CTP Business & Financial Management Flashcards

What is the primary purpose of a tour operator's profit and loss (P&L) statement?

Answer: To measure revenue, costs, and net profit over a period

A P&L statement summarizes revenues and expenses to show whether a tour business is profitable over a given period.

Which pricing strategy involves setting a tour price based on what competitors charge?

Answer: Competitive pricing

Competitive pricing sets prices in line with or relative to what rival tour operators charge for similar products.

What does 'net rate' mean in the tour and travel industry?

Answer: The wholesale price offered to travel agents before markup

A net rate is the unpublished wholesale price a supplier offers to agents, who then add their markup to create the retail price.

A tour company's 'break-even point' is best defined as:

Answer: The sales volume at which total revenues equal total costs

The break-even point is where total revenue exactly covers total costs, meaning the business neither profits nor loses money.

Which financial term describes money collected from clients before a tour departs?

Answer: Deferred revenue

Deposits and pre-payments for future tours are recorded as deferred revenue because the service has not yet been delivered.

What is 'yield management' in the context of tour operations?

Answer: Adjusting prices dynamically to maximize revenue based on demand

Yield management involves adjusting tour prices in real time based on demand, booking pace, and seat availability to maximize total revenue.