Contents Introduction chapter 1

The tour operator has five (5) sources of income
: 
2. By seeking and negotiating or cost savers and concessions. Some 
components are given by the suppliers on a complimentary basis, but included as a 
cost in the package.
3. Through the sales of optional tours, excursions and extensions. This source of 
revenue is generated after the sale of the basic package. 
4. For tour group movements, souvenir shops grant the tour operator shopping 
commissions on sales generated. This commission is normally shared with the tour 
guide. 
5. Through direct sales to end-users, thus avoiding the payment of 
commissions to the travel agents. However, this is a short-sighted policy that is not 
accepted by the travel industry at large. Tour operators who condone and practice this 
policy do not last long as they lose the support and credibility of the retail travel 
agents. Occasionally, a tour operator earns or loses money on foreign exchange rate 
fluctuations. Sometimes it makes use of advance deposits and cancellation fees. 
A Tour Operator can therefore be characterized as follows
: 

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1. A wholesaler who transacts business primarily with, and protects the interest 
of the retail travel agents. 
2. Acts as a conduit to and a middleman of suppliers. 
3. Have variable but limited profit margins. Capitalizes on cost-savers and 
concessions. 
4. Generates additional revenues by selling optional tours, excursions and 
extensions. 
5. Can, but should not, by pass the retailers, and sell direct to the end-users. 
 
 
 
 
Figure 2.The movement of tourism services along the distribution chain
Source; by author 
 

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