“Economic traps” hidden in accommodation contracts
| Potential conflict Areas driven from accommodation contracts | Accommodation contract terms | Economic implications |
|---|---|---|
| Stop sales right | “NO STOP SALES can be accepted. In case of clear misuse of stop sales tour operators have the right to invoice a commercial damage being the amount equal to the last contracted value” | If the demand is high, principals cannot make direct sales and lose extra profits |
| Principals’ liability for all claims | “claims caused by servants or third parties retained by them’ without declaring how these claims are being justified and leaving contingencies for principals’ provision of economic compensation to the agents” | The risk of being liable for any claim and the risk for upholding the economic compensation burden is high |
| “Justified doubts” of principals’ bad performance, without clarifying the justified evidence of those doubts | “tour operators are not liable for damage of any kind caused by actions and/or missions of his servants” | Agents may declare “bad principals’ performance” without certain and specific evidence, asserting economic compensation for that or terminating the contract |
| Room selling in conjunction with management, marketing and other facilities | “to sell rooms in conjunction with facilities and other goods and services” | Agents’ customers and direct principals’ customers may be treated differently, creating customer complaints and discrimination issues that may lead to customer losses and economic losses. Agents’ marketing control may create a false picture distant from reality creating customer and economic losses as well |
| Cancelling charges | “shall cover the agent’s administration costs in dealing with the cancellation of the booking” | A cancellation 24 h prior to arrival will be compensated by principals only a night regardless of the reservation period creating an economic loss: (a) the money not received for the reservation period and (b) the profit the principal may lose if the room is not directly sold after the cancellation and (c) the coverage of the agents’ administration costs for the cancellation |
| Principals’ duty to undertake investments when agents consider necessary | Principals should “carry out and pay any repairs or alterations to the property at their own expenses that agents consider necessary to ensure health and safety to customers” | Principals should uphold the cost of undertaking the investment without any written agents’ promise for a long-term cooperation. The Return on Investment (ROI) may be low |
| Short “release period” | normally 6 days or less in some cases prior to arrival | Principals do not have the appropriate time to arrange direct bookings and the risk of not doing so is high, increasing the economic costs |
| The law that governs the contract terms | under the laws of the countries that agents are registered in | Principals may not have the knowledge and the money to employ a lawyer specialized in foreign laws. A false step may indicate unpredicted high economic costs in other countries’ laws |
| Denial to display list of bookings | Agents “may at any time refuse to display list for bookings regarding number, type and frequency of rooms booked except to the maximum extent permitted by [English] law” | Principals have no idea of the tourism demand and cannot charge the right room price |
| Agents’ 30–60 day payment delay after the invoices’ receipt | 30–60 days upon the receipt of the invoices | Principals’ economic liabilities with deadlines may not be fulfilled impinging upon their credibility and reputation |
| Potential conflict | Accommodation contract | Economic implications |
|---|---|---|
| Stop sales right | “NO | If the demand is high, principals cannot make direct sales and lose extra profits |
| Principals’ liability for all claims | The risk of being liable for any claim and the risk for upholding the economic compensation burden is high | |
| “Justified doubts” of principals’ bad performance, without clarifying the justified evidence of those doubts | “ | Agents may declare “bad principals’ performance” without certain and specific evidence, asserting economic compensation for that or terminating the contract |
| Room selling in conjunction with management, marketing and other facilities | Agents’ customers and direct principals’ customers may be treated differently, creating customer complaints and discrimination issues that may lead to customer losses and economic losses. Agents’ marketing control may create a false picture distant from reality creating customer and economic losses as well | |
| Cancelling charges | “ | A cancellation 24 h prior to arrival will be compensated by principals only a night regardless of the reservation period creating an economic loss: (a) the money not received for the reservation period and (b) the profit the principal may lose if the room is not directly sold after the cancellation and (c) the coverage of the agents’ administration costs for the cancellation |
| Principals’ duty to undertake investments when agents consider necessary | Principals should “ | Principals should uphold the cost of undertaking the investment without any written agents’ promise for a long-term cooperation. The Return on Investment ( |
| Short “release period” | normally 6 days or less in some cases prior to arrival | Principals do not have the appropriate time to arrange direct bookings and the risk of not doing so is high, increasing the economic costs |
| The law that governs the contract terms | Principals may not have the knowledge and the money to employ a lawyer specialized in foreign laws. A false step may indicate unpredicted high economic costs in other countries’ laws | |
| Denial to display list of bookings | Agents “ | Principals have no idea of the tourism demand and cannot charge the right room price |
| Agents’ 30–60 day payment delay after the invoices’ receipt | 30–60 days upon the receipt of the invoices | Principals’ economic liabilities with deadlines may not be fulfilled impinging upon their credibility and reputation |
Principals denotes tourism producers (hotels); Agents refer to tour operators
Sharing content requires targeting cookies to be enabled. Please update your cookie preferences to use this feature.