Travel Agency and Tour Operation II: Types of Itinerary and Itinerary Planning, Tour Costing for FIT and GIT with Fixed and Variable Costs, Mark-Up and FOC, Confirmation, the Docket, Tour Vouchers and Reconfirmation, Operational Itineraries, Pick-Up and Drop Procedures, Guest Feedback and Its Analysis, Guides and Escorts, WATA, Suppliers, Agency Appointments and International Regulations

The second paragraph of Unit V is the operation of a tour from the first enquiry to the last feedback form. This chapter explains the types of itinerary and the resources and steps of itinerary planning; costs a tour for an individual (FIT) and a group (GIT), separating fixed from variable costs, spreading a free tour leader's place and adding a mark-up, with the difference between mark-up and margin; follows the tour through confirmation, the creation of the docket or file, the issue of vouchers and the reconfirmation of airlines, hotels and ground services; describes the operational itinerary sent to the tour leader, guide, driver and transporter and the standard procedure for pick-up and drop; shows how guest comment sheets are prepared and analysed; and covers tour guides and escorts, the World Association of Travel Agencies, relations with suppliers, agency appointments and the international regulations of the trade. The group and individual costings and a single supplement are worked with round figures.

1. Types of itinerary, and the resources and steps of itinerary planning

Type of itineraryPurpose
Tentative (draft or skeleton) itineraryA first outline of the route, days and main services, sent to the client with an approximate price for approval
Final (confirmed) client itineraryThe day-by-day programme with confirmed flights, hotels, sightseeing and meals, written descriptively for the traveller
Operational (technical) itineraryThe internal version for staff and suppliers, with exact times, flight numbers, confirmation numbers, rooming lists, vehicle and guide details and emergency contacts
FIT and group itineraries; special-interest and customised itinerariesTailored to an individual's wishes or fixed for a group departure; built around a theme such as wildlife, pilgrimage or heritage

The resources for planning an itinerary are maps and atlases; airline, rail and bus timetables and the GDS; the Travel Information Manual for entry requirements; hotel directories and supplier tariffs; guidebooks, destination websites and tourism board material; the agency's own files from earlier tours; and staff knowledge from familiarisation trips. The steps are: understand the client (purpose, dates, budget, number and ages of travellers, interests, fitness, special needs); research destinations and their seasons; plan a logical route that avoids backtracking; allocate time realistically, allowing for travel time, time-zone changes, rest and a buffer for delays; choose transport, accommodation, sightseeing and meals; cost and price the itinerary; send the draft; revise it with the client; and confirm.

2. Tour costing: tariffs, FIT and GIT, fixed and variable costs, FOC and mark-up

Tour costing starts from suppliers' tariffs, the rates quoted by hotels, transporters, guides, restaurants and attractions, often as special net rates for the trade. The key distinction is between fixed and variable costs. A fixed cost is incurred for the tour as a whole and does not change with the number of passengers: coach or car hire, the guide's and escort's fees, permits and group activities. A variable cost is incurred per passenger: the hotel bed on a twin-sharing basis, meals, entrance fees and insurance. For an FIT (free independent traveller) all costs, including the private car, fall on one or two people, so the per-person price is high. For a GIT (group inclusive tour) the fixed costs are divided among the paying passengers, which is why group prices are lower. Suppliers usually give a group one free place, an FOC (free of charge), for every fifteen or so paying passengers, often used for the tour leader; if the leader's costs are not free they are spread across the paying members. A single supplement is charged to a traveller who wants a room alone, the difference between the single-room rate and the per-person twin rate.

Group of 20 paying passengers and 1 tour leader, 5 days and 4 nightsAmount
Fixed costs: coach ₹8,000 a day × 5 = ₹40,000; guide ₹2,000 a day × 5 = ₹10,000₹50,000, or ₹50,000 ÷ 20 = ₹2,500 per paying passenger
Variable costs per person: hotel ₹3,000 a night twin-sharing × 4 = ₹12,000; meals ₹1,000 a day × 5 = ₹5,000; entrance fees ₹1,500₹18,500 per person
Tour leader's variable costs, not free, spread over the group: ₹18,500 ÷ 20₹925 per paying passenger
Cost per paying passenger: 18,500 + 2,500 + 925₹21,925
Selling price with a 20 per cent mark-up on cost: 21,925 × 1.20₹26,310 per person

The same tour for an FIT couple shows why individual travel costs more. The car at ₹3,000 a day for 5 days, ₹15,000, is shared by two, ₹7,500 each; the hotel, meals and entrance fees are the same ₹18,500 per person; there is no guide. The cost is ₹26,000 per person and, with a 20 per cent mark-up, the price ₹31,200, against ₹26,310 in the group. Mark-up and margin must not be confused: a 20 per cent mark-up on cost is a margin of 20 ÷ 120, about 16.7 per cent, of the selling price. A single supplement is worked the same way: if a twin room costs ₹6,000 a night (₹3,000 per person) and a single room ₹5,000, the supplement is ₹2,000 a night, or ₹8,000 for four nights.

⚠️ Divide fixed costs by paying passengers, not by everyone on the coach
The tour leader travels free to the client, so the coach and guide must be paid for by the 20 who pay, not by 21 heads. Dividing by 21 under-prices the tour. And a mark-up is added to cost (cost × 1.20), whereas a margin is taken from price (price × 0.20); a price of ₹26,310 with a 20 per cent margin would imply a cost of only ₹21,048.

3. Confirmation, the docket, vouchers, reconfirmation, the operational itinerary and pick-up and drop

A tour is confirmed when the client accepts the itinerary and price and pays the deposit, and the agency confirms each service with its supplier, obtaining a confirmation number. A docket (file) is then opened for the booking. It holds the client's details and passport copies, the enquiry and correspondence, the final itinerary, supplier confirmations, copies of tickets and vouchers, the costing sheet, invoices and receipts, special requests, and later the feedback. Vouchers are issued to the client or sent to suppliers: a hotel voucher, transfer voucher or sightseeing voucher (sometimes called an exchange order) states the services to be provided, the dates, the number of guests and the billing instructions, so that the supplier provides the service and bills the agency rather than the client. Before the tour the agency reconfirms flights, hotel rooms and ground services, checking times and names and any changes since booking.

The customised operational itinerary is distributed to everyone who delivers the tour: the tour leader or escort, the local guides, the drivers and the transport company. It gives the exact schedule, flight and train numbers, pick-up points and times, hotel names and addresses, the rooming list, meal arrangements, special needs (dietary, medical, mobility) and a list of emergency contacts. The standard procedure for pick-up and drop is written down so that it does not depend on memory: check the flight or train status before leaving; the vehicle reaches the airport well before arrival; the representative meets the guests with a name placard, welcomes them, checks the number of passengers and bags, and escorts them to the vehicle; the driver has the hotel address and the route; for the drop, the pick-up time allows for traffic and for reaching the airport about three hours before an international departure, and the representative assists with check-in. Every failure point, a missed pick-up above all, is covered by a contact and a back-up.

4. Guest comment sheets and their analysis, and tour guides and escorts

A feedback or guest comment sheet is given at the end of a tour to learn what worked. It asks the guest to rate each service separately, usually on a five-point scale (excellent to poor): the booking experience, flights, each hotel, transport and drivers, guides, meals, sightseeing, value for money and the overall experience, with space for open comments and a question on whether the guest would recommend the agency. Analysis turns the sheets into decisions: tabulate the ratings, compute the average score and the share of poor ratings for each service and supplier, read the comments for recurring complaints and praise, compare against earlier tours and against targets, and act, by reviewing or replacing suppliers, retraining staff, changing the itinerary and replying to each dissatisfied guest (service recovery). Worked example: if 18 of 20 guests rate a hotel "good" or "excellent", 90 per cent are satisfied; if 6 of 20 rate a guide "poor", that 30 per cent calls for action.

RoleDuties
Tour guideA local expert who interprets a site or city to visitors: history, culture, facts and stories; in India guides are trained and licensed, for example as regional-level guides approved by the Ministry of Tourism, and many monuments admit only approved guides
Tour escort (tour manager or tour leader)Travels with the group throughout and manages the tour: check-ins, timings, coordination with suppliers, headcounts, problem-solving, emergencies and group morale; represents the operator
Code of conduct for bothPunctuality, accuracy of information, courtesy, no forced shopping or undisclosed commissions, respect for local culture, safety of guests, and discretion with personal information

5. WATA, relations with service suppliers, travel agency appointments and international regulations

The World Association of Travel Agencies (WATA), founded in Geneva in 1949, is a network of independent travel agencies in many countries that book services through one another, and its guidelines set the standards members observe in dealing with each other: prompt handling of requests, honouring confirmed bookings, clear terms of payment, protection of clients' interests and fair dealing, so that an agency can entrust its client to a member abroad. Relations with service suppliers, hotels, transporters, guides, airlines and attractions, are the operator's real asset. They rest on written contracts that set rates, allotments and release dates (after which unsold rooms return to the hotel), cancellation terms, payment and credit periods, quality standards and responsibilities; on paying on time; on sharing feedback; and on long-term partnership rather than squeezing each rate. An agency appointment is the authorisation of an agency by a principal to sell its product: accreditation by IATA to issue airline tickets, authorisation by the railways as an agent, and appointments by cruise lines, car rental firms, insurers and hotel chains, each with its own conditions.

The international regulations of the trade come from several sources: IATA's resolutions on agency accreditation and the conduct of ticket sales; the standards of UFTAA and the national associations; the International Convention on Travel Contracts adopted at Brussels in 1970, an early attempt to set the rights and duties of organisers and intermediaries; regional consumer law, above all the European Union's Package Travel Directive (in its 2015 form), which makes the organiser of a package liable for its performance and requires insolvency protection; data protection law such as the EU's General Data Protection Regulation (2018) for client records; and the UNWTO Global Code of Ethics for Tourism (1999). An Indian operator selling to European clients must meet the obligations its European partner carries under such law.

Key takeaways

  • Itineraries are tentative, final (client) and operational (technical, for staff and suppliers); planning uses maps, timetables, the GDS, the TIM, tariffs and files, and moves from client needs through route, time, services and costing to confirmation.
  • Fixed costs (coach, guide) are divided by the paying passengers; variable costs (bed, meals, entrances) are per head; a non-free leader is spread over the group; the worked group price is ₹21,925 cost and ₹26,310 with a 20 per cent mark-up, against ₹31,200 for an FIT couple.
  • A 20 per cent mark-up on cost is about a 16.7 per cent margin on price; FOC is one free place per about fifteen paying; the single supplement is the single rate minus the per-person twin rate (₹2,000 a night in the example).
  • Confirmation, the docket, vouchers (exchange orders) and reconfirmation precede the tour; the operational itinerary goes to leader, guide, driver and transporter; pick-up and drop follow a written procedure; comment sheets are rated, averaged, read and acted on.
  • Guides interpret places and escorts manage the group; WATA (Geneva, 1949) links independent agencies under common guidelines; supplier contracts set rates, allotments and release dates; appointments authorise an agency to sell a principal's product; the Brussels convention (1970), the EU Package Travel Directive, GDPR and the UNWTO code shape the trade internationally.

Practice questions (10)

Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.

  1. A 5-day tour for 20 paying passengers and 1 tour leader has fixed costs of ₹50,000 (coach and guide) and variable costs of ₹18,500 per person. The tour leader is not free, so the leader's variable cost is spread over the paying passengers. With a mark-up of 20 per cent on cost, what is the selling price per paying passenger, in rupees?

    Numerical answer — type the value.

    Show answer

    Answer: 26310

    Fixed cost per paying passenger 50,000 ÷ 20 = 2,500; leader's share 18,500 ÷ 20 = 925; cost = 18,500 + 2,500 + 925 = 21,925; price = 21,925 × 1.20 = ₹26,310. Dividing the fixed costs by 21 people, or leaving out the leader, under-prices the tour.
  2. In costing a group tour, which of the following are variable costs, incurred per passenger? Select all that apply.

    1. Hotel accommodation on a twin-sharing basis
    2. Monument entrance fees
    3. Meals
    4. The hire of the coach for the tour
    Show answer

    Answer: A — Hotel accommodation on a twin-sharing basis; B — Monument entrance fees; C — Meals

    Beds, meals and entrance fees rise with each passenger. The coach costs the same whether it carries 15 or 25 people, so it is a fixed cost to be divided among the paying passengers.
  3. A tour operator adds a mark-up of 20 per cent to cost. As a percentage of the selling price, its margin is about

    1. 16.7 per cent
    2. 83.3 per cent
    3. 20 per cent
    4. 25 per cent
    Show answer

    Answer: A — 16.7 per cent

    On a cost of 100 the price is 120 and the profit 20, which is 20 ÷ 120 ≈ 16.7 per cent of the price. A 20 per cent margin on price would need a 25 per cent mark-up on cost.
  4. A hotel charges ₹6,000 a night for a twin room shared by two and ₹5,000 a night for a single room. What single supplement, in rupees, should a solo traveller on a 4-night tour priced on a twin-sharing basis pay?

    Numerical answer — type the value.

    Show answer

    Answer: 8000

    The twin rate per person is 6,000 ÷ 2 = ₹3,000 a night; the single costs ₹5,000, so the supplement is ₹2,000 a night and 2,000 × 4 = ₹8,000 for the tour.
  5. In group tour costing, "FOC" refers to

    1. a free place given by suppliers, usually one for about every fifteen paying passengers, often used by the tour leader
    2. a fixed operating cost of the coach
    3. a fee for changing the tour dates
    4. the final operating confirmation sent to the hotel
    Show answer

    Answer: A — a free place given by suppliers, usually one for about every fifteen paying passengers, often used by the tour leader

    FOC stands for "free of charge": a complimentary place a hotel, airline or other supplier grants a group of a given size. It lowers the cost of the tour leader that the group would otherwise share.
  6. A document issued by a tour operator that instructs a hotel or transporter to provide specified services to named guests and to bill the operator is a

    1. tentative itinerary
    2. tour (service) voucher, also called an exchange order
    3. guest comment sheet
    4. rooming list
    Show answer

    Answer: B — tour (service) voucher, also called an exchange order

    The voucher names the guests, services, dates and billing instructions, so the supplier serves the client and claims payment from the operator. A rooming list tells a hotel who shares which room, and a comment sheet collects feedback.
  7. The version of an itinerary sent to the tour leader, guides, drivers and transporter, with exact times, flight numbers, confirmation numbers, rooming lists and emergency contacts, is the

    1. brochure itinerary
    2. tentative itinerary
    3. client's descriptive itinerary
    4. operational (technical) itinerary
    Show answer

    Answer: D — operational (technical) itinerary

    The operational itinerary is the working document for those who deliver the tour. The client receives a descriptive final itinerary, and the tentative itinerary is the first draft sent for approval.
  8. Assertion (A): The per-person price of a group inclusive tour is usually lower than that of the same tour sold to an individual. Reason (R): In a group the fixed costs, such as the coach and guide, are divided among many paying passengers.

    1. Both A and R are true, and R is the correct explanation of A
    2. Both A and R are true, but R is not the correct explanation of A
    3. A is true, but R is false
    4. A is false, but R is true
    Show answer

    Answer: A — Both A and R are true, and R is the correct explanation of A

    Both are true and R explains A. In the worked example the group price is ₹26,310 against ₹31,200 for a couple, because the vehicle cost of ₹40,000 is spread over 20 people instead of ₹15,000 over two; suppliers' group rates and FOCs widen the gap.
  9. Which of the following would normally be kept in the docket (file) of a confirmed tour? Select all that apply.

    1. Supplier confirmations and copies of vouchers
    2. The hotel's staff salary register
    3. The airline's aircraft maintenance log
    4. The costing sheet, invoices and receipts
    Show answer

    Answer: A — Supplier confirmations and copies of vouchers; D — The costing sheet, invoices and receipts

    The docket holds everything about the booking: client details, correspondence, the final itinerary, confirmations, ticket and voucher copies, costing, invoices, receipts and feedback. Suppliers' internal records are theirs, not the agency's.
  10. In a hotel contract with a tour operator, the "release date" is the date

    1. on which the hotel releases its brochure
    2. on which guests must check out
    3. after which the operator may no longer pay the hotel
    4. after which rooms in the operator's allotment that have not been sold go back to the hotel
    Show answer

    Answer: D — after which rooms in the operator's allotment that have not been sold go back to the hotel

    An allotment is a block of rooms held for the operator; unsold rooms are released to the hotel at the release date, a set number of days before arrival, so that the hotel can sell them itself. This protects the hotel from rooms held but never filled.