. Address of a representative client in an origin country: Home address & telephone
number, Office address & telephone number, Mobile phone number and E-mail Address.
5. Local Contact of a client in a host country: The local contact in the host country of a
client must be recorded to have connection with a client in an emergency and report it to
airlines.
6. Tour Code: The tour code usually controls the reservation record and it is given to each
record.
7. The number of pax and details inside a client’s group: The reservation of an air ticket
requires even the number of adult, child and infant for each.
8. Departure date, Flight, Time e.g. 08 Dec LH591/2340）
9. Arrival date, Flight, Time（e.g. 15 Dec LH590/2140）
The contents of Air Reservation
 Request of the reservation: Request Date, Name of Contact Person
 Reply from the airlines: Accept Date, Name of Contact Person
 Reply to the client: Reply Date
 Final confirmation from the client: Confirmation Date
 Issue Ticket: Date of issue
 Report of ticket number to airlines: Date of report, Ticket Number
10. The contents of Hotel Reservation
 Request of the reservation: Request Date, Name of Contact Person
 Reply from the hotels: Accept Date, Name of Contact Person
 Reply to the client: Reply Date
 Final confirmation from the client: Confirmation Date

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 Final confirmation to the hotels: Confirmation Date

 Preparation of Hotel voucher: Preparation Date
11. The contents of Land Arrangement
 Request of the reservation: Request Date, Name of Contact Person
 Reply from the tour operator: Accept Date, Name of Contact Person
 Reply to the client: Reply Date
 Final confirmation from the client: Confirmation Date
 Final confirmation to the tour operator: Confirmation Date
 Preparation of Tour voucher: Preparation Date
12. Progress checklist
 Preparation & Delivery of Confirmation Sheet/Contract document
 Receipt of Deposit
 Preparation & Delivery of Invoice
 Receipt of Balance
 Preparation of Final Itinerary（include Guidance of departure）
 Issuing Air Ticket
 Preparation of Hotel voucher or Tour voucher
 Preparation of Insurance document
 Set up Travel goods such as a name tag
Delivery of G/A（Final Document）

Guest reservation in Host Country

1. Name of the ordered Travel Agency
2. Name List for Domestic Air Tickets
3. Rooming List for Hotels: When the foreign tourists check-in a hotel, they are requested the
presentation of their passport from a hotel. However, in the case that tour operators are
notifying their passport data to hotels in advance, most of hotels don’t demand the
presentation of their passport to them. Therefore, tour operators are desirable to obtain their
passport data in advance for the convenience of them.
4. Local Contact of a client in a host country: Although this is clear when tour operators make
a reservation of the hotels for clients, but when clients do by themselves, tour operators need

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to obtain this for the emergency in advance.

5. Tour Code: The tour code usually controls the reservation record. Tour code is given to each
record. It is easy to distinguish records when each travel agency / tour operator is given each
Tour Code. For example, NTS00001 is the first reservation from “Netherlands Travel
Service”, IET00025 is the 25th reservation from “Indian & Ethiopian Travel”, and
JTB00150 is the 150th reservation from “Japan Travel Burro”.
6. The number of pax and details inside a client’s group
7. Arrival date, Flight, Time
8. Departure date, Flight, Time
9. The contents of Air Reservation for domestic flights
 Request of the reservation: Request Date, Name of Contact Person
 Reply from the airlines: Accept Date, Name of Contact Person
 Reply to the travel agency: Reply Date
 Final confirmation from the travel agency: Confirmation Date
 Issue Ticket: Date of issue
 Report of ticket number to airlines: Date of report, Ticket Number
10. The contents of Hotel Reservation
 Request of the reservation: Request Date, Name of Contact Person
 Reply from the hotels: Accept Date, Name of Contact Person
 Reply to the travel agency: Reply Date
 Final confirmation from the travel agency: Confirmation Date
 Final confirmation to the hotels: Confirmation Date
 Preparation of Hotel voucher: Preparation Date
Guide submits Hotel voucher to the hotel in the tour of guide accompanying.

11. The contents of Land Arrangement

12. Car Rental or Car Assignment
13. Restaurant Reservation & Budget per person
14. Tickets Arrangements (Train, Theater etc.）
15. Guide order or Guide Assignment
 Request of the reservation: Request Date, Name of Contact Person

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 Reply from the each: Accept Date, Name of Contact Person

 Reply to the client: Reply Date
 Final confirmation from the travel agency: Confirmation Date
 Final confirmation to the each: Confirmation Date
16. Progress checklist
 Issuing Air Ticket
 Accepting other tickets
 Preparation of Hotel voucher
 Preparation of Meal voucher
 Preparation of Meeting Board
 Guide Assignment
 Give Away (Special Attention etc.)

CHAPTER NINE

IDENTIFYING, MONITORING AND ADJUSTING TOURS

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9.1 Pre-tour, en-route and post departure customer services

A tour company, to success in tour packaging business, must adopt professional approach. It
should provide timely, relevant, understandable and comparable information to the tourists to
make the difference that their organization is offering unique packages.

Tour manager must set objectives in advance and then make sure they are effectively realized.
For efficiency in advance preparation is essential. The work begins long before the meeting of
tourists. Moreover, to make tour packages more attractive and effective, a prospective tour
company needs to provide the following travel information.

i. Pre-departure (pre-tour) necessities

 Confirming reservations  Visa

 Evaluating/contact services providers  Foreign exchange
 Info. about cities/villages on the way  Medicines
and overnight stops  Clothing
 About region: handicraft, crops  Two photocopies of each travel
 Other info. upon the special interests documents
 Passport

ii. On arrival at airport

 X-ray of baggage  Check travel documents

 Check-in counter  Checking baggage

Formalities on arrival at destination airport

 Baggage claim  Custom procedures: up-to-date info.

 Foreign exchange duty free, other regulations
 Immigration procedures  Welcome party by concerned tour
company

Information about accommodations/hotels

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 Check-in and check-out procedures  location

 Its distance from the town and  Rooms
attractions  Services/facilities offered
 Meals  Tips and other information

Formalities at destinations

 Customs, traditions and cultures  Natural and manmade tourist

 Environmental impact attractions
 Entrance ticket
 Transportation  Other entertainments
 Local guides

Departure
 Ensure baggage and belongings
 En-cashing of foreign exchange
 Goodbye (farewell, client occasions, holidays parties for free of charge)
iii. Post departure
 Keep contact with customers- e.g. through e-mail and phone, send gifts during special
occasions, etc.

9.2 Identify tour requirement

This is the final chapter, and of course your final preparation for you to start the actual tour and
deliver it for the tourists. The requirements of a certain tour depend on its nature and the
destination to which tourists are travelling to. For example, if you are taking tourists for trekking,
you should have the necessary materials that help successfully accomplish the tour. If you are
travelling to destinations where there are no accommodation establishments, it will be necessary
for you to have tents for camping. Generally, the following are some of the requirements of a
tour:
 Tour badges and name tags  Sunscreen
 Bottled water  Cost sheet and note book for the
 Tents guide

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 Car and its spare parts-like extra tire  Address book-Telephone numbers of
and fuel police stations and hospitals/clinics
 Note on matters that need special in the destination
attention in the destination  Photo or video camera (optional)
 Tour manager

9.3 Assign staff

The next activity is to assign the necessary staff. This depends on the type of arrangement you
made or the type of package tour. For example, for escorted package tour, you have to assign a
qualified tour manager/escort who will lead tourists from starting point of the visit to the
destination and back to the origin. If the tour is hosted, you have to assign a host at each
destination who will assist tourists starting from transfer to hotel and advising tourists about the
destination. In addition, the manager of the tour company or other people should be assigned to
follow up the progress of the tour-asking whether the tour is successful and answering their calls
to provide prompt responses.

9.4 Contact service providers

i. Liaise with operators and other industry colleagues
Gather as much information on your audience as is possible and appropriate including collecting
passenger lists when relevant who will be involved in your tour ( e.g. coach captains, retail store
owners, tour operators, attraction staff and other guides).

ii. Reconfirmation calls- This refers to the calls to conform for services.
Importance of confirmation calls and what we should do:

 True professionalism becomes evident in the area of reconfirmation calls to any service
done by the guide.
 Forgetting reconfirmation call is deceiving oneself and inviting to trouble
 Arriving at a hotel without reconfirmation call may result in no record of the group.
 In general, reconfirmation is very crucial because the more you tell him/her the easier it
will be to both the service supplier and to the service receiver.

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Activities:

 Each service must be confirmed by telephone, not later than 48 hours before arrival
 When you make a call to hotels for confirmation before 48 hours of arrival time, you
should:
• Have the voucher in front of you to check which services are refused and which
are accepted.
• Ask the name of the person who manages tour booking
• Speak to him clearly and with authority to show leadership of your group
• Give your name, the company’s name, the tour name or code
 Give detail of the actual needs of the tour written on the voucher (accommodation and
meal request)
 Inform the booking manager about changes if any. This is because there appears
cancellation of reservation by clients.
 Tell your estimated time of arrival and some special needs of clients e.g. vegetarians who
do not eat meat.

9.5 Expense allocation

Identify all the necessary cost components for the tour to help you get the total cost. For your
further understanding of tour costing and pricing, refer chapters six of your handout. There will
be such costs as welcome party, fare well party, client occasions and holidays such as X-mas.
There are other costs which the guide might have incurred at the destination. Give the guide cost
sheets to record it correctly. Calculate the cost accurately!

Expense account report sheet:

It is a form in which expenses associated to any tour are recorded. There are two kinds of
expense account report sheets:

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 Daily entry page: - this is similar to incidental charges. We register expenses of

telephone, fax, e-mail, etc. We register these expenses by forming categories.
Example: Laundry Services Communication Services

_____________ ______________

_____________ ______________

_____________ ______________

The amount spent on each item is entered. At last, all subtotals are tallied (sum up) and deducted
from the total amount taken from the office.

 An actual day by day estimate expenses as outlined in the itinerary:

Transport Entrance

Boat $750 $85

Road $1200 $100

9.6 Tour coordination

Wardrobe and packing:
It is an important part of your pre-tour preparation. It means selecting material you use when you
are on a tour. Factors to be considered included:

1. Type of tour- safari tour, rafting, bird watching

2. Climate
3. Restriction/ limitation by carriers- air transportation, surface transportations
To look fresh and well groomed all time, select clothing that is easy to care for keeps the shape
and has light weight as much as possible.

Wardrobes are:

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Cloths and other materials that fit to your tour and climate, considering color, weight and
thicknesses for example, (shoes with comfort especially for taking rain coats and umbrella, toilet
materials and medication materials, flight bags, etc).

Packing:

Experienced tour guides can pack:

 Surprising amount of clothes in luggage’s and flight bags

 Utilizes every inch—packing socks inside shoes, rolling under wear, etc
 Use your flight bag for your toilet articles and for your night cloths and reading materials
( to tell up to date information’s)
 Every evening on tour, layout every preparation for the next days and then pack your
suitcase so that in the morning you will pack only your flight bag.

9.7 Monitor and adjust Tour

The future is full of uncertainty and risk. There will be delays in flight that can shorten the
time for visiting the attractions. You may run out of time to visit all the attractions in the
destination. In such a case, you are forced to make adjustments in the itinerary: some of the less
important sites should not be visited to allow tourists to accomplish the tour within the time
given. Or, the car will have some problems and delay your tour. One of the passengers might get
sick or lost his baggage. There will be overcrowding and you may have short time to spend in
the destination area.
Flight delay shorten planned visiting time-
Sometimes, you will be forced to extend the tour for some period of time.

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CHAPTER TEN

AUTOMATION IN THE TRAVEL TRADE BUSINESS

10.1 The Evolution of Agency Automation

Until the 1950s, all airline reservations were made by telephone or at airports and airline offices.
Fares were obtained from price books called tariffs. Manual calculating machines were used to
calculate the total fare for an itinerary. In the 1960s, flight schedules and fares were stored on
microfilm.

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Computer technology was developed in World WarII to aid in the war effort. The U.S. Army
developed the first electronic computer, called ENIAC, in 1939. The name ENIAC was an
acronym for Electronic Numeric Integrator, Analyzer, and Calculator. ENIAC was used to
calculate artillery trajectories and prepare navigational charts for warships.

After the end of World War, industry began using computers; International Business Machines
Company became the largest manufacturer of computers. The same technology, which enabled
data to be printed out by a computer, was used to develop the Teletype machine.

By the 1960s, most of the major airlines had installed computer systems to store flight schedules
and fares and handle reservations. However, the use of these systems was limited to the airlines’
own reservation agents and ticket agents. Retail travel agencies continued to make reservations
by telephone and, in most cases, wrote tickets by hand. In the early 1960s, Teletype machines,
which could transmit and receive information over telephone lines, were introduced, enabling
travel agencies to print tickets in their own offices. This type of arrangement was called tele-
ticketing.

The first airline reservation systems were installed in travel agencies in the mid 1960s. These
early systems were mostly experimental and contained flight information for only one airline.
Until the 1970s, only the largest corporations and government agencies could afford their own
computers in United States. Advances in technology developed by the U.S. space program
enabled smaller computer equipment to be manufactured at a price that most businesses could
afford.

In 1976, American Airlines, Trans World Airlines (TWA), and United Airlines each developed a
computer reservation system (CRS) containing flight information and fares for several different
carriers. Travel agents could obtain information from the CRS via a data terminal, called an
agent’s set, consisting of a display screen and a keyboard. As with a Teletype machine, the
agent’s set was hooked up to a CRS via a telephone line.

In 1982, Eastern Airline creates a reservation system called “System One”. The distinguishing
feature of System One was its ability to link up with other computer reservation systems.

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The companies operating computer reservation systems are called CRS vendors. A travel agency
that contracts with a CRS vendor is called a subscriber. As reservation systems expanded rapidly
throughout the travel industry, a new term -agency automation- became popular.The most
prominentCRSs (now known as global distribution systems (GDSs) used within the airline
distributionsystems) are Amadeus, Sabre, Galileo and Worldspan (the latter two merging in
2007),while regional systems also exist (such as Axess, based in Japan, and Abacus, which
servesthe Asia Pacific region).

10.2 Agency Automation

The term automation, as applied to computers, was first used in factories to describe the use of
computers to control manufacturing processes. Agency automation refers to the use of computers
by a travel agency. Agencies that use computers are called automated agencies.

Agency automation is of two basic types: sales automation and business automation. Sales
automation refers to the use of computer reservation systems to handle sales and ticketing. A
sales automation system, commonly referred to as a front-office system, is used to obtain travel
information and prices, store client records, and write tickets. Business automation refers to the
use of a computer to handle accounting and record keeping. Business automation systems are
also called back-office systems.

10.3 Components of a CRS

A computer reservation system consists of a large computer, called a mainframe, capable of

serving many different sites. Data such as flight availability, fares, and passenger records are
maintained in the storage unit of the mainframe. Data terminals are used to communicate with
the mainframe from a travel agency, an airport ticket counter, or another site. Each terminal
consists of a keyboard and processor to input data to the mainframe and a video screen to display
information.

A data terminal is commonly referred to as a CRT or cathode ray tube. A data terminal in a travel
agency is called an agent's set.

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Since 1985, personal computers (PCs) have been used increasingly as data terminals in travel
agencies. In addition to being used with a CRS, a PC can also be used for record keeping,
accounting, and other back-office functions.

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Each agent's set is connected via a modem to the central processing unit (CPU) of the
mainframe. A modem (short for modulator/demodulator) translates computer data into signals
for transmission over a telephone line. When an airline reservation is booked from an agent’s set,
the data is transmitted to the CPU and stored in the storage unit of the mainframe. Other
information such as flight schedules and fares is also stored in the storage unit. This information
can be retrieved and displayed by an agent's set. However, an agency can only retrieve its own
reservations. Special permission must be obtained from the airline.

A ticket printer may also be connected to the mainframe via a modem, to receive data over a
telephone line. Ticket printers can be used to print airline tickets, boarding passes, invoices, and
itineraries. The ticketing information is obtained from the passenger record. The phrase driving
the ticket means to transmit ticketing information from a passenger record to the ticket printer.

Devices such as data terminals, modems, and ticket printers connected to a computer are referred
to as peripherals.

Contract of CRS

Each agency that uses a CRS pays an ongoing subscription fee to the CRS vendor. The agency
must sign a contract agreeing to use the vendor’s CRS for a stipulated period, called a term. The
agency is obligated to pay the subscription fee during the term of the contract, regardless of how
much or how often the CRS is used.

10.4 Primary Functions of a CRS

All the major computer reservation systems have the following features in common:

1. Fare displays 6. Storage of client profiles

2. Flight availability displays 7. Queue functions
3. Flight bookings 8. Ticket and document production
4. Storage of passenger records 9. Auxiliary segments
5. Advance seat assignments 10. General information

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An understanding of computer reservation systems requires a basic familiarity with each

function.

 Fare Displays
A fare display is a list of fares between a specified board point and off point. Fares can be
displayed for the current date or for a specified departure date. The subscriber can also display
competitive fares for all carriers or only those offered by a specified carrier.

Using the fares stored in the CRS, a subscriber can auto price most air itineraries. To auto price
an itinerary means to calculate the total base fare, tax, and total fare automatically. The CRS can
auto price selected segments or an entire itinerary. It can also display the price for an entire party
or just for selected passengers.

Depending on the CRS, fare displays are also called fare quotes or tariff displays. Besides fares,
a CRS can also be used to display the restrictions, or fare rules, that govern various restricted
fares.

 Flight Availability Displays

A flight availability display lists regularly scheduled flights between a specified board point and
off point and shows the number of seats that can be sold in each class of service on each flight.
Flight availability can be displayed for the current date or a specified departure date. Arrival time
or class of service can also obtain availability.

The display gives the following information for each flight:

Carrier code and flight number

Seat quota
Origin and destination airports
On-time performance
Departure time and arrival time
Equipment code and meal service
Stops

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The seat quota is the maximum number of seats than can be sold in each class of service during
one transaction. Each airline that participates in the CRS has a contract with the vendor. The seat
quota for each flight depends on the airline’s agreement with the CRS vendor.

The departure and arrival time are given in local time, based on 12-hour clock time.

 Flight Bookings
Airline reservations can be booked directly on the CRS. Booking a reservation is called selling
space, or selling seats. On a desired flight, if a selected class of service is sold out, seats can
often be waitlisted. A waitlisted reservation may eventually be confirmed, if other passengers
with confirmed reservations later cancel their reservations.

Two types of flight bookings can be made on a CRS-direct and teletype. When a direct booking
is made, the seats are sold directly on the airline’s own reservation system. With a Teletype
booking, a Teletype message is sent to notify the airline. When the message is received, the
airline books the seats on its reservation system. The type of booking that is made depends on the
airline’s agreement with the CRS vendor and other factors.

 Storage of Passenger Records

Every reservation booked on a CRS is stored in a passenger name record (PNR). Besides the air
itinerary, each PNR also contains the following contact information:

 Passenger name(s)
 Travel agency telephone number
 Passenger business telephone number
 Passenger home telephone number
 Ticketing arrangement
 The person who made the reservation

In addition, a PNR may contain the passenger’s billing address, the form of payment, and special
service requirements, such as wheelchair service or a specially prepared meal. Data items are
stored in fields. For example, the passenger names are stored in the name field, and contact
telephone numbers are stored in the phone field.

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The ticketing arrangement is stored in the ticketing field. For instance, this field often contains
the date on which the ticket will be issued. When a ticket has been issued, the ticketing date and,
in some cases, the ticket number, may be stored in the ticketing field.

The person who made the reservation is entered in the received-from field. Every PNR must
contain an itinerary and data in the name, phone, ticketing, and received-from fields.

The passenger data items entered by the agent are held in an electronic holding area, called an
agent work area. When all the elements have been assembled, the agent enters a command to end
the transaction. When the transaction is ended, the PNR is transmitted to the mainframe for
permanent storage. The PNR remains in storage until the itinerary has been completed or until
the passenger cancels the reservation. While the PNR is in storage, the record can be retrieved
and displayed by the travel agency or the airline. When a PNR is displayed, changes can be made
to the itinerary or to the passenger data fields.

 Advance Seat Assignments

A CRS can also be used to make advance seat assignments on various flights of participating
carriers. An advance seat assignment is used to reserve specific seats on a flight for passengers
who have confirmed reservations. On many flights, the CRS can assign seats automatically,
based on the client’s preference for sitting by a window or an aisle. If a flight has a smoking
section, a seat can also be requested in either the smoking section or the non-smoking section.
(Most carriers do not permit Smoking.)

On many flights, a seat map can be displayed so that a specific seat can be assigned. A seat map
shows the seating arrangement on a specified flight and the location and status of each seat. The
status indicates whether a seat is available for advance seat assignment. If a seat has already been
reserved, or if it has been blocked out for sale by a wholesaler, it cannot be reserved. Some seats
are also held back by the airline for last-minute assignment at the boarding gate. Such seats are
said to be under airport control.

 Storage of Client Profiles

Depending on its contract with the CRS vendor, a travel agency may have special records, called
client profiles, containing passenger data for its regular clients. The passenger data can be

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transferred to a PNR, as needed.

Client profiles provide an easy way to create PNRs, eliminating the need to type out data items
that are used repeatedly for a regular client of the agency.

In addition, a master account record (MAR) contains frequently used agency data. Other terms
may also be used for client profiles, depending on the system.

 Queue Functions
Queue is a French word meaning “a waiting line.” In a CRS, a queue is an electronic holding
area where records or messages may be stored temporarily for a special purpose. For example,
PNRS that are affected by airline schedule changes might be stored in one queue, and PNRs that
have been confirmed from a waitlist might be stored in another queue. Two types of queues are
used: message queues and record queues. Only messages can be stored in a message queue,
whereas only PNRs can be placed on a record queue. A PNR that is stored in a queue is said to
be on queue.

Queues are an aid to handling the daily workload of an agency. For example, every business day,
all PNRs scheduled for ticketing on that date appear automatically in a ticketing queue, and all
PNRs with waitlist confirmations appear in the waitlist queue.

A queue count is a summary of the messages or records currently on queue. Most queues contain
PNRs that require some sort of action. For example, PNRs in the waitlist queue require the agent
to reconfirm the reservation with the passenger. If a schedule change has occurred, an alternative
reservation may be required.

 Ticket and Document Production

A CRS can be used to print tickets and other documents, such as boarding passes, invoices, and
itineraries. An itinerary/invoice is a document that provides detailed flight information for each
segment and a summary of all the charges. Special features enable the travel agent to print
messages, called itinerary remarks or invoice remarks, on the itinerary/invoice. For example, an
itinerary remark might be used to print directions to a hotel or to indicate a telephone number to
summon a courtesy car.

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If desired, a ticket can be printed without an itinerary/invoice, or, alternatively, an

itinerary/invoice can be printed without a ticket. If a ticket was issued previously without a
boarding pass, a boarding pass can be printed separately-assuming the airline is one that permits
boarding passes to be issued by the CRS.

 Auxiliary Segments
Besides airline space, a CRS can also be used to book hotel, rental car, cruise, tour, and other
types of reservations. Such bookings are referred to as auxiliary segments.

 General Information
A CRS can also be used to display reference information, such as weather forecasts, in-flight
services, foreign exchange rates, city descriptions, and so forth. The encode/decode function is
used to determine codes for airlines, cities, airports, countries, and equipment.

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