Well if I use my works discount, I can get my holidays discounted by 20%

So look for cheapest holiday, and get it price matched

Thomas cook ..... £716
Direct line........£650

Print of price for direct line, go to local travel agents thomas cook, get them to price match, direct line plus 20% of price, gives me a holiday price of £520, saving me £130, and free extra 5 kg allowance, plus free inflight meals, gives me a grand saving of £216

I would be more asking what does the hotel get, and especially if I am paying £520 for 2 weeks half board, insted of £716, if thomas cook take 30% commision that leaves the hotel with £370, and the flight would probably cost around £100

joeseptuk wrote:

Well if I use my works discount, I can get my holidays discounted by 20%

Nice discount, i am suprised that thomas cook do that. To price match yes i can see that, but then take 20% off that is amazing.
Looking at those figures i would love to know the bottom costs, i bet they are pritty low. But is it the hotel that does not cost the amout stated and it is to them they pay the least. Surely they cant do a holiday at a loss.

I used to run a car hire operation and the profit came from utilisation. To put it simply my vehicles had to be rented out a certain number of days to cover my costs. Say 20 days per month. When vehicles were rented out for more that 20 then my profits rose quite dramatically. I would assume that TOs and hotels operate in a similar manner. If a TO has a poor take up then their profits will suffer hence to special offers that we see for late bookings.

It is difficult to say how much they make on individual holidays some will just cover the costs whilst others will generate a substantial amount. You need to consider that TOs have a very large and expensive infrastructure, in addition they also pay commisions to agents.

My eldest son - a Chef - used to have his own business. Some days he barely covered his costs whilst on others he made a lot of money.

joeseptuk enjoys a 20% discount. Perhaps the TO makes very little on such bookings but then even if it is only £10.00 when multiplied by the number of bookings it caould be a large amount of money. Certainly when you read the balance sheets of these companies then the bottom line is not very large compared against turnover.

fwh

JOANNE1505 wrote:

joeseptuk wrote:

Well if I use my works discount, I can get my holidays discounted by 20%

Nice discount, i am suprised that thomas cook do that. To price match yes i can see that, but then take 20% off that is amazing.
Looking at those figures i would love to know the bottom costs, i bet they are pritty low. But is it the hotel that does not cost the amout stated and it is to them they pay the least. Surely they cant do a holiday at a loss. :que

These are our discounts for 2011, but we used to have better discounts

10% discount for all employees in local shopping centre
10% works benefit discount

Cant remember the name of the travel agent, in 2007 we got the following; 10% works discount, plus a further 25% discount from the travel agent, only snag. You could only book certain holidays, and prices, the more expensives ones, and holiday had to be booked for more than 2 persons

So I guess as a family booking, with 2 kids you could save a considerable amount of money, and get 35% of

Ah that's good you get a discount....*ponders something*

hmm...

when I worked for one of the big tour operators I was lead to believe that on a package holiday the company earns about 15% and the maximum discount we could give anyone was 10%. We could go slightly above 10% if it was a massive group booking or something. Any more discount than that and the company makes next to nothing.

there's not a set percentage as such.

Prices are set to maximise the yields from each resort/flight etc. So for example, if a particular flight is selling well quite early in the season then the price on all packages using that flight would be raised. If it was one particular accom that is selling well then just the packages to that accom may be raised in price. Conversely, if some packages aren't selling too well then the price may be dropped to stimulate demand.

It's kind of like a market trader, the goods are bought up front (hotels & flights committed) and the job is to sell them for as much as you can without ending up with unsold packages.

This is why prices move up and down so much, the TO's will constantly be adjusting them to maximise revenues. Some packages are sold at a loss, as it is better to take some revenue rather than have an empty seat.

The 10% figure mentioned above is approx the margin that a high street agent will earn from selling in house packages. This is their payment for SELLING the package, not the profit that the TO makes. The branch may make a small profit whilst the TO actually makes a loss.

As a rough idea of a large tour operators overall profits and only using publicly available info. In both of the last 2 years (2008/9 & 2009/10) Thomas Cook group Operating Profit was approx 4% of revenue. This is after paying for all the accomodation, flights, wages, admin etc but before tax and interest. TUI (Thomson) made more like 1.3% and that excludes volcanic ash charges!

As fwh said below - it's all about utilisation. The TO's contract the hotels and plan for a certain capacity. This significantly sets their costs for the season. They then need to sell, sell, sell and once they have sold enough to cover costs everything else is profit.

All of the above is fairly simplified but it gives a fair reflection.