Tour Operators: Types, Functions, Importance, Difference

  • Post last modified:3 November 2021
  • Reading time:14 mins read

What is Tour Operator?

Tour operators are sometimes called wholesalers but this is partially true because a wholesaler buys goods or services in bulk at his own account to prepare a tour package and then retails it through the travel agencies or directly to the clients.

However, a tour operator who has his own one or more tourist product components formulates a new tourist product for example ‘inclusive tours’. Tour Operators generally offer a variety of package tours to cater to the needs of different kinds of travellers.

An organization, firm or company which buys individual travel components, separately from their suppliers and combines them into a package tour, which is sold with their own price tag to the public directly or through middlemen is called a tour operator.

More precisely, tour operators are mainly responsible for delivering and performing the services specified in a given package tour. They can provide these services themselves as some have their own cars and coaches, hotels and other travel-related services or can obtain these from other suppliers. That is why they are called manufacturers of tourism products.

Types of Tour Operators

Following are the types of tour operators explained briefly:

  1. Inbound Tour Operators
  2. Outbound Tour Operators
  3. Domestic Tour Operators
  4. Destination Management Companies

Inbound Tour Operators

These are also known as incoming tour operators. Technically, the operators who receive guests, clients/tourists, and handle arrangements in the host country are called inbound tour operators.

For example, a group of American tourists coming through TCI to India and the company makes arrangements and handles the group in India, then TCI is called an inbound tour operator. Incidentally, the inbound traffic to the country for the last two decades has been decreasing.

Essentially, tour operators need to adopt innovative marketing strategies and should introduce special interest tours to cater to the special needs of foreign tourists.

Outbound Tour Operators

Tour operators, who promote tours to foreign destinations, maybe business tours or leisure tours are called outbound tour operators. Indian outbound tourist traffic is growing at a rate of 10 percent annually and this makes India the second-largest country in the world with regard to the travelling population.

However, India’s outbound tourism is not only holiday-oriented but it is business-oriented too. There are many travel companies that offer outbound packages such as SITA, TCI, Thomas Cook etc.

Domestic Tour Operators

Domestic tour operators are those who assemble and combine tourist components into inclusive tours and sell them to domestic travellers. In general, these tour operators provide travel services within the boundary of the home country and offer package tours to travellers viz. domestic inclusive tours or independent tours.

Destination Management Companies

These are commonly known as handling agencies and their main function is to organize tour arrangements for incoming tourists on behalf of overseas operators. When a tour operator himself promotes beach holidays, wildlife holidays, wildlife tours, heritage tours, cultural tours at different places, the difficulty arises.

It is the ground operator who handles the incoming travellers in the same season but at different places ensures that the entire operation is according to the package tours or agreements.

Sometimes when a handling agency is at a prominent tourist place, for example, Delhi and it has to make arrangements to Goa, then it contracts (if it has no office of its own) with a local operator (known as an excursion agent) to handle the arrangements on his behalf.

Functions of Tour Operator

A tour operator is like a service provider, providing the most convenient option for tourists to stay, visit, as well as leave the city. A tour operator owns a high volume of travel services across carriers, services, and accommodation. Some most important functions of the tour operators are following:

  1. Planning a Tour
  2. Making Tour Package
  3. Arranging a Tour
  4. Travel Information
  5. Reservation
  6. Travel Management
  7. Evaluate the Option Available
  8. Promotion
  9. Sales and Marketing
  10. Taking Care of Glitch

Planning a Tour

The most important function of the tour operators is planning a tour. Tour operators plan a tour and make a tour itinerary that contains the identification of the origin, destination and all the stopping point in a traveller’s tour.

A prospective tour operator also gives advice to intending tourists in various types of tour programmes, which they may choose for their leisure or commercial travel.

Making Tour Package

Tour operator buys individual travel components, separately from their suppliers and combine them into a package tour. Tour operators make tour package by assembling various travel components into a final product that is called a tour package which is sold to tourists with their own price tag. Making tour packages is also an important function of Tour Operator.

Arranging a Tour

Tour operators make tour package and also arrange a tour according to tourist demands. Tour operators arrange the tour package and various tourists activities to provide the best experience to tourists/travellers.

Travel Information

Whatever the size of tour operators, it has provided necessary travel information to the tourists. This task is utterly difficult and very complicated. A tour operator must give up-to-date, accurate and timely information regarding destinations, modes of travel, accommodation, sightseeing, immigration, health and security rules about various permits required to travel in a particular area etc.


It is a very important function of all types of tour operators and travel agencies. Tour operators make all the reservations by making linkages with the accommodation sector, transport sector and other entertainment organizations to reserve rooms, and seats in cultural programmes and transportation.

Travel Management

Tour operators manage tours from the beginning to the end of the tour. A tour operator has the responsibility to look after the finer details of a vacation or tour such as hotel, accommodation, meals, conveyance etc. Tour operators provide travel guides, escorting services and arrange all travel-related needs and wants.

Evaluate the Option Available

Tour operators evaluate all available options to provide a unique or unforgettable travel experience to tourists during their journey. Tour operators evaluate the various options available for a tour package and provide the best of them to tourists.


Tour Operators makes tour packages and promote them into various tourists markets at domestic as well international level. Tour operators promote a travel destination to attract a large group of tourists at the domestic as well as international level.

In the promotion of tourist destinations, tour operators play a key role. Travel agencies or tour operators are called image builders of a country.

Sales and Marketing

Tour operators do sales and marketing of tourist products. Tour operators buy individual travel components, separately and combine them into a tour package, which is sold with their own price tag to the public directly. Tour operators do the marketing of tourist destinations and tourism products to attract the attention of the tourists/travellers.

Taking Care of Glitch

Tours operators are also called handling agencies that handle tour package and take care of all the glitches and problems that arise during a tour package. Tour operators fix the glitches and provide the best available alternative to tourists during their journey.

Importance of Tour Operators

  1. Tours operators play a key role in the tourism sector. Tour operators create tourist product,promote them and finally sold them to tourist.

  2. Tour operators provide the best and competitive price to the tourist. Tour operators negotiatewith suppliers of tourism product such as hotels, airlines and provide the best possible price tothe tourist.

  3. Tour operators buy tourist product in bulk and get huge discounts from suppliers. Sothat they can provide tourist’s products at cheap price.

  4. Tour operators organized a tour in the best way. They personalize and make sure each and everycomponent of the tour is well-taken care. Tour operators provide best travel experience during atour. Tour operators save tourist’s times and money.

  5. Tour operators provide immediate support system at host country as well as foreign land. Whentourists travel to a foreign land and things get uncertain, maybe it’s a health or loss of documentsand need to return back or change of travel plan. A qualified tour operator takes care of all theseunseen events with efficiency.

  6. Tour operator caters to the needs of tourists on the based on their taste of travel. Tour operatorprovides all the best available option according to tourist needs and demands.

Difference between Travel Agent and Tour Operator

There is a lot of confusion about the difference between tour operators and travel agents what exactly makes them different. The main difference between a Travel agent and a Tour operator are following as:

  1. A travel agent is a person who has a full knowledge of tourist product – destinations, modes oftravel, climate, accommodation and other areas of the service sector. He acts on the behalf ofthe product providers/principals and in return get a commission.

  2. Tour operator is an organization, firm or company who buys individual travel components,separately from their suppliers and combines them into a package tour, which is sold withtheir own price tag to the public directly or through middlemen.

  3. Tour operators are like wholesalers and travel agents are the retailers.

  4. A tour operator makes the package holidays up and the travel agents sell them on.

  5. Tour operator taking up the bulk of the responsibilities and his fee is obviously much greaterthan a travel agent.

  6. A tour operator has the responsibilities to look after the finer details of a vacation or tour suchas hotel, accommodation, meals, conveyance etc.

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