Evaluating pricing policies applied to Tour Operators and Travel Agents in Egypt

Abstract

Pricing policies and techniques are very important components of the daily operations of services organizations. This is because price is one of the most effective variables that managers can manipulate to encourage or discourage demand for services and products in the short-run (Aziz et al., 2011; Gazopoulou, 2012). In many tourist destinations, tourism intermediaries (including tour operators and travel agents) play an important role in setting the prices that consumers should pay for tourism products and services, particularly in destinations which depend on intermediaries (Buhalis, 2000). Pricing policy is very important for the market success of travel agencies offering products of tourism (Kyurova, 2013). Ineffective implementation of pricing policies can result in a decline in both domestic and international tourism demand and unless the pricing policies are well applied, the tourism industry in the developing countries will lose the economic benefits that could result from tourism (Walpole, Goodwin & Ward, 2008). Therefore, this study aims to explore the pricing policies and techniques applied at tour operators and travel agents in Egypt; as well as to evaluate the efficiency of these policies and techniques. It also aims to provide some recommendations to managers of tour operators and travel agents in Egypt to enhance their performance regarding the integration of policies and techniques. Literature review: Pricing policies and techniques for tourism services: Pricing is the process of setting values at which products and services are to be sold. Thus, pricing is an important process to the successful marketing of products or services (Buhalis, 2000; Hudson, 2008; Reid & Bojanic, 2009). Also, price is a main measure that customers use for judging the value of the product and it strongly in fluencies brand selections among competing organizations (Avlontis & Indounas, 2007). In addition, pricing is the only element of the marketing mix that generates revenues for the company whilst the other elements of the mix represent costs (Lancaster & Reynolds, 2005). According to Kyurova (2013) the pricing policy of an organization refers to the process of setting prices and their fluctuating levels on the short and long term depending on the market conditions. There are several policies/techniques that can be used for pricing tourism services; each of which has its own characteristics, advantages and disadvantages (Buhalis, 2000; Reid & Bojanic, 2009). Pricing strategies/policies of tourist products and services may include strategies such as: skimming pricing strategy; penetration pricing strategy; neutral pricing strategies (Reid & Bojanic, 2009). According to skim pricing strategy, prices of products and services are set very high with high quality to attract rich tourists to achieve high profit out of these certain exclusive segments. However, penetration pricing strategy involves setting prices that attract more customers and gain advantage over its competitors. According to neutral pricing strategy, prices a...