1. THEME. Development of Tours and Calculation of their Value
Simon Kuznets Kharkiv National University of Economics, 2017

2. Plan of lecture Methods of tour package formation
Stages of tour package formation
Calculation of tours

3. Methods of tour package formation
Development of tourist products in the tourist industry is provided by tour operators, depending on the market needs or tour group demands.

4. Methods of tour package formation
Since production of tour packages is a one-off process with repeated sales , the production process can be similar to the development and design of the tour. Tour design is preceeded by the market research and evaluation of the firm’s capacity to develop the chosen target market segment. which are presented in

5. Methods of tour package formation
Nowadays, tour formation begins with the collection of information on the Internet, visiting tourist fairs and shops, tourist view catalogues and promotional s. Thus the tour can be formed at the workplace within a short period of time. The method of tour development consists of several stages ,

6. Methods of tour package formation

7. Stages of tour package formation
At the first stage the idea of the tour is developed, its aims with regard to certain customers are defined, the season, destinations and model content of the trip are chosen.
In order to accomplish the above-mentioned Various methods can be used. One of them, which gained wide-spread use in many spheres including tourism, is the method of brainstorming. The backbone of the method is generation of new ideas to form their maximum range with their further analysis and selection of the most prospective ones.

8. Stages of tour package formation
Another direction of ideas formation for the future tour is keeping track of travel agencies operating in other countries and regions. Tour operators can fully or partially take over the idea and adjust it to local conditions and needs of the target customers

9. Stages of tour package formation
The third direction in ideas formation is may be tour operator' personal experience, his awareness of market demand, skills in customer needs development forecast. On the other hand, ideas formation is a creative process which cannot be limited to the frames of standard decision-making algorithm.

10. Stages of tour package formation
Having formed the idea of the future tour, the tour operator analyzes and defines its implementation possibilities according to several directions:
correspondence of the idea to the customer expectations;
potential market research;
estimation of competitive tours of other travel agencies;
identification of partners and tourist service providers search and selection in order to implement the idea;
enterprise internal capabilities estimation.
As a rule, this stage presupposes research of several ideas aimed at selection of the most attractive ideas. They form the basis of new tours development.

11. Stages of tour package formation
At the second stage partners and tourist service providers search and selection are conducted. Potential partners search lies in selection of those who fully meet the needs and requirements with regard to tourist service out of the total number of service providers.

12. Stages of tour package formation
In order to search for partners and service providers different reference books as well as the Internet and other communication methods can be used, contacts with service providers can be established at specialized exhibitions, fairs and tourist salons etc. When selecting partners in hotel and transport business, it is worth remembering that working with one partner is not desirable. Presence of several hotels and transport organizations in the region of the tour, extends their choice and serves the alternative in case of unforeseen and conflict situations. This is common for providers of other services as well.

13. Stages of tour package formation
Service providers are selected on the basis of regional interests, kind of tourism, service program contents as well as the segment of customers with accordance to their age, social and economic status. Their business skills and reputation play an important role.
Possible travel routes are developed along with establishing contacts with service providers.

14. Stages of tour package formation
The third stage involves forming the basic and the additional service package of the tour. It presupposes including services rendered by the partners or providers into the tour package on the basis of practical proposition.
The fourth stage. Tour formation must be supported by the process control documentation relevant to the statutory requirements aimed at customer rights protection. They are controlled within tourist products certification .

15. Stages of tour package formation
The set of process control documentation for each tour includes:
operation card of the tourist trip along the route - the document which summarizes basic information about the tour travel agency availability for groups of tourists reveals the workload of travel agencies along the route and enables to track and manage it

16. Stages of tour package formation
Tourist trip data sheet is an integral addition to the tourist voucher which comprises necessary information (type of tourist trip, basic contents of the service program, length of stay and accommodation at every service point, list of services to be rendered at additional charge) and additional information (age limitations, specific information for tours which include hiking etc.)

17. Stages of tour package formation
Booking form is the specific order placed by the tourist or the representative of the tourist group with the tour operator in order to form the tourist product. It is concluded in the written form and signed as a primary agreement
forms of the contract with clients for the purchase of a tour are completed according to the law of Ukraine “On Tourism” and is based on Sale Purchase Framework Agreement
agreements with partners being service providers (hotels, transport companies, sightseeing tour agencies) guarantee rendering of particular services

18. Stages of tour package formation
estimates of the tour costs are made through summing up the cost of every service and statutory per cent of return; for the tour operator it totals per cent on the tour net cost (annex H)
route description is prepared in free format to facilitate work of route managers and guides, in the form of an annex to the agreement with the travel agent or addition to the tourist trip data sheet
itinerary is made in the form of a table with the indication of dates and time of arrivals and departures for every point on the route

19. Stages of tour package formation
route net map is prepared as the layout of the route
description of the tour technological characteristics is a reminder of the terms to submit requests for transportation, tickets, excursions to museums and book hotels, catering as well as the terms of claiming visas and insurance, transfers, waits, the duties of guides at receptions or foreign representatives and support guides. This is needed for the tour supervisors fieldwork.
additional information on the route includes reference books, booklets, work timetables of transport and museums, hotel addresses, access roads to them and other materials covering peculiarities of the tour

20. Stages of tour package formation
brochures and booklets are aimed at tourists familiarization, instruction and advertising of tour operator possibilities in organizing tours (organized tour directions promotional information with the necessary requisite details)
price lists provide information about prices on various tourist services. They can take the form of leaflets, booklets and catalogues (deployed bids)

21. Stages of tour package formation
The information in leaflets is presented in brief, tour package prices are given for the short term. In certain cases these are special offers of firms for one or several trips.
Deployed bids are bulky editions (catalogues, booklets) which include not only the full list of seasonal prices for the offered tours, but also additional recommendations and clarifications: lists of documents necessary for tour documentation, rules for claiming visas and booking (booking forms are supplied), flight timetables, information about prices, car rent terms and characteristic features of hotels.

22. Calculation of tours
Setting the tour price is the basis for carrying out a particular pricing policy by a travel agency in the travel market. Pricing policy is a marketing instrument that corresponds to the chosen strategy which is based on a certain concept of marketing management.
Price of the tour must be flexible to ensure the activity in terms of market competitiveness and meet the demand for tourist services. It should also cover the cost of its organization and implementation on the tourist market and generate some profit for the business that would enable business development

23. Calculation of tours
When calculating the price of standard (mass) tourist products, tour operators often follow market leaders’ pricing policy, especially at a time when demand for tourist services falls in a particular season. Large tour operators reduce costs and, thus, do not allow competitors to restrain costs.
Specialized tour operators have greatest flexibility in pricing because they offer unique packages. They determine their price, mainly focusing on the costs of services being rendered, including other expenses and a certain percentage of the profits.

24. Calculation of tours Major expenses for the tour can be divided into:
1)fixed costs that do not change with the number of sold tours:
credit payments;
rent of premises, equipment , vehicles , etc.;
utility payments;
wages of managers and administrative staff;
advertising and other tourist products ;
taxes on land, transport and hotel fees;
2) variables that depend on the number of sold tours:
salary for guides and others accompanying the tourists;
expenditure on tour organization and realization.

25. Calculation of tours
Depending on the method of determining the cost items are divided into direct items related to services units, and indirect, which are classified according to certain criteria, for example, in proportion to consumption rates.
Additional costs for the tour and the cost of additional services offered to tourists, may be included in the total price of the tour package or paid at the place of consumption. The cost of the tour does not often include transportation before the beginning of the tour.

26. Calculation of tours
The tour value can be calculated on the basis of formula

27. Calculation of tours Pt – the cost for a tourist holiday package, UAH.
Cb.s. – the cost of basic services to a group of tourists in terms of the tour , UAH.
Cad.s – costs on additional services to be rendered to a group of tourists included in the voucher at their request UAH.
T – taxes and other obligatory payments , UAH.
Rpr – rate of profit of the tour operator UAH.
D – discounts provided by the tour operator to every tourist on certain services in holiday packages, UAH.
(+/-)Com – agent’s commission for each tour, where (+) is the mark-up on the price of tour packages , defined by the tour operator, and (-) denotes the discount provided to the travel agent by the tour operator, UAH.
Nt – the number of tourists in the group , people;
– Number of people accompanying the group on this route, people.

28. Calculation of tours
Tourist products price differentiation is the result of differentiating tariffs on certain types of services that are part of the tour, reflecting changes in labour costs for specific services at different times . Fluctuations in rates are a result of market-oriented policies of service providers based on the fact that the proposal is aimed at meeting the needs of tourists during peak demand , so you need to have spare capacity and the ability to deploy them according to growing needs. Pricing is complicated by including tourist resources into tourist products and taking into account climate, beautiful landscapes , etc

29. Calculation of tours
Lower price limit is its self-cost , which includes prices on basic services fixed in contracts in accordance with the agreed parameters of the tour and operating costs of its implementation and consumption arrangement. The last parameter depends on the marketing strategy chosen by the firm: type of advertising and promotional campaigns, branching network and its location, diversity of distribution channels for tourist products.

30. Calculation of tours
The self-cost of the tour is the sum of its components :
accommodation, meals, transportation, sightseeing services and some additional services that enhance the competitiveness of the package;
health insurance and visa support ( for overseas tours ).

31. Calculation of tours Tour price is determined by:
holiday season and region - seasonal mark-ups on virtually all types of services, mark-ups on services provided in popular tourist and recreation centers;
travel period - the longer the tour , the more expensive it is ;
type of travel during the trip – by air, bus, railway;
form of travel - private tours are more expensive than group tours calculated per one tourist . The larger the group, the lower the cost of the tour;
group members - many services are provided to certain categories of customers on favorable terms, such as preschool children and schoolchildren , pensioners , the military

32. Calculation of tours
The price of the tour is affected by the nature of agreements between tour operators and travel agencies, since they determine the conditions of agreement implementation and determine the travel agent’s commissions in the form of the extra charges and discounts. Tour operator can be a wholesaler who:
- has no further control over the agent’ pricing policy during the sale of tours (i.e. the travel agent pays the price determined by the tour operator and establishes its own market price within sales of tours);
- Reserves the right to control pricing and provide appropriate discounts to travel agents being wholesalers of particular tour packages. In this case, the travel agent must comply with the retail price, which is determined by the tour operator, and its profit is the difference between the wholesale and retail price of tours.

33. Calculation of tours
Tour price is calculated per one person. The group also includes people who organize services consumption (support guides, guides, interpreters) in exchange for wages.

34. Calculation of tours
Price calculations in tourism have certain criteria. For example, if a seasonal program implies a series of long-term charter flights, including hotel accommodation in a particular destination, the costs are calculated on the basis of the number of transfers and choice of certain means of transport with a certain number of seats plus one empty flight at the beginning and end of the season. This covers full costs of the seasonal charter program. They are divided by the number of tours, and the price of one tour is calculated to be included in the tour package.

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