Package tourism explained: What, why and where

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(Last updated on: 19/11/2021)

Package tourism is an important component of tourism. The package holiday market has boomed in the past couple of decades, and although people are not choosing to book their package holidays in quite the same way nowadays, package tourism is here to stay.

So what is package tourism and what does it mean for the face of the tourism industry? In this article we take a look at this important part of the tourism industry.

What is package tourism?

Package tourism

Package tourism is when elements of a holiday are grouped together and sold as a package by a tour operator at an inclusive price. Typically, a package holiday will include the three core elements of; transport (e.g. flights), transfer (e.g. coach or car) and accommodation (e.g. hotel).

Package tourism is traditionally associated with the production of mass, standardised holidays, for example beach holidays to Europe. However, in recent times tour operators have been promoting a wider range of package holidays that facilitate niche tourism and allow for tourists to design their own personalised tour packages.

Learn more about package tourism in this video!

The history of package tourism

The growth and development of package tourism is largely down to one (famous) name in travel and tourism- Thomas Cook. Thomas Cook wasn’t just a company- there was a face behind the name!

In 1841 Thomas Cook organised the first package holiday as we know it today. It may have only been a short trip between Leicester and Loughborough, but it was revolutionary in terms of the growth and development of tourism industry. In the proceeding years, Cook took many tourists on similar trips, which were becoming more varied and exotic. Increases in disposable income, having paid time off work, an increasing desire to explore new destinations and significant developments in transport and technology meant that Cook’s business grew and grew. You can read a detailed account of the history of Thomas Cook here.

The development and growth of package holidays is an important part in the history of tourism. Learn more here!

In the years that followed, other tour operators and travel companies opened up, hoping to offer services similar to Thomas Cook, whilst many succeeded in doing so, none were ever real contenders for the package tourism giant. In 1990 the EU Package Travel Directive was introduced, offering protection to travellers in the case of a tour-operator or airline failure and by the mid 1990’s more than half of all holidays taken by UK citizens were package holidays.

Package tourism was an easy way to book a holiday. It wasn’t until the growth of the Internet that package tourism started to decline in popularity. The advent of Web 2.0 meant that tourists could now do their own research about their holidays and they no longer had to rely on the advice of a travel agent and for a tour operator to package together their trip for them. The growth of travel blogs, comparison websites and online travel agents all contributed to the gradually decline in the number of tourists booking package holidays.

Whilst package holidays do continue to be sold around the world, many of them are now known as dynamic packages, whereby the tourist selects the elements of the package and puts it together themselves, with the assistance of an operator, usually an online travel agent.

History of tourism

Major package tourism tour operators

There are many different travel and tourism companies around the world that provide package tourism services and package holidays.

Up until 2019, Thomas Cook and TUI were the two major market players in the package tourism business. The companies held a duopoly, meaning that they were the two major companies that dominated the package tourism market and therefore had most of the business. However, in 2019 Thomas Cook ceased trading, leaving a monopoly- TUI remains to be the major market leader in package tourism.

However, there are also other companies that offer package tourism products. These include:

  • Independent tour operators
  • Online tour operators
  • Niche tourism tour operators

Types of package tourism

Traditionally, package tourism is based on a holiday to a beach destination that includes a flight, transfer and hotel room. You can have all-inclusive package holidays, half-board package holidays and self-catering package holidays.

Travel agents will also often try to sell the tourist extra services in addition to the core package, known as ancillary products and services. This could include insurance, tickets to tourist attractions, car hire etc.

Travel agents are the main retailers for package holidays. Learn more about them here.

Nowadays, there are more options for package holidays than a sun, sea and sand holiday. For example, I booked a package tour when I went to the Galapagos Islands for my honeymoon! This tour included nights in 3 different hotels, multiple flights and a cruise- it certainly wasn’t your traditional package holiday! With the growth in popularity of holidays that are a little bit different (known as niche tourism), many tour operators are now offering bespoke, tailor made package holidays to suit the needs of their customers.

Another popular way to book a package holiday is on the Internet. Many tourists will choose to use on online tour operator to book their package holiday. There are plenty of companies that offer this, such as Expedia, On The Beach and easyJet.

Benefits of package tourism

Package tourism has been a popular type of tourism for many years, and for good reason!

Package tourism is easy and convenient for the tourist. There is no need to do any research, no need to research flight times or bus timetables and no need to do anything before departure except for packing your suitcase! Prior to the 2000s, this was perfect for many people. However, with the growth of the Internet, many people felt that they no longer needed this help and that they could now research and book these elements of their holiday themselves.

Package tourism is often cheaper than other forms of tourism. This is based on the basic rule of supply and demand- tour operators, using the traditional Fordist model of mass production, create standardised package holidays in bulk. Because they are putting together a large number of holidays, they are able to offer them at a cheaper price to consumers.

Booking a package holiday typically comes with added protection, at least within the EU anyway. ATOL and ABTA are two major organisations that provide insurance and legal security for tourists. Most package holidays are covered by these organisations.

Package tourism

Disadvantages of package tourism

There are also disadvantages of package tourism. One of the major disadvantages is that that package holidays often have few economic benefits of tourism to the local destination, especially if the package encompasses an all-inclusive hotel. This is because much of the money paid by the tourist will be retained by the tour operator and other foreign organisations- this is an example of economic leakage in tourism. This is a negative impact that hinders the ability for sustainable tourism to take place.

Another major disadvantage of package tourism is the association that package tourism has with mass tourism. Because package holidays are typically mass produced, the result is large amounts of tourists all visiting the same place often at the same time. This causes many problems, from environmental degradation to negative social impacts of tourism and more.

From the tourists’ perspective, package tourism isn’t always the best type of tourism either. This is because it is not personal and it is not (usually) tailored to the needs of the specific tourist. In recent years we have seen consumer desires change- people want to see new things and explore new places outside of what the traditional package holiday model typically offers. People are more interested in niche tourism than ever before. Whilst there are some packages that cater for this, this often comes at an expense for the tourist and it isn’t so easy to come by.

The death of the package holiday

Many people have suggested in recent years that package holidays are dying, heck- the collapse of Thomas Cook told us that was probably the case! However, I disagree with this, yes- the traditional package holiday is dying, people are less interested in sun, sea and sand holidays than before, but there is most certainly still a market for package holidays, they just look a bit different nowadays!

Many people are opting to book dynamic packages. This is when the tourist can select their own elements of a package (i.e. which flight they prefer, which hotel they like the look of) and combine them together to create a package. People tend to prefer this because they can tailor their holidays to better suit their needs and requirements, yet still have the ease and protection that comes with booking a package holiday. Many people don’t realise that they are booking a package holiday when they book their holiday through websites such as Expedia or easyJet, but in fact, they are!

Alongside this, niche holidays are also growing in demand. A person may be interested in painting or diving, for example, but they don’t know where the best place to go for their specific interest is or how to organise their trip. This is where a niche tourism tour operator comes in, who can develop a package for them.

Further reading

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Dr Hayley Stainton

Hi, I'm Dr Hayley Stainton

Through Tourism Teacher I share my knowledge on the principles and practice of travel and tourism management from both an academic and practical perspective.

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