The Relationship between Tour Operators and their Suppliers - Case Study Example

Topic: The relationship between tour operators and their suppliers INTRODUCTION: The relationship between the tour operator and their suppliers is that of mutual benefits and that makes it all the more crucial. This relationship fosters growth in the tourism industry as is absolutely crucial to keep the business running. Negligence or lack of performance from either side of the business can ultimately collapse it. However just like any business it holds to follow just a few norms in this relationship which can kick the business to flight. Tour operators enter into long term contracts with air carriers, hotels and other suppliers for the provision of travel services in bulk form. Later are the distinct travel services assembled into a package tour featuring round trip transportation, seven night accommodations, ground transportation and tours of local sites. The package tour is marketed to the general public through travel agents. Tour operators are principals and responsible to consumers for the provision of the component travel services of each tour package. KEYS AND COMPONENTS: ·       In order to ensure the success of tourism business it is crucial that the tour operator and the tour supplier both hold a healthy relationship. ·       Customers like perks; hence there should be sufficient attraction for the tourist. The tourist plan, coverage of destination, and price tag etc all matter to the customer who are spending a decent amount of money simply to have a good time. ·       They’re also probably doing their research for ‘best plan offered’ which include discount rates, great services offered and decent destinations. A tour operator’s plans and vibrant offers should be head-turning and the tour suppliers should enthusiastically demonstrate those plans in order to confirm business flow. The best way to do it correctly is by synergizing the efforts of both, the operator and the supplier. ·       Both the partners in this travel business must have sufficiency and efficiency in their knowledge of and about the industry. ·       To cater this essential requirement of the business many organization work with such particular dynamics that provide a networking support for both tour operators and suppliers. KEY ISSUES IN THIS BUSINESS RELATIONSHIP: 1. Coordination: Tour operator and suppliers work as a team and that obviously makes them dependent on each other. To make this dependency healthy there should be viable coordination; sharing of knowledge, client information, regional analysis etc should be of utmost priority. 2. Information: Lack of information both current and on-ground changing stats can paralyze a running business. There should be a vital link between the supplier community and the travel distribution network; accommodating the sharing of informational and other resources. 3. Market Research: Market research includes client research, target market as well as the competitor market. Roving eyes on other travel businesses, their rates and their services and product and special offers can not only keep your tourism business in-line with competition but can also provide you with fresh ideas. 4. Tourist attraction: There are different categories of tourists ranging from backpackers to new bees. Regular and new customer dealing should be specifically designed by the operator and supplier together. Packages, plans and routes should be decided accordingly. 5. Foresight - Natural calamities obviously lead to an unwelcome number of cancellations by tourists.  The supplier must keep a check on weather conditions and other local issues and make related preparations for future. Operators must keep vary of the same and ensure the accommodating nature of supplier. BRINGING EXCELLENCE TO THE TRAVEL BUSINESS: If the PMC rule is applied accurately, the business can relish heaps of rewards. 1.    Professionalism: Professionalism is the key in any business. Operator and supplier need to keep their targets appropriately realistic, with an alluring marketing campaign while doing timely business. 2.    Meaningful and Impartial business standards: Add meaning to your business. Every region has its own official standards. There are different types of businesses in different countries, for example; there are three different types of agencies in the UK: Multiples, Miniples and Independent Agencies. In the United States, there are four different types of agencies: Mega, Regional, Consortium and Independent Agencies Each type must invigorate the feasible and required standard to meet the essence of the trade. Giving value to the customer and building a long term relationship should be the basis of all plans. 3.    Cost effective products and services: With high competition for both the operator and supplier, their ultimate goal should be providing maximum benefit to the consumer. As discussed earlier, perks and small benefits can make you products look accessorized. Giving the true value of the clients’ price should be decided by operator and supplier together. HOW AGENCIES WORK: Tour operators select the suppliers that will provide the component travel services which make up the package tour. Tour operators should investigate the reliability and willingness of suppliers to deliver safe travel services. Such an investigation should reveal the suppliers financial solvency, prior accident and safety history, the existence of insurance and compliance with all applicable licensing and safety regulations, both domestic and foreign. A failure to conduct such an investigation may generate liability for the negligent selection of suppliers. Do not expose unnecessarily: Tour operators should design itineraries which maximize safety and minimize the consumers exposure to risk. Of course, calculated exposure to risk may be a strong selling point in marketing "adventure" tours featuring challenging terrain or white water rafting. Tour operators may be held liable for unnecessarily exposing consumers to risk or designing itineraries in a negligent manner. According to ‘Sustainable Tourism’ “A suppliers role as a key partner in our supply chain is a fundamental one, and we are confident that the good working relationship we have developed when working with them in recent years will prove to be a good basis for the introduction of our new Travelife Handbook - A preferred code of Environmental and Social Practice.  We are convinced of three factors: 1. This makes long term business sense: As the statistics in the handbook illustrate, environmental and social issues are becoming more and more important in the holiday decisions of our customers. We must respond to these issues to ensure we survive in a competitive market. 2. To deliver the right balance we must work together: Suppliers are at the sharp end of the holiday experience. What happens in the destination matters most; from the warm welcome and the quality of the local environment to the services available. In other words, the balance between the local economy, nature and the community. 3. The FTO is not alone: A recent global survey found that more than 70% of tour operators consider sustainable tourism important to the quality of experience they are able to offer their customers. We are working with other EU Tour Operators to synchronize efforts." HOW THE INTERNET INFLUENCES: (a) Clients decisions: Internet has surely seeped into the modern consumers life. Too much variety, heavenly looked packages and superb marketing techniques of competitors buzzing the consumer online, can blur the clients decisions and even the best of efforts by the operator and supplier can suffer. The key points we discussed earlier such as coordination, research and foresight should be vigilantly utilized to counter unwanted influence on the business. (b) Business norms and strength: Dynamic packaging tools have been applied by the travel businesses to provide wholly bonded (full financial protection) travel at prices identical to or lesser than a member of the public can book online. By this method, the agencies financial assets are protected in addition to professional travel agency advice. Most travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation for this hotel. This means the booking that the customer has done is not yet confirmed which can create a lapse on non availability. On the contrary, the on-ground working Operators and suppliers work with realistic methods of client’s package confirmation and hence this can be made advantageous for the trade. (c) The job market in this industry: Internet has also given a platform to home-offices and these are growing fast giving a competition thug to the existing Suppliers and Operator. The number of available jobs as travel agents is decreasing. Most jobs that become available are from older travel agents retiring. Counteracting the decrease in jobs due to internet services is the increase in the number of people traveling. Since 1995, many travel agents have exited the industry, and relatively few young people have entered the field due to less competitive salaries. However, others have abandoned the brick and mortar agency for a home-based business to reduce overheads and those who remain have managed to survive by promoting other travel products such as cruise lines and train excursions or by promoting their ability to aggressively research and assemble complex travel packages on a moments notice, essentially acting as a very advanced concierge. Operators and suppliers ought to work together on this key issue and find viable solutions. Problems and Legalities Why do travelers vamoose from expensive holidays or end up suing their agent/operator? Simple; they don’t get what they are looking for. Apart from the illegitimate suppliers, bad experiences also come from legible travel companies that annoy the clients enough to trigger a law suit against travel businesses. This makes the consumer more vary who usually wants to learn all about their right. Making a substantial outline for consumer rights that ought to give more confidence to the client in both the supplier and the operator. As a general rule tour operators may be able to disclaim liability, in the absence of their own negligence, for a consumers physical injures caused, primarily, by the negligence of a foreign supplier. The traditional theory being that a principal should not be liable for the torts of independent contractors. This general rule can be circumvented by applying one or more of the following theories of liability. Make sure there is no breach of Warranty of Safety theory  A tour operator may be held liable for the consumers physical injuries if the tour operator promised, either expressly or implicitly, that the tour would be delivered in a safe and careful manner. Brochure language such as "safe and enjoyable cycling area", "Marencos administration and staff work together to make your stay comfortable, safe", "suitable for handicapped individuals", "perfectly safe" canoeing conditions and "safe buses" may generate liability under a breach of warranty theory. Alternatively, the tour operator may assume a duty to deliver safe travel services. Assumed duties may more readily overcome written disclaimers than a warranty. Give legal information to the client and making it more available on the website etc is crucial. To quote Halsburys Laws of England: "Agency is determined on the true nature of the agreement or the exact circumstances of the relationship between the alleged principal and agent. If an agreement in substance contemplates the alleged agent acting on his own behalf, and not on behalf of a principal, then, although he may be described in the agreement as an agent, the relationship of agency will not have arisen." Regulation 15 of the Package Travel Regulations. Regulation 15(3) states: "In the case of damage arising from the non-performance or improper performance of the services involved in the package, the contract may provide for compensation to be limited in accordance with the international conventions which govern such services." Regulation 15(4) states: "In the case of damage other than personal injury resulting from the non-performance or improper performance of the services involved in the package, the contract may include a term limiting the amount of compensation which will be paid to the consumer, provided that the limitation is not unreasonable." In case of Unintended Consequences 1.   As the principal (the tour operator) can easily pass on the costs of compensation there is little incentive to robustly defend the supplier, and the supplier is not able to defend themselves. 2.   The Package Travel Directive has the unintended consequence of reducing market access for small scale producers and the informal sector. ·       Tour operators and air carriers may lend their names to promotional brochures giving consumers the impression of ownership and control. Describing foreign bus companies, taxi services and ground service providers in possessory terms ["our"] can generate liability.  Travelers have to go through highly unpleasant experiences because of irresponsible operators or suppliers, whether they are intentional or unintentional. Precaution and honesty are the rule to counter losses. Bibliography 1. Dickerson, Thomas, A.,"TOUR OPERATORS AND AIR CARRIERS : MODERN THEORIES OF LIABILITY". Published In The Aviation Quarterly, October 1996. http://www.courts.state.ny.us/ 2. "Supplier Sustainability Handbook"; Responsible Tourism > Sustainability Guidelines.http://www.fto.co.uk/responsible-tourism/sustainability-guidelines/ Read More