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The process of determining the actual cost of a tour package by detailing the various components of the package, and attaching a specific cost represented by the contracted rate to each, according to the costing methods detailed in this section.
An itinerary is a schedule of activities and destinations arranged in a chronological order. There are three (3) types of itineraries.
Skeletal itinerary is a proposed and preliminary schedule of activities.
A technical itinerary specifies the details, like the scheduled transportation, arrival and departure schedules, duration of sightseeing, land travel time, type of accommodation.
The descriptive itinerary provides a narrative of the planned activities and destinations visited. It is produced primarily for marketing purposes.
The costs of the components of a tour package can be either fixed or variable.
Fixed costs do not change and remain constant regardless of the number of participants.
Variable Cost
Variable costs, on the other hand, depend on the number of projected or proposed participants.
The costs of all tour packages are always on a per-person basis.
Transportation is the cost by air, sea, or land, to and from a point of origin to a destination, or destinations and back to the point of origin.
Sightseeing tours are mini-packages that include transportation, tour guide services, entrance fees, cost of entertainment activities, and sometimes snacks and meals.
The tour guide cost is calculated by adding up the sum total of the tour guide’s fees plus the cost of transportation, board and lodging on a single-room basis. The sum total is prorated by a predetermined number of participants. The rule of thumb when calculating the cost of the tour guide is one guide per vehicle.
Entrance fees are always fixed. As a rule of thumb, no free concessions are given for entrance fees.
Cost for entertainment activities may be fixed or variable.
For example, the rental fees for a picnic hut at a picnic camp will normally be prorated, while the entrance fee to the picnic camp is fixed. A boat rental may be fixed per person or prorated by the numbers of riders.
Accommodations refer to the cost of the lodging, depending on the number of persons occupying a room, and the costs of meals served within the lodging establishments.
When the hotel accommodations are included in the tour package, the rule is that two persons share a room.
Hotel costs are always fixed. For room costs, the rule of thumb is to prorate the cost of the room by the number of persons occupying it.
If the Twin/Double room rate at La Corona Hotel is US$ 48.00, the perperson rate for a share-twin or half-twin is US$ 24.00
US$ 48.00 divided by two guests = US$ 24.00
If three guests wish to share one room, there is a triple reduction representing the cost of a double or twin room plus an extra bed, divided by three (3) guests. If the extra bed cost at La Corona Hotel is US$ 42.00 the single room supplement is US$ 18.00
US$ 42.00 minus US$ 24.00 = US$ 18.00
If three guests wish to share one room, there is a triple reduction representing the cost of a double or twin room plus an extra bed, divided by three (3) guests. If the extra bed cost at La Corona Hotel is US$ 12.00, the triple reduction rate is US$ 4.00.
Twin rate US$ 48.00 plus extra bed US$ 12.00 = US$ 60.00 divided by three guests = US$20.00 minus halftwin rate of US$ 24.00 =US$ 4.00
Some tour operators quote a one-third rate instead of a triple reduction. In this case the one-third triple rate is US$ 20.00.
Twin rate US$ 48.00 plus extra bed US$ 12.00 = US$ 60.00 divided by three guests = US$20.00.
If four guests wish to share one room, the one/fourth quad rate would be the cost of a double or twin room plus two extra beds, divided by four (4) guests. If the extra-bed cost at La Corona Hotel is US$ 12.00, the quad rate is US$ 18.00.
Twin rate US$ 48.-00 plus two extra bed US$ 24.00 = US$ 72.00 divided by four guests = US$18.00.
Therefore, the more persons occupying a room the less are paid per person.
Meals in accommodation establishments are always based on fixed costs.
As a rule of thumb, meals taken outside the place of lodging are normally less expensive. However the additional transportation cost to and from the restaurant may result in a higher cost than the same meal served at the place of lodging.
Tour Escort refers to the costs incurred in the accommodations, meals and some transportation components of the individual who travels with the clients from the point of origin and back.
Note that while the tour guide costs are calculated by adding up the sum total of the tour guide’s fees plus the cost of transportation, board and lodging on a single-room basis, the tour escort’s costs are reduced by applying all possible concessions.
1-Service or Component. All the services and components are individually specified in chronological order, on a day-to-day basis.
2-Cost. This column indicates the net unit cost of each service or component.
3. Passengers’ Brackets. This section provides the number of persons per bracket to be used in prorating the costs. Bracket numbers normally follow the configuration of the equipment being used.
Note, however, that the choice of equipment to be used is always subject to the passengers’ comfort. For example, a group of sixty-four (64) can easily be accommodated in a bus of forty-five (45) seats and a minibus of twenty-nine (29) seats. For a short trip, like an arrival transfer, this configuration should be acceptable. Note: For a longer trip, like a full-day city and countryside tour, two 40-seat buses, is a better choice. Consider also the feeling of passengers in a small bus. Some might complain about not having equal-sized vehicles as in the first example. The automatic concession of one (1) FOC as represented by the “+” sign in columns 4, 5 and 6.
4. In order not to re-cost in case of a shortfall, this bracket is based on the proposed number of participants, less twenty (20%) percent.
5. This bracket indicates the proposed number of participants and is always the basis for brackets 4 and 6.
6. In order not to re-cost in case of an increase in number of participants, this bracket is based on the proposed number of participants plus twenty (20%) percent.
For example, a group of sixty-four (64) can easily be accommodated in a bus of forty-five (45) seats and a minibus of twenty-nine (29) seats.
For a short trip, like an arrival transfer, this configuration should be acceptable. Note: For a longer trip, like a full-day city and countryside tour, two 40-seat buses, is a better choice.
Consider also the feeling of passengers in a small bus. Some might complain about not having equal-sized vehicles as in the first example. The automatic concession of one (1) FOC as represented by the “+” sign in columns 4, 5 and 6.
7. FOC. The Free-of-Charge column details all cost not given complimentary by the suppliers.
8. Guide. The Tour Guide column details all cost involved for the tour guide.
9. SWB/S means Single Supplement. This column shows the total due for individuals opting for single-occupancy rooms.
10. T/R means Triple Reduction. This column shows the total reduction due to each individual opting to occupy a triple room with friends or relatives.
11. Sub-Total of Cost. This row adds up all the costs involved, per person, for each FOC and for each tour guide.
12. Prorate FOC. The total costs of the FOC/s is/are divided by the number in column 4, 5 and 6. Be sure to allocate one (1) FOC for every fifteen (15) participants.
13. Prorate Guide. The total costs of the tour guide/s is/are divided by the number in column 4, 5 and 6. Be sure to allocate one (1) tour guide for every vehicle.
14. Total Cost. This row shows the total per-person cost based on the numbers indicated in columns 4, 5 and 6.
15. Markup/Margin. In this row, add the desired percentage of markup/margin or profit.
16. Net due to Operator. This row represents the net amount due to the tour operator.
17. Agent’s Commission. Should a commission be included, this row shows the commission allocated retailers.
18. Gross Selling. This row shows the gross selling price of the package.