The ppt introduces the type of contracts used by tour operators for preparing packages and package tours

1. Tour Operation Process
purchasing/Negotiating/
Contracting
P

2. Planning and
development
Negotiation/
Contracting
Packaging
Marketing
and sales
Yield mana-
gement
Evaluation
The process of tour operation
Looking for package
components
Purchasing
Negotiating
Contracting

3. Components of the packages and suppliers
• The target market and the type of the trip will determine that
how many and what type of components the package will
include:
•Types of trips:
• Excursion – 1-2 days
• City break – 4-5 days
• Round trip – 6 and more days
• Holiday/Vacation trip – 8 – 15 days

4. Loooking for services

5. Looking for the package elements - options
Inbound tour
operatos
connect the
suppliers
directly
Outbound
tour operators
may browse the ready
itineraries of inbound tour
operators at the destination
may sent inquiry to inbound
tour operators
may contact the suppliers at
the destination

6. Comparing, analysing the proposals/offerings
• After having received the proposals, tour operator selects the
ones that might fit the best into the target market expectations
•Priority list in advance!
• Visit and try the services, attractions before make the final
decision on purchase and contracting
•but only in case, whe tour operator orders big volume of services.

7. Negotiation

8. • Nagotiation is about:
•quantities and qualities of the needed services
•conditions of provision and purchase
• In the negotiation both parties are intent to achieve the best
conditions:
•price (discount)
•payment conditions
•cancellation conditions …

9. • Determinants of the conditions offered by the suppliers:
• the risk spreading – type of contract and clauses;
• benefit spreading
• the quantity of products;
• the payment method (timing);
• the reputation;
• working history.

10. • The contracts are signed at the moment of agreement and fix
the quantity and the price of the services
• Services will be supplied later (at the time of consumption)

11. Examples
• Time and discount relationship:
• The sooner payment arriving is more beneficial to the supplier, but it is maybe not
beneficial to the tour operator, so the discount is usually higher.
• Paid amount and discount relationship:
• Immediate full payment might mean higher discount, while payment in tranches might
result lower discount.

12. Contracts

13. Contract
• Any agreement that the law will enforce, whether in writing,
verbal or implied, i.e. assumed from the conduct of the parties
• The Civil Code (Private Law) governs the general rules and
terms of the contracts
•The law of obligations deal with them in details.
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14. Contracts of travel establishments
Contracts related
to the operation
Rental,
Employment,
Leasing,
maintenance,...
Contracts related to the professional activities
Contracts for establishing the supply
Contracts related to the purchase of the
supply elements
Purchase contracts
- guarantee (rental)
-allotment
- frame
- Confirmed request
for quoate
Sales contract /Contract of sale
Contracts related to the sales of
supply
Contracts with
dealers/retailers
- agency
- consignatory
Travel contract
with customers

15. Supply (Purchase) contracts
Purchase contract

16. • Used for purchasing goods and services from vendors at agreed
prices and conditions, such as rebates and quantities to be
ordered.
•The supply contracts have general and special terms depending on the
subject (types of services) of the contracts

17. General terms of the supply (purchase) contracts
• Official full name and address of the parties
• Subject(s) of the contract
•Name of the service, quantity, and quality of the services, dates and/or
periods of time of the provision of services
• The agreed price of the services
•In case of various types of prices they might be listed in annex – there must
be a refence to the annex in the contract body

18. General terms of the supply (purchase) contracts–
cont’
• Agreements related to the commissions(?)/discounts given by the
suppliers
• in amount or in %,
• conditions of giving the discount/commission , method of pay off…
• Method of service provision and use of services
•How to apply for quotes, confirmations and how to confirm, reconfirm
•Conditions of cancellation (deadlines, penalties)

19. General terms of the supply (purchase) contracts–
cont’
• Payment conditions and payment methods:
•Timing: schedule and amount of payments
• Sanctions:
•For the cases of not respecting the agreed conditions (deadlines, payments,
cancellations)
• Liabilities:
•Between the parties,
•Between the contacted parties and the consumers

20. General terms of the supply (purchase) contracts–
cont’
• Dispute resolution (covers a range of choices, from negotiating a
solution to going to court)
•name of the the delegated law court for settling the disputes
• Conditions of contract validity
• first day, last day, breaching, termination
• List of annexes (if any)
• Date of the signature
• might be different from the validity!
• Signature of parties

21. Special terms of supply (purchase) contracts
• These are determined by the type of the contract and the types
of the services in dispute
• Types of contacts:
•framework
•allotment,
•guarantee(d)

22. • Framework agreement/contract:
• General agreement for cooperation: the services will be ordered and
confirmed upon this agreement
• None of the parties can be sanctioned as there is no concrete deal in
this agreement - does not mean risk for any of the parties
• Only the theoratical basis of the cooperation are set in the agreement.

23. • Allotment/Allocation /(Contingent) contract
• The buyer has pre-emption right on the services.
• Signed for certain allotment (quantity) of rooms which are at the
disposal of the buyer. (There is a deal – in comparison to the
framework contract!!!)
• Might (!) mean discount for the buyer (but not automatically – the
discount is a result of negotiation)
• Clauses are/might be added to the allotment contracts.
• The clasues regulate the special conditions: rights and obligations of
the parties.
• These are result of negotiation
• The risk of this type of contracts is shared between the parties

24. Example on a special clause:
•Option clause*:
•The supplier reserves a fixed quantity of rooms to be purchased
by the buyer ‘by’ or ‘at’ a given date decided by parties.
•The rooms that have not been sold until that date can be given
back with or without sanctions.
•Certain % of allotment might be guaranteed to be paid.
*it is typical in the allotment contracts in tourism

25. • Commitment/Guarantee(d)/(Rental) contract
• Signed for certain quantity of services which are „rented”by the
buyer. (It is a deal in the conract– in comparison to the frame work
contract!!!)
• The buyer takes the guarantee to pay for the agreed quantity on the
agreed price does not matter what is happening in sales.
• Might (!) mean relatively high discount for the buyer (but not
automatically – result of negotiation)
• The risk is fully supported by the buyer (tour operator)
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26. Specialities of the supply contracts
• Meal services:
•Framewor contract is signed usually and the TO orders services on ad hoc
basis
•These contracts usually apply flexible conditions for cancellation and
quantity amendments

27. Specialities of the supply contracts – cont’
• Scheduled transportation:
• Retail type agreement:
• There are special conditions for the payment and
confirmation.
• The general terms and conditions of the transportation
companies set in in advance must be accepted.
•Guaranteed contract:
• for flight if TO needs block of seats
•Allotment contract:
•for flight if TO needs block of seats train: block of seats
•for train if TO needs block of seats train: block of seats

28. • Chartered/rented transportation:
•Framework contract – only for coaches!
•Commitment/guarantee contract
• For renting the whole facility (aircract, train)

29. • PLEASE NOTE:
•Allotment and guaranteed contract are signed only by tour operators and
not by travel agencies
•Framework contract/agreement might be signed by travel agencies as well
if special conditions are agreed (extra commission, special cancellation
conditions).

30. Contracts signed by outbound tour operators
• With suppliers at the destination:
•allotment
•guaranteed
• With suppliers in their own country (with transportation
companies:
•framework
•allotment
•guaranteed
• With inbound tour operators at the destination:
•framework
• allotment

31. Contracts signed by inbound tour operators
• With suppliers in their own country:
•guaranteed
•allotment
•franework
• With outbound tour operators in the sender country
•framework
•allotment