Tour production costs

Abstract

Profitability depends on production costs as much as it depends on sales revenue. Information on production costs is therefore critical in the analysis of competitive commercial enterprises in all industry sectors. The dynamics of any industry sector, under either market or policy changes, depend on the relative production costs of its individual enterprises. Empirical data on production costs are sparse, however, because of commercial sensitivity. Stock exchanges show share prices, and annual financial reports show aggregate income and outgoings, but unit production costs are treated as confidential. Here, therefore, I argue for greater effort in empirical studies on production costs in tourism, to complement the existing body of theoretical research. In particular, I suggest that empirical information on production costs is prerequisite to analyze the value contributed by agents and intermediaries in tourism distribution systems. As an initial case study, I present data from six similar small-group international package tours in the nature and adventure subsector.