What is a tour package?
A tour package (package tour) is a pre-arranged trip that combines two or more travel services and is sold at one inclusive price. It is made by a tour operator and sold directly or through travel agents.
Components
- Transport to and from the destination (air, rail, road, sea).
- Accommodation with a meal plan.
- Meals.
- Sightseeing and entry tickets, activities.
- Guide or tour manager.
- Transfers between airport, station and hotel.
- Extras: insurance, visa help, taxes.
Why people buy packages
One booking and one price, lower cost from bulk buying, expert planning, safety and support, and less worry. Limits: less freedom and a fixed pace.
Types of tour packages
- Independent (FIT): for a single traveller or family; transport and stay are fixed, but they explore on their own. (FIT = free independent traveller.)
- Escorted group tour (GIT): a group travels together with a tour manager throughout. (GIT = group inclusive tour.)
- Hosted tour: no escort travels along, but a local host or desk helps at the destination.
- All-inclusive: nearly everything (travel, stay, all meals, activities, taxes) in one price.
- By area: domestic, inbound and outbound packages.
- By theme (special interest): adventure, pilgrimage, wildlife, wellness, culture and heritage, honeymoon, education, business (MICE: meetings, incentives, conferences, exhibitions).
Designing a tour package
- Market research: who are the buyers, what do they want, what do rivals offer, what is the best season.
- Choose destination and theme that match the market.
- Write the itinerary: day-by-day plan, realistic and balanced.
- Negotiate with suppliers: airlines, hotels, coach firms, guides; get group rates and contracts.
- Costing and pricing: add all costs per person, then add a mark-up.
- Brochure and marketing: clear inclusions, exclusions, terms and cancellation rules; promote online and through agents.
- Operate and get feedback: run the tour, solve problems, and use feedback to improve the next package.
Pricing a package
Most operators use cost-plus pricing:
Selling price = total cost per person + mark-up, where mark-up = cost × mark-up %.
- Variable costs are paid per person (flight seat, meals, entry ticket).
- Fixed costs are paid once for the group (coach hire, guide fee). Divide them by the number of travellers: the bigger the group, the lower the share per person.
Detailed tour costing (taxes, seasons, single supplements) is studied in the next chapter on tour costing.
Key formulas and definitions
- Tour package: 2 or more services at one price
- Components: transport, stay, meals, sightseeing, guide, transfers
- FIT: free independent traveller; GIT: group inclusive tour
- MICE: meetings, incentives, conferences, exhibitions
- Mark-up = cost × mark-up %
- Selling price = cost + mark-up
- Fixed cost per person = fixed cost ÷ group size
Worked examples
1. Flight ₹9,000, hotel ₹7,500, meals ₹3,000, sightseeing ₹2,500 per person. Mark-up 20%. Selling price?
Cost = ₹22,000. Mark-up = 22,000 × 20% = ₹4,400. Price = ₹26,400.
2. A coach costs ₹30,000 for the tour. Share per person for 15 and for 30 travellers?
15: 30,000 ÷ 15 = ₹2,000. 30: 30,000 ÷ 30 = ₹1,000. Bigger group, lower share.
3. A couple wants flights and a hotel booked but plans their own days. Which type of package?
An independent (FIT) package.
4. A company sends its top 50 sales staff on a reward trip with a conference. Which theme?
MICE (incentive and conference travel).
Common mistakes
- Calling a single hotel booking a package. A package needs two or more services together.
- Forgetting to divide fixed costs like coach and guide among the group.
- Not listing exclusions clearly, which leads to angry customers.
- Mixing up escorted (tour manager travels along) and hosted (local help only).