Package holidays, popularly known as a tour package or simply the word ‘tour’ in the travel and tourism industry refer either to a package tour escorted or not escorted by the tourist guide.


When we say tour package, it means a pre-arrangement, prepaid trip that combines two or more travel components like airfare, airport transfer, accommodation, and other services. Practically, to define the tour package concept is complex one rather understand.

History of Tour Package

The term ‘tour’ was in vogue as early as 1670. The Britishers traveled to widen their knowledge of the continent, especially to study the culture and social life. This practice was gradually adopted by other lovers of cultural centers.



The result of the process was that many European historic and cultural centers were opened to the British tourist. By the early 1730’s the small fishing resorts around the British coast begin to attract tourists seeking to their diseases by drinking the sea-water or by immersing themselves in it.

The introduction of a rail link between the major centers in 1830, had a profound impact on the pleasure travelers for the first time. Many entrepreneurs began to inspire rail travel by organizing excursions for the public at discounted offers.


However, to ‘the origin of package tour’ the credit goes to Mr. Thomas Cook in 1855, Cook, extended his business operation to different countries by introducing the first ‘inclusive tour‘ to Paris.

Mr. Cook put together all the components of tourism products and sold them as ‘inclusive tours’ to the tourists. His pre-packaged tour inspired other tour organizations in the travel industry to organize similar tours to all parts of the globe.


Most of Cook’s tours were a linear tour i.e., the person went from place to place on a single destination. Basically, Mr. Cook developed the concept of ‘grand tour and escorted tour’, the concept which is still used.

Incidentally, World War II has tremendously developed the package tour concept because of the following reasons:


  • Social and Economic Conditions
  • Lower Cost
  • Increase in Aircrafts
  • Marketing Conditions
  • Legal Requirements
  • Integration took place.

Today, package tours are a vital segment of the world’s travel and tourism industry. According to WTTC, package tour sales generate $25 billion annually in the United States, $18 billion in Europe, $19 billion in Britain, and $21 billion in Asia. Today tour sales represented 50 percent of all leisure travel sales and 35 percent of all travel agency revenues.

Types of Tour Packages

A travel agency/tour operator deals with a variety of ‘tour packages,’ catering to the diverse needs of tourists such as adventure, beach, architecture, cultural, business, conference, incentive tours, ayurvedic packages, Buddhist, religious, incentive tour, special interest tours, cruise tour group tour, educational tour, heritage, monuments, wildlife lovers, etc. These are broadly classified into five categories:

  1. Independent Tours
  2. Escorted Tours
  3. Hosted Tours
  4. Incentives Travel/Tours
  5. Freedom Tours

Independent Tour

Independent tours are prepared/formulated for those tourists who want to travel independently. The components of such tours are air travel, air transfer, accommodation, travel documents, sightseeing, boat riding, entertainment, and other travel services.

However, in some cases, tourists are free to purchase every single component separately. Thus, this type of tour provides the tourists considerable freedom to plan the activities according to their own choice.

An independent tour may or may not be an all-inclusive tour. Therefore, tour price varies depending on the type of air travel, air transfer, accommodation and is inclusive of other tour components. Foreign independent travel (FITs) and domestic independent travel (DITs) are examples of the independent tours.

Escorted Tour

When a travel agency includes the services of a well-educated and trained tour manager in its package, the tour is called an escorted tour. Basically, escorted tours are meant for those travelers who are planning to visit a foreign country first time.

The escort’s responsibilities and duties are to provide comprehensive information and assistance to the group or individual traveler, at the origin, en route, and destination place. The excursion tours are examples of escorted tours.

Hosted Tours

A hosted tour means when an agency utilizes the services of another agency at a particular destination. Suppose a group of French tourists is coming to India. When the group arrives in India, they are greeted at the airports by TCI, which assists them in clearing their baggage and transferring them to the hotel.

Their tour host (TCI) is available to offer devices and information about the local attractions and entertainment. Further, when the group arrives at another designation in India, a different travel agency greets them at each tourist spot. Thus, a hosted tour provides the tourists maximum level of pre-arranged and personalized services.

Incentives Travel/Tour

It is a motivational program or a fully paid holiday which is given to the employees by the enterprises as a reward. Mostly in medium and large-scale companies and usually too distant destinations to spur them in maintaining their track record, to increase output, improve the image and moreover to earn the long period loyalty of the employees.

There are a number of other packages offered by a tour company such as a custom tour an excursion tour, an adventure, and special interest package tours.

Freedom Tours

Freedom tours are becoming very popular these days among the working class. These tours are designed as per the choice of tourists. The tourist is free to choose and plan how they want to travel and enjoy their holidays. These types of tours are meant for the kind of people who like to decide how, when, and where to travel.

This tourist may an individual, family, group holidays for families and group travel for business. These tours are promoted and developed by the ORBIT.

Components Of Tour Package

What is to be included in a package tour largely depends and varies from one tour organization to another, or from one country to another, or from one destination to another, and from one market to another market. But there are certain well-defined travel services that always turn a part of a package tour irrespective of the tour operator/travel agency, destination, and even the market condition.

If we study and see the package tours offered by Thomas Cook and Sons Ltd., Cox and King Ltd., and other international travel companies, we find that a package tour has two major components. Therefore, a standard package tour has two basic components namely:

  • Travel
  • Ground Arrangements

Travel industry experience has shown that the first component, i.e. ‘Travel’ is directly bought by the agency from the principal providers like airlines and transport operators, and for ground arrangement, the travel agency management asks the ground operators.

The reason behind buying ground arrangements from a handling agency is that it represents a ground operator at a particular destination for the numerous tour organizations. Secondly, the price offered by it is much lower than an individual agency obtain. Thirdly, it is very difficult to get credit from the supplier and finally, it ensures professional travel services.

Factor Affecting the Tour Package Formulation

Generally, the business of package tours involves great risk, high breakeven, high-quality product, and competitive prices. Therefore, the tour management requires in-depth tour planning and market survey. However, before a tour is designed the tour manager should take into consideration certain factors which are crucial in the formulation process.

These factors have a profound impact on the tourist’s satisfaction. The main factors are:

  • Purpose of Tour
  • Choice of Destinations
  • Tourist Budget
  • Legal Requirement
  • Types of Tourist Accommodation
  • Tour Period
  • Departure and stay information
  • Tour price; inflationary condition
  • Tour Reference Tools
  • Tour Features – political stability
  • The relationship between the host and tourist generating nation