Industry Analysis of Tour Operators in India

INDUSTRY ANALYSIS OF TOUR OPERATORS IN INDIA

Abstract

This paper analyzes the industry in all its aspect including suppliers, buyers, industry players and their operations. This paper analyzes the functions, operations and working of tour operator industry in India. In India tour operators can be classified into large stable and many small less stable firms. In this analysis forces like barrier to entry, barrier to exit, bargaining power of suppliers, bargaining power consumers, effects of rivals etc are thoroughly analyzed. A clean understanding about the past, present and future of the industry is expected to be obtained from the study.

Industry Definition

Tour operator industry specializes in arranging domestic and international tour packages which include travel, accommodation and sometimes service of a local representative, all for one price. They are a market place which connects different market participants in tourism sector. The idea started when it became difficult when a person or people were unable to fulfil all his needs regarding travel or visiting a famous tourist destination. Tour operators also help their customers by arranging itinerary. With the advent of internet the number of do it yourself tourists are increasing, still tour operators are holding their ground mainly by focusing on large group events like college school events, by providing attractive packages etc. They mainly come in when the traveller has issues regarding language, currency, communication etc. This can be the reason why tour operators are a growing industry even now.

Main Activities

The main activities of tour operators include

• Arranging and assembling their own tour packages
• Operating travel tours
• Operating tours

Arranging and assembling their own tour packages

• Package tours are those in which a variety of services are combined together and given as a package. It typically includes all transfer between airport, harbours, railway station etc., accommodation, cruises, rental cars, insurance, event tickets etc. Package tours are further classified in to specific tour types. Like special interest tours, adventure tours, group tours etc. In packaged tours the tour operators prepare the entire itinerary for the tour according to the convenience of the customer. This includes the popular tourist sites, events happening in that visiting place on that particular time.

Operating travel tours

• The tour operators increase the usage rates and thereby reduces promotional costs of suppliers. They also reduce the cost of consumers by preparing the itinerary thereby avoiding a travel agent. They negotiate with suppliers at the destination and acquire large volume discounts. These rates are kept confidential. If the discounts are high and the market is pretty competitive, they may pass some of these discounts to the consumers. This attracts more customers to the package. The next operation is to determine the tour package, this is done according to the customer convenience, and most of the tour operators have fixed packages. There is also a new trend of dynamic packaging that allows consumers to build their own travel packages, flights, accommodation etc.

After this stage the next function of the operator is to market the product. Most of the operators use brochures for marketing. Some highly profiled tour operators will go with television and YouTube advertisements, Instagram promotion is one of the leading form of social media marketing format.

Similar Industries

Some example of industries which has the same business model as tour operators are given below.

Event management industry

• Here also the management firm acts as a marketplace or as a facilitator to connect different suppliers to the consumer for a single product. In the case of a marriage, the event organizer connects the caterers, the band, the vendors etc. to the consumers in this case the people who are getting married.

Airlines Industry

• Also being a market participant of tour operators the business model of airlines industry is similar to that of them. Here the suppliers like the airport, the food suppliers are different entities. So the airlines connect all these to the consumers while providing their own service or product.

Bucket list industry

• This is a new and emerging industry and can sometimes be considered as a subset of tour operators itself. Here what the company or firm helps is to identify the bucket list of the consumer and helps them to fulfil it. It can be various things like travelling in which case they act as tour operators, learning dance, music etc. in which case they act as the facilitator etc. So here also the firm is a marketplace or medium to connect the consumers with the suppliers, in this case multiple suppliers.

Market Participants

The market participants can be defined as the term for economic agent an actor and more specifically a decision maker in a model of some aspect of the economy. Here the various market participants are

Government

• It is the entity that regulates all the rules and regulations that needs to be followed in the industry. They decide on the tax margin and the different economical regulations so as to increase their intake.

Suppliers

• Here the different suppliers are airlines, railways, rental cabs, hotels, theatres, restaurants etc.

Buyers

• Buyers can be people or group of people, even though they are not the only one getting the service of tour operators, the end users are considered to be them.

Rivals

• Rivals can be other tour operators, tour agencies etc.

New entrants

• Bucket list industry can be considered as a new entrant along with all other new entrants of tour operators

Barriers to Entry

Barriers to entry act as a hindrance for new entrants and competitors. They fill in as a protective instrument that forces a cost component to new participants, which incumbents don't need to shoulder.