Answer Guide: Holidaymakers may purchase a package because it offers a cheaper combined price than purchasing elements separately. It can also reduce the time needed in researching and selecting the holiday products, trusting that the tour operator has selected accommodation appropriate to the needs of the market. Within Europe, there is also some protection under the package travel directive regulations.

Customers may choose to book direct (and this may be more common for short breaks rather than their main holiday), but the time and risk may mean they continue to use tour operators (albeit some might use online tour operators) to buy packages.

Answer Guide: Hotels may decide to work with tour operators because it allows them to transfer the risk and cost involved in selling their entire inventory directly to the customer. Instead, they can negotiate a contract with a tour operator for a set number of rooms, thus guaranteeing this income – acknowledging that the rate per room will be lower than if the room was sold directly to a customer.

Answer Guide: Information technology can offer a real-time booking of the product to customers, managing the inventory of stock and assisting with back-office functions such as customer payments (including deposits). IT has also moved booking online, reducing the need for intermediaries such as travel agents.