Tour operator as a business

Business ideas by directions

In an environment where exchange rates have risen against the ruble, the tour operator’s business idea seems out of time. However, starting a travel operator business is a serious level business idea for serious income.

Although, from a formal point of view, many tour operators are small businesses, in fact, the complexity of organizing and managing such enterprises is more likely to be medium or large. The turnover of large tour operators, especially during the season, amounts to tens and hundreds of thousands of dollars. Therefore, the desire to become a tour operator, especially if you have experience in the tourism business, means a transition to a new level of management and a new level of income.

In order to establish a tourist operator enterprise, the requirements stipulated by the legislation must be met. In particular, it is necessary to ensure that the enterprise is included in the State Register of Tour Operators. And this, in turn, provides for the availability of financial security for civil liability insurance of obligations, or a bank guarantee.
For tour operators specializing in international tourism, the security amount is 10 thousand dollars. If the tour operator specializes in domestic tourism, the amount of financial security is less — 500 thousand dollars.
The mere presence of financial support indicates the need for serious investment in the tour operator’s business. And this is quite justified, since the complexity of organizing tourist services makes this type of business very costly.

If travel agencies sell travel services and do not work directly with individuals — clients, then the travel operator organizes almost the entire process of providing tours. This requires the conclusion of contracts with the owners of hotels, hotels, transport companies, travel agencies and so on.

The tour operator actually completely forms the tourist service, from beginning to end, from the organization of transfers to the accommodation of tourists in a hotel and the organization of excursions. To do this, it is necessary to have stable reliable relations with all participants in the tourism business, local representatives, skillful management of financial flows and numerous personnel.
The benefit for the tour operator is that it receives significant discounts from its partners for the organization of passenger transportation and accommodation of tourists in hotels. These discounts range from 30 to 50% of the cost of services.
With a large-scale business, this is a lot of money, which allows not only to maintain a sufficiently large staff of qualified employees, but also to provide, in turn, discounts to travel agencies.

The initial cost of setting up a tour operator business is measured in millions of dollars. The wider the range of work of the tour operator, the wider the list of services and directions provided, the higher the costs, which include not only licensing and staff salaries, but also the opening of numerous representative offices in various countries of the world, advertising campaigns, and the purchase of transport. Large tour operators even have their own fleet of aircraft, which provides charter flights to the necessary destinations.

Of course, the creation of a tour operator business is a complex and expensive process that requires special planning and economic calculations. The profitability of a tour operator as a business is only a few percent. However, when making a profit, the tour operator’s income is so high that it covers all the risks of this complex line of business.

On our website you can order a business plan for organizing a tour operator, which includes not only the necessary calculations, but also recommendations for creating and maintaining this complex but profitable type of business.