Costing a Tour Package — Components, Cost Sheet, FIT vs GIT Costing Explained
Travel Trade · Part 2 · Module 23
Costing a Tour Package — Components, Cost Sheet, FIT vs GIT Costing Explained
How much should a 7-day Rajasthan tour cost? Too high and you lose the sale. Too low and you lose money. Tour costing is the art and science of pricing a package that is both competitive and profitable. Here is the complete framework.
💰 What Is Tour Costing?
Tour costing is the systematic process of calculating all expenses involved in a tour package and setting a selling price that covers costs, includes a profit margin, and remains competitive in the market. The ultimate aim of any tour operator should be to create a package that is cheaper than what the customer could assemble independently — while still generating profit.
📦 Components of Tour Cost
1. Transportation Cost
Air: Economy/business class airfare, airport taxes, fuel surcharges
Rail: AC First/2AC/3AC train fares, Rajdhani/Shatabdi supplements
Road: AC coach/taxi hire, toll charges, driver allowances
Sea: Cruise fares, ferry charges
Transfers: Airport-hotel-airport, inter-hotel transfers
Rail: AC First/2AC/3AC train fares, Rajdhani/Shatabdi supplements
Road: AC coach/taxi hire, toll charges, driver allowances
Sea: Cruise fares, ferry charges
Transfers: Airport-hotel-airport, inter-hotel transfers
2. Accommodation Cost
Hotel tariff × number of nights × number of rooms. Based on: hotel category (5-star/3-star/budget), meal plan (AP/MAP/CP/EP), occupancy type (single/double/triple), season (peak/off-peak), contracted rate vs rack rate.
3. Sightseeing & Entry Fees
Entry tickets to monuments, national parks, museums, theme parks. Guide fees (local/regional guides). Cultural show tickets. Photography fees. Heritage site permits.
4. Meals (If Not in Hotel Rate)
Lunch and dinner costs when not included in hotel meal plan. Restaurant selection — local authentic, Indian, or international cuisine. Welcome dinner, farewell dinner, special cultural meals.
5. Documentation & Visa Costs
Visa fees for foreign destinations. Visa processing charges. Travel insurance premiums. Health certificates if required. Travel permits for restricted areas (Northeast India, high-altitude zones).
6. Operational Costs
Tour escort/manager cost (if included). Porterage charges. Tips budget. Communication costs. Emergency fund allocation. Bank charges on forex transactions.
7. Agency Margin & Profit
The tour operator’s profit — typically 10-25% mark-up on total cost price. Must cover: office overheads, staff salaries, marketing costs, and desired profit margin.
📊 Sample Cost Sheet — 5N/6D Rajasthan Tour (Per Person, 20 Pax Group)
| Component | Details | Cost Per Person |
|---|---|---|
| Air (Delhi-Jaipur + Udaipur-Delhi) | Economy class both ways | ₹8,500 |
| Accommodation (5 nights) | 3-star hotels, MAP, twin sharing | ₹12,500 |
| Local Transport | AC coach entire tour | ₹4,000 |
| Sightseeing & Entry Fees | Forts, palaces, Amber, Udaipur | ₹2,500 |
| Licensed Guide | English-speaking, 5 days | ₹1,500 |
| Welcome Dinner | Cultural folk dance programme | ₹800 |
| Travel Insurance | 5-day domestic policy | ₹400 |
| Porterage & Tips | Standard allowance | ₹500 |
| Total Cost Price | ₹30,700 | |
| Agency Margin (15%) | ₹4,605 | |
| GST (5%) | ₹1,765 | |
| Selling Price Per Person | ₹37,070 |
🍽️ Meal Plans — Essential for Costing
The 5 Standard Hotel Meal Plans
EP (European Plan) — Room only. No meals included.
CP (Continental Plan) / BB (Bed & Breakfast) — Room + Continental breakfast (bread, butter, jam, juice, coffee/tea) OR American breakfast.
MAP (Modified American Plan) / Half Board — Room + Breakfast + one major meal (lunch OR dinner). Also called demi-pension.
AP (American Plan) / Full Board — Room + All three meals (breakfast + lunch + dinner). Also called en pension.
All Inclusive — Room + All meals + Beverages + Activities.
CP (Continental Plan) / BB (Bed & Breakfast) — Room + Continental breakfast (bread, butter, jam, juice, coffee/tea) OR American breakfast.
MAP (Modified American Plan) / Half Board — Room + Breakfast + one major meal (lunch OR dinner). Also called demi-pension.
AP (American Plan) / Full Board — Room + All three meals (breakfast + lunch + dinner). Also called en pension.
All Inclusive — Room + All meals + Beverages + Activities.
🎯 UGC NET Key Points — Module 23
◆ Tour cost components: Transport + Accommodation + Sightseeing + Meals + Documentation + Operations + Margin
◆ Tour operator goal: package cheaper than tourist can assemble independently
◆ EP = Room only · CP/BB = Room + breakfast · MAP = Room + 2 meals · AP = Room + 3 meals
◆ American breakfast: 2 eggs, bacon/sausages, toast, cereal, coffee/tea/juice
◆ Continental breakfast: bread, croissants, jam, butter, juice, coffee
◆ Hubbart Formula: calculates room rate based on ROI + total expenses
◆ Rack rate = standard room rate (no discount) · Corporate rate = 10-20% below rack
◆ FIT costing = individual basis · GIT costing = per-person basis for group with economies of scale
◆ Agency margin typically 10-25% on cost price
◆ Tour operator goal: package cheaper than tourist can assemble independently
◆ EP = Room only · CP/BB = Room + breakfast · MAP = Room + 2 meals · AP = Room + 3 meals
◆ American breakfast: 2 eggs, bacon/sausages, toast, cereal, coffee/tea/juice
◆ Continental breakfast: bread, croissants, jam, butter, juice, coffee
◆ Hubbart Formula: calculates room rate based on ROI + total expenses
◆ Rack rate = standard room rate (no discount) · Corporate rate = 10-20% below rack
◆ FIT costing = individual basis · GIT costing = per-person basis for group with economies of scale
◆ Agency margin typically 10-25% on cost price