Definition of Breakage
Breakage refers to the expenses that have been budgeted for a specific tour but have not been utilized or expended. This results in additional profit for the tour operator. Breakage can occur due to various reasons such as meals that were budgeted but not consumed, fluctuations in currency that benefit the tour operator, or selling tours to an unexpectedly large number of passengers.
Tour operators often allocate a specific budget to cover the various expenses for a tour. However, if the actual cost of the tour turns out to be less than the allocated budget, breakage occurs. Breakage is a beneficial concept for tour operators as it helps them increase their profits without compromising on the quality of the tour.
Breakage is not limited to a particular type of expense and can be observed across various aspects of the tour. For instance, a tour operator may budget a certain amount for transportation, but if the actual cost of transportation turns out to be less than the budget, it results in breakage.
Overall, breakage serves as a significant source of additional profit for tour operators and is a crucial concept in the tourism industry.
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