There are many products sold at Thomas Cook but the product that gets sold the most is a package holiday which includes flights, accommodation and transfers. Cruises are also a popular product sold at Thomas Cook however this is like a package holiday as accommodation and flights if needed are included in the cost. Flights are sold however not many of these are sold on their own as many people now purchase flights off the internet or phone at a cheaper rate. Accommodation within the UK is also available and is popular for weekend breaks or theatre breaks. Foreign exchange is a big income to Thomas Cook in Huntingdon, customers who have booked their holiday through Thomas Cook get a special rate where buying currency. Other products available from Thomas Cook can be shown in the product breadth matrix on the following pages.
Core Product Diagram for a Package Holiday The core benefit of a package holiday is to have a good time no matter what type of holiday it is. Thomas Cook has a range of holidays with something to suit everyone. So the main benefit is to have a good time whilst you’re on holiday. The actual product of a package holiday is the accommodation, flights and transfers. The accommodation depends on which package holiday is chosen it can be a hotel room, apartment or villa. Meals with accommodation depend on which board basis is chosen and this is included in the price of the holiday. The flight is included in the price off the package holiday as well as 5kg of hand luggage and 20kg of hold luggage. The transfers take the customers from the airport to their accommodation, this is usually a bus, however villa package holidays provide car hire from the airport which is included in the cost.
The extras of a package holiday are what customers can purchase to make their holiday more special or comfortable for them. Extras that can be bought include: The reason for the different prices in brochures for a package holiday is the differences in demand that occur at different times and places. Thomas Cook set these prices to ensure that as many aircraft seats and hotel beds are used as possible.
Season pricing – Package holidays are mostly organised into two seasons, summer (May to October) and winter (November to April). In the summer it is known that more people want to go on holiday in August than in May this could be because of warmer weather and time off work and school. However tour operators need to keep their holidays selling throughout both seasons, this is why the prices are varied to reflect the demand for holidays. The summer season is the main time to travel due to the reasons stated above. Because of this demand and the fact that it is not just people in the UK wishing to travel to these destinations as these times the prices must rise for these periods. This is because Thomas Cook commits to beds and seats for a 6 month season. During the quieter months of May and the beginning of October, Thomas Cook often sells holidays at, or below the cost price to ensure that the flights and hotels are filled.
Flight times – If people are wishing to travel during the day time they are likely to pay more than someone going on a night flight. This is because of the demand for day flights, people want to travel in the day time that the night time. So Thomas Cook puts the price up on day flights compared to night flights to meet this demand. For example a holiday to Ibiza from Manchester in the same hotel on the 4th July costs 229 per person for a 08:00 leaving flight. The same holiday but a night flight leaving at 00:15 costs 189 per person.
Regional Departures – The prices for flights from regional airports are set to keep aircraft as full as possible. Thomas Cook is keen to provide regional departures for people who like to travel from their local airport. However if the local airport is only a small airport these could incur an added cost. The cheapest airports to fly from if using Thomas Cook is Gatwick and Birmingham, so most other departure airports have an added departure cost. However in the last two months Thomas Cook has taken off some off the departure costs in some holidays to keep in competitions with other tour operators such as Thomson who do not charge for fuel supplements.
Accommodation supplements – Thomas Cook’s contracts with hotels and apartments are based on a price per room, however in their brochures its price per person. So if a room bought by Thomas Cook cost 400 and could sleep two people the brochure cost would be 200 per person. However if a single person wanted to stay in that room they would have to pay the whole 400. Rooms are allocated according to the size of the party travelling. However if there is a party of three and the hotel only has a room that sleeps 2 or 4, the party would have to have the sleeps 4 room and pay a supplement as they are not filling that room.
Exchange rates – a high proportion on the costs incurred by Thomas Cook is in foreign currencies for accommodation, transfers, airport charges etc. in the country where the holiday is to be taken. Aviation fuel is also priced in $ (American dollars). As holiday prices are advertised a long time before Thomas Cook has to pay for these products the exchange rates could have a major impact on their profit. For example a 500 holiday, 300 may be payable in foreign currency. Thomas Cook expects to earn around 2-3% profit. However if the exchange rate changes by as little as 5%, Thomas Cook will either be at a loss or making double the profit depending on whether the exchange rate went up or down. Below are two comparison tables showing the price comparison for a short haul and a long haul holiday between the big four tour operators.