M3: Explain ways of maximising the profitability of the planned package holiday. For M3, learners must explain, with specific examples, ways in which profitability could be maximized. Aspects such as methods of contracting, consolidations, currency exchange, cancellation charge and commission must now be applied specifically to the planned tour, with explanations to show how they could contribute to its profitability.
Methods of contracting-
Like any tour operator I need to make a profit, and in order to increase the profit of my planned package holiday to La Charente in France I need to keep the contract with my suppliers flexible so that low booking numbers will not affect my overall revenue. In the contrary if I have a fixed contract then I would still have to pay for plane seats and hotel rooms even if they haven’t been booked, this would result in me being out of pocket and could end up bankrupt like what happens to many small independent operators.
Methods and Benefits of selling-
When a tour operator sells a package successfully they receive many benefits, a tour operators uses many methods in order to sell the package.
If a tour operator sells their holiday effectively the number of reservations in the peak season increases. The more reservations a tour operator makes the more profit they will make therefore the tour operator can cover all their costs and start to generate extra profit.
As the holiday date approaches the tour operator will be attempting to make late sales. Late sales are cheaper towards the end of the sales period because the price comes down in order for the tour operators to make more sales. The tour operator’s aim is to sell every ticket, seat and room of a holiday and this is helped by late sales. Also if a tour operator does sell all seats it makes a better impression on the customer because it shows it was a popular choice. Late sales are not wanted from any...