A Future for the Package Tour Operator in the 21st Century?

Abstract

Tour operators' performance and recent changes in air inclusive tours (AITs) are traced. The difficulties tour operators face are identified in the light of economic factors influencing demand and supply. Attention is concentrated on the impact of economies and diseconomies of scale, concentration, integration, legal liabilities, technological change and the general economic climate. Discussion of trends indicates that in the face of increasing competition, continuing excess capacity and market instability, tour operators are confronted by varying and challenging prospects into the next century.

The UK air inclusive‐tour industry: a reassessment of the competitive positioning of the ‘independent’ sector

“…In doing so they have tried to combine the bene®ts of scale with the higher margins to be derived from the exploitation of successful niche markets. Nevertheless it can be argued (Evans, 1995;Evans and Stabler, 1995) that many middle-ranking operators remain vulnerable since because fail to derive the bene®ts of scale on the one hand and on the other they have failed to develop a niche market they can defend. The vulnerability is likely to be greatest in the short-haul markets owing to the structural characteristics of the industry.…”

“…The largest mass tour operators themselves are sometimes taken to be the`big four', or sometimes the largest 30 or 40 operators. Evans and Stabler (1995), distinguish between three tiers of operator comprising ®rstly, the largest ®ve operators, the next 25 largest operators, and the remaining operators with ATOL licensed capacity. Clearly, given the scale and complexity of their operations, and the vertically and horizontally integrated structure of their businesses, the four largest operators in the UK can now be viewed as constituting a category of their own.…”

“…See for example Sheldon (1986), Middleton (1991), Ryan (1991), Goodall and Bergsma (1991), Bywater (1992), Renshaw (1994), Evans (1995), Evans and Stabler (1995), Downward (1998), Cleverdon (1997), Richards (1997), (1998a, b), and Mundt (1988a, b). Comparatively little research, however, has been carried out in relation to the smaller independent tour operators' position within the market, although Evans (1995), Evans and Stabler (1995) and Davies and Downward (1998) make some reference to such operators. The aims of this paper are to:…”

“…During the years from the early 1950s to 1964 the industry can be viewed as having been highly fragmented and catering for af¯uent and discerning travellers attracted by the excitement and glamour of foreign travel (Evans and Stabler, 1995). The second phase, which represents the main phase of growth, ranges from 1965 to 1989.…”

“…In this phase rapid growth took place, fed by the rapid development of air travel technology as operators appealed to`mass-market' travellers. The industry during this period encountered a volatile record of pro®tability, and a sharp rise in market concentration (Evans and Stabler, 1995). From the early 1990s the record of pro®tability has improved but a slackening in the rate of growth has been discernible.…”