What you need to have in mind while negotiating with Tour Operators and smart tips for more efficient and lucrative contracts.6 mins read
One of the most important parts in a tourism season is the right timing – for example, in the middle of the summer for major summer destinations – when Tour Operators begin to book hotel rooms for the upcoming season. The reason for this is rather simple, and it lays on the scheduling of airplane seats for the travelers. These seats need to be covered, by contracting with the hotels.
As simple as they might seem, these actions require time and usually they prove to be more complicated than expected. Tour Operators consult their company’s Marketing Department so as to receive the latest news about the market they are going to address and the local developments – economic, political, regional turmoil, existing competitors etc. So, when the time is right, also known as the “Contracting period”, they are ready to put pressure on the hoteliers, with the sole purpose to achieve the best possible outcome for them.
The point, however, is what the hoteliers should do, so that the overall negotiations conclude to the desired result. Let’s focus on this subject by presenting essential advice and smart tips that hoteliers should keep in mind while negotiating:
Which are the key questions we should ask our potential Tour Operator Partner?
To better understand the dynamic and intensions of every Tour Operator regarding our hotel, we should first impose some key questions. These questions, in addition to necessary and useful information about the forthcoming collaboration, make a clear statement to the Tour Operator that the hotel consists of people who have a deep knowledge of the industry. At the same time, they manage to amplify the hoteliers’ position against several requests that the other party might have.
Some indicative questions that you can use, are:
- How many rooms or beds will they need?
- What will be the terms of the allotment contract?
- Which will be the agreed-upon price, having in mind the increase in cost living as well as a reasonable trade increase?
- What amount will be asked in advance, what will be the contract percentage and when will the payment take place?
- Historical data about the area (materialization factor)
Which is the necessary information we should provide Tour Operators with?
In the framework of negotiations and discussions with each Tour Operator, the hotels should clarify the key elements related to their operation and the general context within which they usually develop their various collaborations. By making those points clear (for example, the cancellation policy or the extra services provides to their guests), the hotels allow Tour Operators to have a better idea of the case and adjust their propositions accordingly.
Amongst others, the hotel should provide the following information:
- Cancellation Policy and release period duration. Also, the percentage that the Tour Operator is required to pay
- Inform the Tour Operator about the hotel’s Official Rates
- Examine the possibility of covering part of the cost that the Tour Operator will invest in promoting the hotel
- Updates about the check-in and check-out policies
- Updates regarding the additional provisions that the hotel may offer to its guests — such as welcome drinks or fruit baskets for repeating customers upon their arrival
What should we keep in mind when signing a new contract with a Tour Operator?
Contracts are essential in the business world, as they protect the relationship between two parties throughout their cooperation.
The sooner the hotel provides the necessary information the sooner the Tour Operator will upload the property to their systems, spreading the information more effectively. The information provided should be up-to-date, including data about general improvements in the hotel product, descriptions of any changes that have occurred over the past period, as well as anything new or upgraded that the hotel now offers to its customers. In the past, we have witnessed some “aggressive” terms from Tour Operators, like the well-known issue with drachma. It would not be unreasonable for Hoteliers to ask for a guarantee for their money.
Many Tour Operators – but also, many hoteliers – wish the agreements to be drawn and signed on their own forms. In this case, the agreements should be checked thoroughly to avoid any mistakes and the specific conditions should be read carefully and be mutually accepted so that the cooperation has a positive effect on both sides.
It is a fact that the structure of tourism has changed and will change even more in the upcoming years. Tour Operators have been and will always be very important players in the path of Hotels and Resorts, but the trend is now declining and many partnerships pose risks even from organizations that seem to be stable and reliable. The solution is one-way for everyone and involves more work dispersal, more focus on the Online part, which is what has caused the biggest problems to Tour Operators, focusing on Marketing (online & offline) and Concept Design for every Hotel. This does not mean that Tour Operators should be excluded, but it should be ensured that the course of a hotel does not depend on the financial condition of one or more Tour Operators. At the same time, the loss of dependency on Tour Operators removes from them the negotiating advantage for reduced prices.
This means that hoteliers will now have to deal with revenue throughout the year and not just the contracting period, in addition to managing the expenses they have incurred so far as the issue of selling rooms has been resolved with one or two big contracts.