Allotment (travel industry)
Encyclopedia
Allotments in the tourism industry are used to designate a certain block of pre-negotiated carrier
seats or hotel
rooms which have been bought out and held by a travel
organizer with a huge buying power like a wholesaler, tour operator or hotel consolidator
, and more rarely by a retail travel agent.
Allotments can be purchased for a specific period of time such as a whole season
, part of a season or for any single dates and then resold to travel partners and final customers around the globe. A couple of days prior to carrier departure/hotel check-in
any unsold seats/rooms may be released back to the supplier if such an agreement exists between the two parties. An allotment release back period is also negotiated as part of the allotment contract (e.g. four days prior to check-in/departure).
Rooms or seats that have not been contracted between the travel company and the product supplier are referred to as free sales and their purchase is handled ‘on-request’ where each booking of an airline seat or hotel room needs to be confirmed with the supplier before being confirmed with the client.
. Tour operators book a certain number of rooms in hotels or seats on carriers and have the right to use them by a given date, also known as a release date, that usually is some days prior to tourist's arrival (hotels)/departure(carriers). The allotment contract reduces the risk of any unsold products by the supplier and grants relative price advantage to the travel organizer helping him to stay competitive on the market by offering extra discounts.
Tour operators obtain discounts, through allotment or commitment contracts, primarily depend on the firm size and the bargaining power exercised; they can vary from 10% to 50% according to the period of the year, the destination, the quantity and quality of services contracted upon. Some big tour operators are able to obtain up to 70% of discount.
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
seats or hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
rooms which have been bought out and held by a travel
Travel
Travel is the movement of people or objects between relatively distant geographical locations. 'Travel' can also include relatively short stays between successive movements.-Etymology:...
organizer with a huge buying power like a wholesaler, tour operator or hotel consolidator
Hotel consolidator
Hotel consolidator is a travel company or business that buys up blocks of hotel rooms in top destinations and then resells them at discounted rates to the final customer...
, and more rarely by a retail travel agent.
Allotments can be purchased for a specific period of time such as a whole season
Season
A season is a division of the year, marked by changes in weather, ecology, and hours of daylight.Seasons result from the yearly revolution of the Earth around the Sun and the tilt of the Earth's axis relative to the plane of revolution...
, part of a season or for any single dates and then resold to travel partners and final customers around the globe. A couple of days prior to carrier departure/hotel check-in
Check-in
Check-in is the process of announcing your arrival at a hotel, airport, sea port or social network service.-Airlines and airports :Check-in desks are found in the majority of commercial airports. Their main function is to take in luggage that passengers wish to, or are required to, place within the...
any unsold seats/rooms may be released back to the supplier if such an agreement exists between the two parties. An allotment release back period is also negotiated as part of the allotment contract (e.g. four days prior to check-in/departure).
Negotiating allotments
Allotments can be negotiated between a tour operator and a travel service supplier such as airline company/hotel chain, or between two travel organizers such as a tour operator and a retail travel agent. Either way the buyer needs to prove a consistent level of business, because allotments are hardly granted without any previous sales history.Rooms or seats that have not been contracted between the travel company and the product supplier are referred to as free sales and their purchase is handled ‘on-request’ where each booking of an airline seat or hotel room needs to be confirmed with the supplier before being confirmed with the client.
The allotment or allocation contract
The amount of the contracted rooms/seats to be specified in the allotment contract is a result of the estimated, during the negotiation, volume of sales to be realized by the tour operatorTour operator
A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour...
. Tour operators book a certain number of rooms in hotels or seats on carriers and have the right to use them by a given date, also known as a release date, that usually is some days prior to tourist's arrival (hotels)/departure(carriers). The allotment contract reduces the risk of any unsold products by the supplier and grants relative price advantage to the travel organizer helping him to stay competitive on the market by offering extra discounts.
Tour operators obtain discounts, through allotment or commitment contracts, primarily depend on the firm size and the bargaining power exercised; they can vary from 10% to 50% according to the period of the year, the destination, the quantity and quality of services contracted upon. Some big tour operators are able to obtain up to 70% of discount.