Determining the Cost of a Tour

1.2.10. Determine the cost and selling price for the program

1.2.10.1. Determining the cost of a tour program

a. Concept of cost of a tour program

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The cost of a tour program includes all direct costs that the travel company must pay once to carry out the tour program.

If these costs are calculated for 1 guest, it is called the cost for one tour program.

If these costs are calculated for the whole group of guests, it is called the total cost for one tour program.

First of all, it is necessary to realize that the cost of a tour, even if it is determined for one tourist, depends on the number of tourists in the group. Therefore, people group all costs into two basic categories: fixed costs and variable costs.

 Fixed costs for the entire group. Includes all goods and services whose unit prices are determined for the entire group, regardless of the number of guests in the group. This group includes costs for services and goods that are consumed by all members of the group and cannot be separated for each member separately.

 Variable costs per visitor. Includes the costs of all goods and services whose unit prices are fixed for each visitor. These are usually the costs of services and goods directly linked to the direct consumption of the individual tourist.

 Cost calculation formula

Price for 1 guest: z = VC + FC/Q

Total cost for the whole group: Z = VC*Q + FC or = zQ

In there:

z: price per customer

Z: total cost for the whole group Q: number of members in the group

FC: total fixed cost calculated for the whole group of guests VC: Total variable cost calculated for one guest.

b. Costing method

Based on two types of fixed and variable costs, there are several methods of determining the cost of tourism programs, we have two basic methods of determining the cost.

1.2.10.2. Determining the selling price of a tour program

The price of a tour depends on the following factors:

 Popular price on the market

 Role, position, and brand of the business in the market

 Business goals

 Cost of the program

 Tourist season

Based on the above factors, we can determine the price of a program according to the following formula:

G = Z + Cb + Ck + P + T

In there:

Z: price per customer

P: profit for travel business

Cb: Selling costs include commissions for agents and promotion costs.

Ck: other costs: management costs, program design costs, depreciation costs, contingency costs, marketing, office rental...

T: taxes

1.3. Selling travel programs

1.3.1. Promoting the sale of tourism programs

a. Concept

The essence of promotion mix is ​​the process of combining communication in tourism business for consumers in the target market. On the one hand, helping them to recognize

aware of the tourism programs of the enterprise, on the other hand, to attract and entice target consumers to buy the enterprise's products and be loyal to the products, including advertising, propaganda and public relations, promoting consumption, direct sales. The selection of promotional activities requires analyzing the following influencing factors: the nature and characteristics of each type of tourism program that the enterprise brings to the market, the goals that the communication ambition is aimed at, the stages in the product life cycle (tourism seasonality), the situation that the enterprise must face and determine its position in the target market, the budget that can be allocated for promotional activities.

b. Tourism program advertising activities

All advertising activities aim to stimulate tourists' demand for the products of the travel agency. Advertising products must create a match between tourism programs and tourists' needs, desires and aspirations.

Organizing advertising campaigns for tourism programs is becoming more and more diverse, rich and expensive. To attract tourists, travel businesses invite art stars, famous people, journalists... to make free trips according to the business's tourism programs. Although the business has to spend a lot of money, these stars or opinion leaders are magical magnets to attract tourists to buy the business's tours. To create prestige or create buzz for a new product, businesses do not hesitate to spend money to make trips, survey programs (FAM TRIP), with the participation of direct customers, or of media units... The effective form of advertising is the quality of each implementation to achieve high satisfaction of tourists in the target market. High quality leads to good reputation, making the travel business's product brand famous and especially building customer loyalty to the business's products.

c. Propaganda and public relations activities

Propaganda activities are indirect actions aimed at stimulating tourism demand or increasing the reputation of travel businesses by providing information about new tourist destinations and routes through the use of mass media (television, radio, print, magazines, and electronic newspapers) with the support of reporters.

In modern travel business, propaganda is a very important form of travel business to achieve its goals. Through propaganda, travel business can achieve the following goals:

- Create awareness of new tourism services.

- Build credibility

- Create good conditions for sellers and distribution channels.

- Lower cost than advertising.

Publish publications, organize special events, provide information for journalists to participate in interviews, presentations, participate in social and charitable activities to build the company's brand.

d. Promotional activities, consumption promotion, sales promotion

The incentive activities to promote consumption of travel businesses are the use of direct stimulus measures to the sales team of travel agencies and travel businesses, in order to motivate salespeople to actively and proactively speed up the sales of travel programs. The forms of promotion that travel businesses can apply: increase basic commission, bonus commission... Create favorable conditions and preferential policies for sales staff and agents.

Promotional activities (stimulating tourists) are the use of measures and forms directly to tourists (final consumers) to make them willing to buy the tourism program. The most basic measures and forms are:

Applicable in the travel business are giving gifts, participating in contests, travel program vouchers, prize vouchers, receiving refunds, selling at preferential prices...

To conduct two promotional activities and sales promotion, managers need to clearly define: the intensity of stimulation, conditions for participation, popular means of promoting the stimulation program, the duration of the stimulation program, choose the time to implement, the budget for stimulating sellers and buyers. It is necessary to make a specific plan for the stimulation activities and evaluate the results of the consumption stimulation program.

Directly selling a tour program is using measures and forms to reach the tourist's address. The measures and forms that travel agencies use in selling tour programs, the price of the program and the registration procedures via phone, post, television, etc.

1.3.2. Organizing the sale of tourism programs

a. Identify customer sources

When building tourism programs, travel agencies often identify the main target market for their products. This is one of the basic stages and plays a decisive role in achieving the business goals of the tourism program of the travel agency. Therefore, it is necessary to choose the optimal methods and means to consume the maximum amount of products with the minimum cost. This stage includes the main tasks such as choosing the consumption channel, and managing the consumption channels in the tourism program.

Travel businesses can choose product distribution channels suitable for each target market.

The consumption channel in tourism is understood as a service organization system to create convenient points of sale or product access for tourists, outside the location where the production and consumption of the product takes place. Depending on the characteristics of the main customer source of the business, choose the appropriate consumption channel.

There are usually the following main types of distribution channels:

Branch, representative office

PRODUCT

DU

CHAPTER

Travel agent

retail

GUEST

TOUR

CALENDAR

Travel agents for sale

trade

type:

Figure 1.1: The distribution channel system is a tourism program.

Based on the relationship with tourists, the above consumption channels are divided into 2.

Direct product consumption channel: includes channel (1) and channel (2).

In which the business transacts directly with customers without going through any intermediary.

intermediaries. The types of channel organization are as follows:

 Use the company's human resources to greet and sell directly to tourists. Pay special attention to personal selling.

 Directly use offices or branches at home and abroad as a basis for selling tourism programs.

 Open representative offices and retail representatives of tourism programs.

 Use communication systems, especially networked systems to organize the sale of travel programs to tourists at home (e-commerce)

Indirect product consumption channel: from channel (3) and channel (5)

The characteristic of this type of channel is that the process of buying and selling products of a travel agency is authorized to other travel agencies as sales agents or as a travel agency sending customers. Travel agency

The tour program producer will be fully responsible for the products he commissions and the quality of services in the program sold to customers.

In addition to organizing product consumption channels, businesses must also promote propaganda activities to supplement the sales process such as propaganda on television, radio, and newspapers about new tourist destinations, new tourism programs, etc.

For indirect consumption channels, the subject acts as a buyer for their customers. They are independent businesses, they have their own authority and business strategy, in many cases the viewpoint of the travel businesses sending customers, the travel agents are very different from the viewpoint of the travel businesses receiving customers. Therefore, in order to consume many package tours, the travel businesses receiving customers need to give many incentives to the travel businesses sending customers, the travel agents.

To manage sales channels, travel agencies receiving customers need to use three common methods: cooperation, establishing membership relationships, building sales plans and setting sales quotas for travel agencies sending customers and independent travel agents. Evaluate the performance of sales channels according to standards such as number of tours, number of customers, number of customer days, revenue achieved, accuracy of contracts, level of cooperation in promotion programs and market information they provide.

Sales organization has a direct impact on the consumption of any business's products. In essence, it is the process of establishing distribution channels, determining sales conditions as well as sales support tools. With its own characteristics, the organization process of travel businesses has its own advantages and difficulties that are different from ordinary goods. Because travel products exist in the form of services, in distribution channels there are only flows of money, information and sales promotion but no flow of goods, so the organization and operation are often simpler and less expensive than physical goods. However, due to the characteristics of dispersed tourism demand, the distribution channel in the travel business requires a wider coverage as well as the effectiveness of each individual channel.

usually lower. In addition, due to the nature of its existence as a service, sales are often difficult and therefore, the requirements for knowledge and sales skills of agents, points of sale or direct sales staff must be very high.

b. Relationship between travel agencies with each other and with tourists

Cooperation between travel agencies always plays a particularly important role. For travel agencies in Vietnam, when the conditions for direct contact and exploitation of international tourist sources at their accommodation are extremely limited, receiving customers through travel agencies sending customers is almost inevitable. There is usually an agreement between the sending and receiving companies.

For tourists who come to businesses on their own (mainly individual customers), when they buy a program from a travel business, if the program has a relatively large value, there is usually a contract between the business and the customer regarding the implementation of the tour program.

When travel businesses organize to attract customers directly for active tourism programs, promotional activities for selling programs play a particularly important role. Businesses often take advantage of most of the product distribution channels in tourism.

The work of organizing and selling tourism programs can be prepared in advance for a long time. Nowadays, with the widespread use of computer systems, people have kept customer files in which they clearly record their preferences, tastes as well as the services and goods that customers have used. That is one of the clearest manifestations of customer care - a decisive step to the success or failure of a business.