The economies of scale determine the buying power of tour operators. The same economies of scale also allow the tour operators to have a considerable level of control in the sale and distribution of holiday packages to travelers (Davies and Downward, 1998).Most of the agreements in the UK package holiday industry are collusive in nature. These agreements normally depend on the homogeneity of the products or services on offer, frequency of interaction and minimal uncertainty (Ryan, 1989). This means that if companies offering different elements of holiday services think that they can work together and get maximum benefits from the collision, they normally form a kind of a merger. These kinds of mergers are what give rise to tour operators who then offer services from different companies in a single package (Sheldon, 1986).Since there are different kinds of tour operators, the market is also divided according to the kind of holiday packages that they prefer. In the UK, the market is divided as follows: UK residents who tour within the country, UK residents who travel out of the country for their holidays, and non-UK tourists who tour the country (Davies and Downward, 1998). The largest tour operators in terms of market share include Thomason Travel Group Ltd, Airtours, first Choice Limited, Thomas Cook Group and Carlson Leisure (Gratton and Richards, 1997). The table below shows the market share for various travel and tour groups offering package holidays in the U.The UK market is both oligopolistic and competitive. This is because the market has both large companies and small ones offering the same kind of services. The big companies are the ones that are. Agreements in the Package Holiday Industry and Market Opportunities.
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