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Lesson 5

The document discusses various aspects of tour costing and pricing such as: - Direct and indirect costs that make up total tour costs, including fixed costs that do not vary with sales and variable costs that vary with number of tourists. - Components of tour costs like hotels, meals, transportation, guides/escorts, and miscellaneous entrance fees. Differential hotel pricing plans and types of meal plans are also covered. - The process of preparing a cost sheet to calculate total costs and mark-up pricing to determine the price offered to clients. Formulas for allocating annual marketing costs to individual tour packages are also presented.

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Masum Billah
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Download as PPTX, PDF, TXT or read online on Scribd
102 views

Lesson 5

The document discusses various aspects of tour costing and pricing such as: - Direct and indirect costs that make up total tour costs, including fixed costs that do not vary with sales and variable costs that vary with number of tourists. - Components of tour costs like hotels, meals, transportation, guides/escorts, and miscellaneous entrance fees. Differential hotel pricing plans and types of meal plans are also covered. - The process of preparing a cost sheet to calculate total costs and mark-up pricing to determine the price offered to clients. Formulas for allocating annual marketing costs to individual tour packages are also presented.

Uploaded by

Masum Billah
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Tour Costing and

Pricing
Concept of Costing
 A managerial accounting method that
describes when all fixed and variable
costs, including manufacturing costs,
are used to compute the total cost per
unit. Full costing includes these costs
when computing the amount of money
it takes to produce and distribute one
unit of output.
 In travel and Tourism costing
includes, air travel and local
transportation, lodging, and other
Sight Seeing expenses.

2
Costing Process in Tourism
Itinerary

Airlines Seats/ Railway

Seats Hotel & Meals

Ground Arrangements
What is a Tour Cost
Tour cost means the total cost incurred or attributed to a tour product
service or in other words we can say that the tour cost is the sum total
of costs incurred to create or formulate a tour package.

CATEGORIES OF TOUR COST

1. Direct and indirect costs :-


Direct tour costs are those which are incurred and conveniently
identified within a particular package tour; such as; accommodation, travel,
F&B costs

Example of Indirect costs: marketing costs, tour planner’s costs, financial


and legal costs, medical expenses, administrative expenses and so forth.
2. Fixed costs are those which are incurred even when one is selling or
not selling any tour package. These are constant in total amount but
fluctuate per package/ per person.

Example: cost of a tour bus, research and development expenditures ,


tour planner’s salary , marketing expenses etc.

Tour variable costs are varied with number of tourists participating in


the tour .

Example: F & B costs, cost of packets, material or brochures , tourist’s


taxes, room costs etc.
Components of Tour Cost

Hotels Meals Airlines Railways

Road Cruises Local Miscellaneous


Transpor Guides/Escort
t
Hotels
 Different types of
hotels
 Types of rooms
 Tariff plans
 Extra bed charges
 Taxes
 Meals
Differential Hotel Tariff Plans
 Seasonal
 Regular
 Season
 Off season
 Weekend Tariff.
 Special rates for
Corporate

Discounted
Rates for groups
Hotel
 Availability of rooms
 Exact no of Peoples
 Chain of hotels- Oberoi, Taj, etc.
 Regular Contact and Good Relationship
 Extra Bed

9
Meals
 Continental Plans (CP)= Room +
Breakfast
 Modified American Plan (MAP)
=Room + Breakfast or any one Meal.
 American Plan (AP)= Room +All
Meals.
 European Plan (EP)= Only room – No
meals.
 A La Carte = According to the
menu, Pay their own bills
 Most Travel Agents don't include Lunch
because of Sight seeing.
Airline & Railway
 Travel Agents should have the
knowledge of airfares for
different sectors as required for
Itinerary or it can be Supplement.
 TA should be familiar with train
names, routes, schedules, and
fares.

11
Road Transport
 Pick-up and Drop Facility from
Airport / railway Stn to Hotel,
Visiting places of attractions or
Sight Seeing.
 Travel Agent should contact
local transport operator for
calculating the cost of the
vehicle for entire tour.
 Drivers charges, parking
charges, toll taxes etc.
 Km travel/ day. Extra
charge
for extra km
 Ac/ Non Ac vehicles.
 Cruise
Cruise Packages for Three to
five days.
Cost varies for different
categories of rooms,
cabins, on board facilities
etc
 Local guides charges
English speaking or Foreign
Language speaker.
Explain monuments or
other sight seeing
Thus costing includes total
Guides charge divide per
person
Miscellaneous
 Entrance fees – Museums, Historical
forts, palaces, Churches and similar
charges.
 Cultural Show in the evening
 Porterage,
 Desert safari
 Toll Taxes

14
PACKAGE TOURS
1. Escorted - tour leader/director accompanies tourists
2. Hosted - host meet tourists but does not accompany them
3. Packaged - provides transport and lodging but usually not
host or leader
4. Independent - families/friends go together
5. Custom tours or Independent tours or Free
independent travelers (FITs)
6. Group incentive tours (GITs):
7. Inclusive tours or packaging :
8. Business tours:
Pricing
 Mark-up
In order to earn profits the travel agents and travel
tour operators add a mark up to the total cost before
quoting the price to the client. Generally 7-15%
commission
 Gross rate
Supplier gives to the Travel Agent which
includes the commission generally 10%.
Preparation of Cost Sheet
 A document that reflects the cost of the items and
services required by a particular project or
department for the performance of its business
purposes.

 Cost Sheet example


 Travel Budget Calculator
Allocation of Annual Marketing of a Tour being
Planned

FORMULA:

Total Projected & Marketing cost


__________________________________ * no. of days for which individual
tour is
planned

Total no. of project days(all tours during a year)

= Annual marketing cost of a tour


Online Travel and Tourism Cost Calculator

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