What is Tour Packages? Types, Elements, Process

  • Post last modified:1 November 2021
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What is Tour Packages?

Package tour is a package of transport and accommodation with some other services, which is sold as a single holiday package for an all inclusive price.

Packaged tours have revolutionised the way people travel in the modern day. The concept of package tour is as old as the introduction of paid holidays, annual paid holidays and Thomas Cook holiday programmes. This concept has received rapid attention in the world. Packaging is the combination of related and complementary services into a single price.

Package tour is the sum total of a variety of services offered to the tourists in one price, which normally is less expensive than that of each individual item. Such tours largely include the services of accommodation, transport, food, guide and other ground and miscellaneous services. Transport and accommodation form a significant proportion of the cost and service of any organised package tour.

In short, package tours are very economical and covenient for tourists as they help them locate tourist spots, hotels and modes of conveyance with ease and at the apportune moment.

Package tours not only save time and money tourists but also help suppliers to ensure sale of their services thus balancing the demand and supply in the travel market. Tour operator being a consolidator or wholesaler assembles primary and miscellaneous services with his own price tag.

However, packages are designed for independent and group tours after comprehensive research and analysis before it is launched in the market.

Types of Tour Packages

Package tours are generally classified on the basis of their operation and the types of services included.

  1. Escorted Tour
  2. Independent Tour
  3. Hosted Tour
  4. Incentive Tour
  5. Freedom Tour

Escorted Tour

An escorted tour is conducted sending along with the group/ individual a well trained, experienced and qualified, guide/escort to provide information and assistance to the group at the origin, en-route and the destinations about flight boarding, baggage handling, hotel check-in, meal arrangements along with interpretation about the places of tourist importance during sightseeing and all along the trip.

The tour escort helps the group in check-in procedures, hotels, food facilities and provide timely assistance and advice wherever and whenever required. Escort is expected to have the requisite knowledge, presence of mind and crisis management skills.

Independent Tour

A package tour is called as independent tour when tourists want to travel independently. It is designed for such people who want the services of their interest to be included as part of the package. These tourists are very much particular about selecting mode of travel, types of attraction at destinations and accommodation as it suits their time, comfort and budget.

Either individual service is purchased or combination of services is bought by the client which is then packaged. One or more of the components may be changed as per the taste of the tourists. Such tour packages give a free hand to the tourists.

Because these tours are designed as per their desire they ought to be costlier than the group tours. But the element of flexibility makes them more interesting. With the increasing awareness in this regard more tourists are now showing interest in such tours.

Hosted Tour

A hosted tour refers to a tour handled by another agency, ground operator or destination management agency as their representative of the tour operator, wholesaler or principal provider. They actually play the role of a host on behalf of a tour operator away for making ground services like cab, coach, guide, confirmation of hotel rooms, toll taxes, entry tickets, etc. as per the agreement.

The wholesaler may not have its presence in a particular destination and thus takes the help of another agency to host the tour. A tour operator operating from outside the country may have a different host at different destinations in host country. Hosting agencies take care of all the requirements of the tourists as per the contract.

Incentive Tour

Incentive tour is an organised package tour conducted for employees usually sponsored by the business firms or corporate houses as incentives to their employees. These tours are also all-inclusive package tours that include all essential components of a standard package tour.

Sponsoring firms bear all the costs on behalf of the groups/individuals for incentive tours to further encourage their employees as rewards or incentives.

For example, if a team successfully completes a project for XYZ company. and brings cash inflows, the management may send the team for a weeklong incentive tour to Singapore and bear all the expenses.

Freedom Tour

Working class, these days, is inclined to travel but have limited disposable income. Such tours are designed as per the choices of the tourists. Tourists, individuals or groups of common interest, select services like travel mode, hotels, destinations, meal plans and activities etc. and plan for a tour.

Such very flexible planning is assisted by tour operators and then they organise freedom trips. These are suitable for those people who want to decide where, when and how they want to travel and what they wish to do at destinations.

Tour Package Elements

The elements of a package tour hold the success and sale of package tour in the travel market. In order to make a package tour more appealing and attractive, wholesalers examine the buying ability of customers and the cost of components of the package tour, and finally add a profit margin to arrive at the final price of the package tour.

Pricing of a package will also determine its sale and it’s done after a proper costing and demands in the market. Following elements play a major role in planning, designing, marketing, selling and attaining success and acceptance:


Accommodation is an important element of package tour and it shares a good amount of the total cost of package. Accommodation can be of primary and supplementary in nature. Primary service providers are the category star hotels, resorts, business hotels, and international hotels.

They are the conventional accommodation operators with the provision of providing room cum food and allied services. Lodges, homestays, guest houses, bungalows, service apartments, etc. are supplementary service providers.

Depending upon the nature of the groups package, operators include the right kind of a hotel accommodation into the package. Comfortable and safe stay is always a serious concern of tourists and this element determines the strength of a tour package.


Adding the most appealing attractions in a package tour sightseeing is one of the most important elements of a package tour. The best of experiences are counted on the kind of sightseeing conducted and not to forget inclusion of attractions to a package tour must be sequenced in such a manner that the customer satisfaction is enhanced from point to point.

The most exciting should always be listed last and the itinerary needs to be planned in such a way. Sightseeing is, no doubt, the backbone of the whole tour package as it serves the prime objective of the tourists visit to a destination.


Travelling is part of any tour. Transportation thus becomes yet another focal component of a package tour. The journey of a tourist from origin (place of residence) to destination (host country or place of visit) involves tourists’ movement and it requires a suitable means of transport. Safe, comfortable and quick modes of transport are wanting of the tourists.

Quicker means help tourists spend more time at the destinations and at the same time can visit more places in a country. Transportation modes can be air travel, railways, buses, ships, cars etc.

  • Airways: Air transportation in the modern days has great influence on the travel industry. Package tours especially international tours have benefitted a lot. This is a quick mode of transport and most foreign tourists prefer travelling by air. The component of air travel includes international and domestic flight tickets and on-board services.

  • Railways: Railways are most used form of transport for package tours in countries like India and also Europe. Railways connect destinations which are away from airports or where air services are not available.

    For example, the Indrail pass, Eurail Pass, Brital Pass and AMTRAK are booked in advance to provide alternative and quickest mode of transport and different experience to the visitors. IRCTC in India is offering a variety of package tours such as Bharat Darshan.

  • Ships, Cruise or Ferry Services: Passenger ships and ferry services are used for water transport. For example, ferries ply between Chennai, Vizag and Kolkata to Andaman and Nicobar islands.

    Certain operators are using this mode for package tours to these islands. They include room, food, drinks, sightseeing, entertainment, casino, etc on–board.

  • Bus services: Bus services are mostly utilised in domestic tourism for short distance package tours. This is being used by regional tour operators to take tourists to interior destinations as well which otherwise can not be accessed either by air or train.

    Though there isn’t much craze for bus services, they are part of any destination tour for group tours.

Ground Services

Ground services are also an equally important element of package tours. Tourists can not do away with ground services when they are at a destination.

For local conveyance they need coaches, cabs, to know about places they may need guides and interpreters to help them convey in the language of the land. Car rentals, luxury coaches, other motor vehicles services are an active part of package tours enabling better travel with and around a destination.

Events and Activities

Events are of different kind at destinations. Entertainment parks, theme parks, sports and leisure clubs are used for a variety of events and activities.

Events such as meetings, incentive tours, conferences, conventions, exhibitions etc are some times part of certain package tours or package tours of such events are also offered by operators. Events and activities may be offered as complementary to tourists to add value to the package.


Loss of baggage, loss to life and sudden withdrawal of tour or complete break of tour due to natural or manmade interruptions are issues related to travel. Insurance covers this loss and tourists can ensure safe journey plus surety against loss.

Insurance companies have customised travel insurance for the foreign outbound travel for Indian travellers. Insurance nowadays is included in the total cost of the package or otherwise one can choose from the travel insurance policies available in the market. Many nations have made it compulsory for visitors to have insurance before entering their countries.

Monsoon Package Tours

Monsoons may stop you from going out but there are good number of tourists preferring go on a holiday while it is raining all over especially Western Ghats in India. Monsoon tourism is now seriously being promoted by tourism departments of southern states Karnataka, Keral, Tamil Nadu and also Maharashtra.

Monsoon tour packages are selling and people from drier regions are showing more interest just to have the feel of rain amidst lush green forests of Western Ghats.

Major destinations for monsoon packages are Agumbe, Shimoga, Coorg, Munar, Yercaud, Dindigal, Amboli, Mandu, Ooty, Kodaikanal, Kudremukha, Mahabaleshwar etc.

Inbound craze for monsoon tourism is also seen over the years especially from gulf countries and Europe. Though rain in many places is interruption for touring, in this case it itself has become an attraction and selling proposition for Western Ghats!

Tour Package Formulation Process

  1. Market Research
  2. Prepare Itinerary
  3. Identification
  4. Costing of Package
  5. Tour Brochure
  6. Marketing of Product
  7. Documentation

Market Research

Marketing research involves study of the economy of the country to be visited, foreign exchange rate, demand for the product, consumer profile, competitors in the market, studying the product components like sightseeing, transport, baggage allowance, ground service etc., sales status, channels of distribution, and promotional measures.

Prepare Itinerary

A well planned itinerary holds the key for success of a package tour. It needs to incorporate exciting places of interest and enough scope for events and activities.


Identify and decide on mode of travel, hotels, destinations, dates, capacity and others. 􀁺 Contracts: Sign contracts with principal service providers. Agreements with various service providers well in advance is important. Contracts for timely delivery of services by hotels, transportation, entry permits, ground handler etc. has to be signed.

Costing of Package

After having signed contracts and designing of package systematic costing of the package will be done, which includes cost to be incurred towards all elements of a package tour are summed up and then package is given a mark-up price before a price tag is decided upon.

Tour Brochure

Promotional material is another important aspect in the formulation process. Both print and electronic media are widely used but brochures are an integral part of it which play a major role. Hence designing and printing attractive brochures and other material is very essential for marketing.

Marketing of Product

In line with demand requirements of the markets right kind of marketing strategies are framed and then the product is marketed through the above listed means of promotional material.


This last step in formulation process includes copy of the clients itinerary, tour vouchers, travel and other entry tickets, luggage labels and other useful information for the clients.

Importance of Tour Package

Tour package business is becoming more profitable these days; many organizations are entering this venture. Tour operators are leveraging our research skills in developing carefully planned and dynamic itineraries.

Professional and expert tour guides, whose unique understanding of indigenous cultures and domestic landscapes, lends to the ultimate success of your tour. From both a travel agent’s and a consumer’s perspective, package tours provide a number of advantages, which often outweigh the disadvantages.

Importance of Tour Package

  1. Cost saving and budgeting
  2. Responsibility Is On Operator
  3. Convenience and Time Saving
  4. Social
  5. Quality of service

Advantages of Tour Package for Consumer

Cost saving and budgeting

The price of a trip when organised as a package is generally less as travel agencies bulk buy their package deals and therefore can sell the tours at a lower and more competitive rate. This is an instant cost saving benefit for the consumer, as the discount travel agencies receive is generally passed on to the consumer.

Also, as the tour often includes all meals or trips for example, this reduces any uncertainty about the additional costs and allows the consumer to budget properly for costs associated with their travel.

For example, if airport pick-ups or taxi transfers are pre-booked and paid for beforehand there is no potentially expensive surprise when travelling to the accommodation on arrival at the destination.

Responsibility Is On Operator

The lack of responsibility on the traveller is an advantage. If something goes wrong, e.g. a flight is delayed, resulting in the traveller missing a connecting flight, it is not the traveller’s responsibility to arrange a new ticket.

The responsibility lies with the airline or tour operator. In a certain respect, travellers can relax knowing if something goes wrong, someone else is there to solve the problem.

Convenience and Time Saving

This is definitely the most convenient way to arranging a vacation or tour. The travel agency deals with all the arrangements relating to airlines, hotels, transfers directly through the tour provider. This saves the consumer the effort and the time of contacting each company/service individually.


This is frequently a main reason why people may opt to travel on a package tour. The chances of social interaction are higher, allowing the fostering of short or long term friendships.

People regularly choose a tour which ensures they are socialising with people of a similar age, for example, young people who like to party may opt for an 18-30 party group tour, some adults may choose to stay in accommodation which caters to the needs of children and will opt for a family tour or some people may choose to go on adult only tours to avoid children completely!

Quality of service

Tour operators (those who provide the travel agency with the tour package) spend a great deal of time assessing the airlines, hotels, sight-seeing operators etc, which they use to make up the tour package. By doing so they ensure a high standard of quality and the consumer can have peace of mind.

Tour companies are eager to meet their own business needs and so they ensure that the most frequented areas of interest (cultural or geographical) are included in their tour, thus meeting the needs of the consumer.

Advantages for Travel Agent

  1. Agent commission
  2. Savings in Time and Cost
  3. Wide variety of Package Tours Available
  4. Outstanding value in an all-inclusive trip

Agent commission

Travel agents normally receive 10% commission on all tours they confirm. Clearly the financial incentive means travel agencies find it extremely advantageous to sell tour packages and not solely flights and/ or accommodation.

Savings in Time and Cost

in order for a travel agent to put together all the components of a package tour, this would take extensive communication with the different service providers, initially to check rates and availability and then to send through deposits and secure bookings.

By using a tour provider, the travel agent only needs to makes one call, send one email or use an online booking system once to confirm the tour package. Clearly this saves a great deal of time, freeing up the agent to work for other consumers, thus increasing sales and commission.

Wide variety of Package Tours Available

This means the travel agent can always make suggestions on tours which match the needs of the consumer. The high number of very different packages available allows people with possibly lower budgets to still enjoy tours.

Outstanding value in an all-inclusive trip

Outstanding value in an all-inclusive trip, priced to make your travel experience affordable and elimination of any unexpected additional trip costs.

Limitations of Tour Package

  • Control: Travel agents have little or no say over the tour operator’s choice of services, restaurants, accommodation or attractions included in a tour package. As a result they must ensure they carefully choose the correct package which provides a high standard of quality, or is the most appropriate for the particular market.

    Also the business of tour packages and the number of tour providers is vast. This makes is very difficult for all travel agents to become and remain knowledgeable of all the available tour ‘products’ and so extensive time must be spent researching choices and selecting the best one for the consumer.

  • Saving in time and money a travel agent saves a consumer is invaluable: Contacts in the industry regarding reservations and availability then acquiring the best prices to suit an individual cannot be overlooked when considering travelling.

  • Travel agencies receive 10% commission on most packaged tours; however if the agency has a preferred product arrangement with a certain company this amount could be higher. As a commission is taken out before forwarding the final payment to the tour operator, the agency is able to receive the reward for its effort without delay.

  • Tour operators and wholesalers often reserve the right to alter their itineraries for various reasons such as weather, strikes or the outbreak of fighting in a particular area. Any price changes that might occur prior to departure are likely to be passed on the client.

  • Inflexibility: when a traveller purchases a tour they commit to follow the itinerary, flight schedule and accommodation arrangements. Generally they are unable to change or reschedule their tour and whilst on the tour they cannot change their plans as they wish.

  • It is the responsibility of the travel agent at the time of booking to ensure all possible issues are raised and the traveller’s needs are addressed due to the inflexible nature of a tour package.

  • Partners have not got as much control over the quality of the total product.

  • Package may increase the logistics required to handle a client.

  • Packages may increase the potential for things to go wrong, as more players are involved in the package.

  • Packages may create client volume that a partner does not have the capacity to handle.

  • Package may create the feeling of inflexibility among customers, since most packages have predetermined components and often have pre-determined dates.

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