The Ins and Outs of Tour Packages
For a client to understand why the items in a tour package cannot be substituted or charged a la carte, he or she should know the basics of how a tour company operates. A tour company will first proposition an airline company, resort and ground transportation company. The tour company will promise the companies that they will sell a certain number of seats, rooms or tours for the year.
In return for their promise, the airline, resort and ground transportation companies can give the tour company discount rates. The tour company is then obligated to meet the quota of plane tickets, resort stays and bus seats or they face financial penalties with the companies. The tour company builds its profit when it sells these packages because it becomes closer to meeting the quota needed. By packaging the components of the tour together into one lump and discounted sum, the tour company is cutting its own profit but is more likely to meet the quota of sales that it had promised the airline, resort and ground transportation company.
Clients may look at the bottom line price of a tour package and ask, “How much of that price is just air fare?” or “How much can I deduct if I don’t want the ground transportation?” However, it is impossible to break up the tour package into the separate components and price them out individually. Even if a company were able to somehow figure out what each component costs in the package, it wouldn’t matter because the tour package price is irrelevant if the items offered are split up. It would be unfair for a traveler to know what deal the tour company got on the airline rates, resort stays and ground transportation rates from the companies. In order to stay afloat, the tour company has had to mark up the price of the components to offer the package price because the company is taking on a loss of profit in the number of tickets it is unable to sell.
A tour package is put together much like a “value meal” at a fast food restaurant or a “combo deal” at a movie theater. A customer doesn’t ask how much the French fries in a value meal cost because the price that is offered is only offered as the combination price with the drink and sandwich. A customer knows that if he or she wants to purchase fries separately from the meal, the individual price of the fries would be implemented. Clients who want the great deal of a tour package but may not need all the components offered in the package have a valid frustration with the way the package is set up. However, grouping the components together is what allows the tour company to offer such great rates and is why the items cannot be separately priced.
If each component is priced out separately without the tour company in mind, however, the client may find that the components will cost much more when purchased this way. Although they are unable to be separated or substituted in the tour package, purchasing a package can still save the client a substantial amount of money.
While a client may feel the need to dissect the price of a tour package into its separate components, it is impossible and pointless to do. A tour package is sold much like a “value meal” at a fast food restaurant. The traveler is offered all or nothing and cannot purchase the components a la carte. Clients that understand how a tour company operates are often more accepting of the package and its price. While components may not be substituted or excluded, tour packages are still a great way to save a traveler a significant amount of money on their vacation.