Tour Operators and Tour Packages

CHAPTER OBJECTIVES:
1.To understand the functions of a tour operator.
2.To describe the criteria used to differentiate the different types of tour
operators and explain the components of each type of tour packages.
3.To explain why and how tour packages vary.
4.To differentiate the different types of sightseeing tours.
In the Philippines, tour operators are travel agencies who
expand their product range by setting up a tour operations
department. This department is tasked to assemble the
various travel components into a tour package, and sell the
resulting package as one product. In order to make these
packages attractive to the travelers, the tour operator’s
product research and development should constantly look
for a new destination, attraction, and activities.
Functions of a Tour Operator
1.Conceptualizes plans and develops tour packages.
2.Negotiates with suppliers of travel services.
3.Assembles and integrates the various travel components
into a single tour package.
4.Delivers the tour package by operating a worry-free and
secured program or itinerary.
Sales and Revenues of a Tour Operator
1.Variable markup based on the contracted rate from the
suppliers that are negotiated.
2.By seeking and negotiating for favorable terms, conditions
and concessions.
3.Through the sale of optional tours, excursions, and extensions.
4.For tour group movements, souvenir shops grant tour
operators shopping commissions on sales generated.
Characteristics of a Tour Operator
1.Wholesaler - their clientele are primarily the retail travel agencies thus their dealings
with the end-user are indirect.
2.Acts as an intermediary to and as an integrator of the travel suppliers.
3.Derives income from variable but limited profit margins and capitalizes on favorable
terms, conditions, and concessions.
4.Generates additional revenues by selling optional tours, excursions and extensions.
Classification of Tour Operators
        This classification is based on area of operations (geographical area visited in the course of delivering the tour
product), nationality of travelers (may either be Filipinos or foreigners), market or source of traffic (place of residence of
those participating or availing of the tour package), and type of tour packages offered (regular or ad hoc tour packages).  
 
1.The Local Tour Operator (LTO) services Filipinos and/or foreign traffic to national destination by way of regular
sightseeing tours or tour packages, taking into consideration the popularity of the destination, site or sight in the locality.
2.The Domestic Tour Operator (DTO) services Filipinos to any destination in the Philippines, on an ad hoc basis, as
when contracted, by providing itineraries and programs tailor-made to the needs of the client. These tour operators handle
most tour group movements from educational institutions, corporate travel, civic and social institutions and government
entities.
3.An Inbound Tour Operator (ITO) services foreign traffic to any Philippine destination, on an ad-hoc and regular
packages basis. Its source of traffic is mainly foreign tour operators and may include both group movements and
individual travelers.
4.The Outbound Tour Operator (OTO) designs and assembles tour packages for residents of the Philippines, either
foreign or local, to any foreign destination. The source of business is mainly affinity groups – groups with common
interests.
 
Summary of the types of tour operators emphasizing
 
their differences

Basis Local Domestic Inbound Outbound

Wherever the Any

Area of Any Philippine Any Philippine
tour operator destination
Operation destination destination
is situated abroad
Foreigners
Filipinos and Filipinos and
Filipinos living living and
foreigners foreigners
Nationality of and working working
living abroad living and
Travelers in the abroad –
or in the working in the
Philippines including balik
Philippines Philippines
bayans

Philippines
Market Source Philippines Abroad Philippines
and abroad

Package Ad hoc and Ad hoc and Ad hoc and

Regular
Operated regular regular regular
Tour Packages
        The product of the tour operator is the tour package, a combination of two or more travel components. The basic
travel components of a tour package are:
•Transportation: (by sea, air, land) to and from a point of origin to a destination or destinations and back to the point of
origin.
•Transfers: transportation to and from a destination’s gateway (airport, seaport or bus station) to the place of lodging and
vice-versa.
•Sightseeing tours: combination of transportation within the destination to sights and sites of interest, tour guide’s services,
entrance fees, entertainment or activities and sometimes snacks and meals.
•Accommodations: lodging and meals in the lodging establishment.
•Tour Escort or Tour Leader: services of an individual who travels with the clients from the point of origin and back, and
acts as the manager of the tour group.
 
Depending on the number of components, tour packages have different labels: ground arrangements package (if only tours
and transfers are included), land arrangements package (if tours, transfers, and hotel accommodations with some meals are
included), inclusive tour package (if tours, transfers, hotel accommodations and some meals, plus transportation to and
from the destination(s) are included), and inclusive escorted tour package (if all components are included, including a tour
escort).
Tour Package Variables
        Regardless of the type of package, regular or ad hoc, these may vary according to any of the following:
1.Duration – the number of days and nights included in the package.
2.Destination – a package may be for single destination, or for multiple destinations.
3.Category of accommodations – the category of accommodations may vary from De Luxe to Economy for
hotels or AAA to A for resorts.
4.Meal plan – refers to the number of meals per day included in the package served in the place of lodging or
outside in a restaurant.
5.Mode and class of transportation – refers to air, sea or land travel arrangements and type of equipment
Types of Sightseeing Tours
Sightseeing tours, or simply tours, are a combination of transportation
within the destination to sights and sites of interest, tour guide’s
services, entrance fees, entertainment or activities and sometimes
snacks and meals. They are classified as:
 
Half-day sightseeing    Operated mornings or afternoon and normally includes a snack. 
Full-day sightseeing     Operated for eight to ten hours with lunch.
Evening tours           Operated after six in the evening and normally includes dinners and a drink.
Optional tours            Tours that are not included in the Tour Package for which the client pays extra.
Thank You!

Happy
Virtual
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