The tour operator is an integral component of tourism, yet many people are unclear about what a tour operator actually is or what they do.
This article explains what a tour operator is, why tour operators are important, the difference between a tour operator and a travel agent, and the different types of tour operators.
- What is a tour operator?
- Definitions of tour operator
- Importance of tour operators
- The difference between a tour operator and a travel agent
- What does a tour operator do?
- Products and services sold by tour operators
- Types of tour operator
- The Association of Independent Tour Operators
- The tour operator: To conclude
What is a tour operator?
Tour operators are inextricably linked to the package holiday model. The tour operator is the person or organisation who creates the package. A travel agency is then used to sell the package holiday.
In the chain of distribution, the tour operator is represented by the term ‘wholesaler’. This is because the tour operator is responsible for purchasing products or services in bulk and then redistributing them as a packaged product to consumers.
To put it simply, a tour operator is the person or organisation who takes the individual elements of a holiday (e.g. transfer, hotel, transport) and packages these together.
The types of package vary. Most commonly, tour operators are associated with mass tourism and the traditional package holiday market. However, tour operators do also play an important role in the production of niche tourism products and services too.
Video: What is a tour operator?
Definitions of tour operator
A frequently cited academic definition comes from Poynter (1993), who defined the tour operator as:
‘[an organisation or person] who has the responsibility of putting the tour ingredients together, marketing it, making reservations and handling actual operation’.
Similarly, Holloway (1992) states that:
tour operators undertake a distinct function in the tourism industry: they purchase separate elements of tourism products/services and combine them into a package tour which they sell directly or indirectly to the tourists.
The Organisation for Economic Co-operation and Development (OECD) defines a tour operator as follows:
‘Tour operators are businesses that combine two or more travel services (e.g., transport, accommodation, meals, entertainment, sightseeing) and sell them through travel agencies or directly to final consumers as a single product (called a package tour) for a global price. The components of a package tour might be pre-established or can result from an “a la carte” procedure, in which the visitor decides the combination of services he/she wishes to acquire.’
Importance of tour operators
Tour operators are an important part of the tourism industry.
Tour operators make the logistics of organising a holiday much easier for the consumer. This makes people more likely to travel, more often.
Tour operators have a lot of power. If they choose to sell holidays in a particular location, for example, then that location will receive many of the associated positive and negative economic impacts of tourism.
Tour operators are often vertically or horizontally integrated with other organisations, such as travel agents and airlines. This allows for easier management and distribution of products.
Tour operators typically build holidays en masse. This means that economies of scale play a key role in driving down prices- the more that is produced, the cheaper each unit becomes. This is beneficial to the consumer and helps travel agents to have a competitive advantage when selling holidays.
The difference between a tour operator and a travel agent
Many people assume that travel agents and tour operators are the same thing, but they are actually two different types of organisation.
The difference is simple:
A tour operator is the organisation which puts the different elements of a holiday together. The travel agent is the organisation that sells it to the consumer, earning commission from the tour operator. Many travel agents today work as independent travel agents, often supported by a host agency.
While the distinction is easy to grasp, it is also easy to understand why people get tour operators and travel agents confused. This is largely because many organisations will operate under the same company. For example, TUI has a tour operator and a travel agent (and an airline too). As a result, many people do not realise that in actual fact, there are two separate organisations doing two separate jobs.
What does a tour operator do?
Ultimately, a tour operator is responsible for putting the different elements of a holiday together into a commodified package.
To do this, there are a number of different roles and responsibilities that tour operator staff will have. This includes:
- Data analysis- which destinations will sell best, how many holidays should they sell etc
- Assessing suitability of accommodation, transfer and transport options
- Liaising with stakeholders e.g. coach operators, airlines, hoteliers and resort representatives
- Negotiating contracts
- Confirming reservations with airlines/hotels
- Managing and responding to customer feedback
- Undertaking market research
- Production of marketing material
- Providing pricing information
- Handling bookings, invoicing and issuing of tickets
- Working with travel consultants from different travel agencies to put holiday packages together
Products and services sold by tour operators
Tour operators have a number of products and services that they sell, depending on their specific business model, business intentions and target market. A tour operator will typically package together two or more elements to form a packaged product, which is then sold at an inclusive price.
Examples include:
- Package holidays
- Accommodation
- Transfers
- Excursions
- Information on destinations
- Representative service in resorts
Types of tour operator
Tour operators come in all shapes and sizes. Some are large, multinational organisations and others are small, independent businesses.
Different types of tour operators develop products for different types of tourism. This can include the mass market, niche tourism market, special interest tourism, the luxury market, tailor-made products and dynamic packages.
There are four main types of tour operators:
- Inbound Tour Operators
- Outbound Tour Operators
- Domestic Tour Operators
- Ground Operators
Inbound tour operators
An inbound tour operator is one who facilitates inbound tourism.
The aim of an inbound tour operator is to bring tourists in to a particular country or countries.
Inbound tour operators will often collaborate with local travel agencies and transport operators to facilitate travel arrangements for their customers.
Inbound tour operator example: A group of German tourists takes a tour of China, encompassing a visit to Shanghai, Hangzhou and the Yellow Mountains. The tour operator who organises their travel is Chinese-based company China Highlights. This company is based locally in China and they offer local, Chinese tours.
Outbound tour operators
An outbound tour operator is one who facilitates outbound tourism.
The aim of an outbound tour operator is to send tourists out of a particular country or countries.
Outbound tour operators will often collaborate with foreign travel agencies and transport operators to facilitate travel arrangements for their customers.
Outbound tour operator example: A family of four from Liverpool, UK want to book an all-inclusive summer sun holiday in Alicante. They book through TUI, one of the largest tour operators in Britain, which specialises in outbound travel. They are based in the UK, but they work with foreign partners to facilitate holidays overseas.
Domestic tour operators
A domestic tour operator is one who facilitates domestic tourism.
The aim of a domestic tour operator is to organise travel within a particular country or countries.
Domestic tour operators will often collaborate with domestic travel agencies and transport operators to facilitate travel arrangements for their customers. Domestic tour operators will often also serve the inbound tourism market.
Domestic tour operator example: A group of friends from Chicago want to travel to Florida for the spring break holiday. They want to do a tour of the local attractions in the area and have some time to relax on the beach. They organise their travel through the tour company, Trek America. Staff at this company are experts in domestic travel within the USA.
Ground tour operators
A ground tour operator is an organisation that does the groundwork at grassroots level in a destination.
Many tour operators do not have connections in all places around the world, therefore they build a network of connections to help them run their business.
Essentially, some of the work is passed on to a third party, known as a ground operator. This work may include negotiating local contracts, liaising with local suppliers and providing market data, amongst other things.
This is especially common for small tour operators.
You may also hear ground tour operators referred to as handling operators or handling agents.
Ground tour operator example: A backpacker wants to ‘give something back’ and book a volunteer tourism holiday in Kerala. She wants to use a known and trusted tour operator to book her trip so she books it with Intrepid Travel. Intrepid Travel create and sell adventure holidays all over the world, and it is impossible for them to have contacts and staff in every corner of the globe. Therefore they work with local ground operators, who do the work on the ground. In this instance, the ground organisation is Iris Travel– a tour operator based in Kerala, India.
The Association of Independent Tour Operators
The Association of Independent Tour Operators (AITO) is a UK travel industry trade association, similar to ABTA. It was founded in 1976.
AITO represents more than 100 independent, specialist tour operators, many of them owner-managed, offering holidays to destinations all over the world.
These tour operators provide access to a huge range of activities including city breaks, safaris, luxury holidays and much more. AITO is based in Twickenham, south-west London.
AITO plays several roles. Most importantly for consumers, all members must provide financial protection for customers’ money, for example through ATOL (the Air Travel Organiser’s Licence scheme run by the Civil Aviation Authority) or bonding arrangements.
Members are vetted financially and must follow AITO’s Code of Business Practice and Quality Charter, which commit them to accurate holiday descriptions and consistent standards of service.
The tour operator: To conclude
Tour operators are an important part of the tourism industry, packaging the different elements of a holiday into a single product. In the UK, customers who book a package are also protected under the Package Travel and Linked Travel Arrangements Regulations 2018, which make the organiser responsible for delivering every part of the package. Understanding what tour operators do, how they differ from travel agents and the different types of operator is essential for anyone studying or working in travel and tourism.
Tour operators: FAQs
Below are answers to some of the most common questions about tour operators.
What is a tour operator?
A tour operator is a business that combines two or more travel services, such as transport, accommodation and excursions, into a package that is sold at a single price, either directly or through travel agents.
What is the difference between a tour operator and a travel agent?
A tour operator creates the holiday package, while a travel agent sells it to the consumer, usually earning commission from the operator.
What are the four types of tour operators?
The four main types are inbound tour operators, outbound tour operators, domestic tour operators and ground (handling) operators.
What is a ground operator?
A ground operator, also known as a handling agent or destination management company, is a local business that arranges services such as transfers, guides and accommodation on behalf of a tour operator based elsewhere.
What is AITO?
AITO is the Association of Independent Tour Operators, a UK trade association founded in 1976 that represents independent, specialist tour operators who must provide financial protection for customers.
Further reading
If you found this article helpful, the following posts may also be of interest:
- Types of travel agents | Understanding tourism
- What is e-tourism and how is it changing travel?
- Jobs in travel and tourism
- The chain of distribution in tourism
- How to become an independent travel agent
- What is a host agency?
- What is mass tourism?
- What does the World Travel and Tourism Council do?
