Package, Tour or FIT: Defining the Packaged Travel Market

At $18.3 billion in 2008, packaged travel represents a substantial piece of the total U.S. travel market, but it is also one of the more complex and fragmented segments as well. In its simplest form, packaging represents the bundling of travel products and reselling them as a combined single product, called a package or tour. A consumer (or travel agent) generally books the package in a single transaction. There are several different types of packages, as well as several different types of companies that create them. There is also a great deal of overlap and gray area among different types of packages and travel packagers.

Tour operators such as Apple Vacations and Southwest Vacations are well known. But online travel agencies (OTAs) such as Expedia, Orbitz, Priceline and Travelocity could also be considered as travel packagers. As the distribution and selling of leisure travel continues to evolve, so will packaged travel. In partnership with the American Society of Travel Agents (ASTA), the National Tour Association (NTA), the United States Tour Operators Association (USTOA), Phocuswright developed definitions to shed light on some of the grey areas in this space to provide a basis for common understanding.

TYPES OF PACKAGED TRAVEL

Phocuswright defines a "package" as a travel reservation containing at least two of the three major travel components (flight, accommodation, car rental) where there was a single booking and payment transaction; packaged travel may also include (and usually does) other components, such as transfers, day tours or activities, meals, travel insurance, etc. There are several types of packaged travel, defined below.

Package, or vacation package, may include some or all of the following: flight, accommodation, rental car or transfer, day tours or activities, meals and travel insurance.

Charter refers to a flight where the tour operator takes risk on the inventory (or owns the plane) and, usually, sells the seats as part of a package.

Escorted tours usually include more travel components and have fixed departure dates. Escorted tours may also be referred to as just "tours."

FIT originally was short for "foreign independent travel," or leisure trips abroad without an escort or fixed package structure. Today FIT more commonly refers to as "flexible independent travel" - the components of the itinerary may resemble a package, but the itinerary is custom-built for the traveler.

Group travel includes packages and custom FITs for groups of leisure travelers. Generally "group" applies to a minimum of nine or 10 travelers; however, this definition is also fluid and varies widely by travel industry sector and even by provider.

TYPES OF TRAVEL PACKAGERS

Traditional vacation packager (TVP): Phocuswright uses this term to refer to all tour operators and distinguish them from the online packaging of the major online travel agencies.

Tour operator: The general name for providers of all packaged travel, including escorted tours, group tours, charters, vacation packages and FITs, among others.

Escorted operators: They provide fully escorted (i.e., escorted by a tour guide) and specialty programs that usually include more components and complexity than packages and have fixed departure dates.
Online packagers: This term refers to dynamic packaging and vacation package sales sold by online travel agencies and a few smaller, principally online-oriented packagers.

Wholesaler: Phocuswright distinguishes "wholesalers" as entities that aggregate content and resell it; tour operators are wholesalers who bundle different travel products together and resell them as packages or tours.

The U.S. Packaged Travel Landscape: 2006-2010 provides in-depth analysis of a complex and fragmented market, covering market size, growth trends, distribution patterns, and important product developments. The study also delivers critical analysis of the major trends, opportunities and challenges facing both providers and sellers of packaged travel and strategic and tactical recommendations. Purchase the full report in PDF format for US$699.

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