A hotel contract is the commercial agreement that sets which rooms a hotel sells to a travel agency or tour operator, for which dates, at what rates and on what terms. Beyond the rates, it covers the allotment, the release period, cancellation and child policies, payment terms and the markets the rates may be sold in.
Contracts for a summer season are usually negotiated the autumn and winter before. The result is typically a rate sheet and a signed agreement, and those two documents are where everyone looks when a booking's price, cancellation fee or room count is disputed.
Who signs a hotel contract?
On the other side of the hotel is usually a company that will resell the rooms: a tour operator, a travel agency, an incoming agency or DMC (destination management company) at the destination, or a bedbank, the hotel wholesaler that resells rooms to other agencies at net rates. The tour operator puts the rooms into its packages, the agency sells them on their own or with other services, and the bedbank distributes them in bulk.
Hotel chains often contract several properties under one master agreement, with shared terms for all of them and property-specific differences spelled out separately. An independent hotel signs on its own behalf.
What does a hotel contract include?
Contracts look different from hotel to hotel, but their content is largely the same. The table lists the main elements you should expect to find.
| Element | What it sets |
|---|---|
| Parties and validity | Who contracts with whom, the start and end dates, renewal and termination terms |
| Scope | Which properties, room types and board types (room only, bed and breakfast, half board, all inclusive) the contract covers |
| Pricing model | Whether rates are net (you add a markup) or commissionable (the commission is paid out of the guest price), and whether taxes are included |
| Periods and rate grid | Season periods, nightly rates by room and occupancy, weekend and special-date supplements |
| Currency | The currency of the rates and of the payment |
| Allotment and release | How many rooms the hotel holds for you, and the cut-off when unsold rooms go back |
| Sales rules | How stop-sales are notified, minimum stays, days closed to arrival or departure |
| Cancellation and no-show | How late a guest can cancel free of charge, the fee after that, the penalty when a guest does not arrive |
| Child and age policy | Up to what age children stay free, second-child and extra-bed rates |
| Payment terms | Prepayment, deposit or payment on credit, the payment method and due dates |
| Markets | Which source countries the rates are valid for |
The rate grid usually arrives as a spreadsheet, while the terms sit in the signed agreement. The two need to agree. If the sheet says one cancellation policy and the agreement says another, which one applies becomes the argument.
What is an allotment?
An allotment is the number of rooms a hotel holds for a travel agency or tour operator each night over a given period. For example, the hotel holds 10 Deluxe rooms for you every night in July. You sell those rooms without asking the hotel about availability each time, and you confirm the booking straight away.
Who carries the risk depends on the type of allotment:
- Non-guaranteed allotment. Unsold rooms go back to the hotel at no cost on the release date. The hotel carries most of the risk, so it may ask for a longer release period.
- Guaranteed allotment. The operator commits to pay for the rooms whether they sell or not, and usually gets a better rate in return. Tour operators that sell packages built on charter seat blocks use this model often.
Two other ways of selling are common alongside allotments. Under free sale, the hotel does not hold a set number of rooms for you but lets you sell without asking until it sends a stop-sale. Under on request, each booking needs the hotel's confirmation. One contract can mix all three by period or room type.
What is a release period?
The release period sets how many days before arrival unsold allotment rooms go back to the hotel. Contracts state it in days: a 7-day release means rooms still unsold 7 days before a night return to the hotel's general sale.
An example: you hold 10 Deluxe rooms per night in July with a 7-day release. By 18 July you have sold 4 rooms for the night of 25 July. On 18 July, the 6 unsold rooms go back to the hotel, which can now sell them on its own website or through other channels. The 4 rooms you sold stay with you on contract terms. You only lose first call on the rooms you did not sell.
Release periods often change with the season. 14 or 21 days in peak season and 3 or 7 days in quieter periods are common. Requests that come in after the release date need fresh availability from the hotel.
What is a stop-sale?
A stop-sale is the hotel closing sales for certain dates, room types or rate plans. A hotel sends a stop-sale to its partners when it is full, under renovation, facing a large event in town, or at risk of overbooking.
No new bookings can be made for the closed dates. Unless the contract says otherwise, bookings made earlier remain valid. Most disputes are about allotments: some contracts protect the allotment from stop-sales until the release date, others do not. The contract should say which.
If you sell on free sale, speed is everything. The moment the hotel sends a stop-sale, sales must stop across all your channels too, or you will take bookings the hotel cannot honor.
Other sales rules
- Minimum stay: the fewest nights a booking can have. 3 or 7 nights are common in peak periods.
- Maximum stay: the most nights a booking can have.
- Closed to arrival or departure: a stay cannot start or end on that day, but stays that pass through it can still sell.
- Advance purchase: how many days before arrival a booking must be made. Often used with non-refundable rates.
Cancellation, child and payment terms
Cancellation and no-show
The contract sets how late a guest can cancel free of charge and what the fee is after that. A common pattern is free cancellation up to 7 days before arrival and the first night charged after that. For a guest who does not arrive (a no-show), most contracts charge the first night or the full stay. If the cancellation terms an agency gives its own customers are looser than the hotel's, the agency pays the difference.
Child and age policy
Child rates can vary by age band and by whether the child is the first, second, or subsequent child in the booking. A hotel might price the first child aged 0 to 6 free, children aged 7 to 12 at 50 percent off, and a second child at a different rate. If the age bands and the rate for each child are unclear, the same booking may be priced differently.
Payment terms
Payment can be a prepayment, a deposit, or on credit after arrival. The contract should state the currency, the payment method and the due date. If the contract is in euros and you sell in another currency, agree up front who carries the exchange rate difference.
When a contract changes mid-season
Contracts change during the season. The hotel updates the rates for a period, tightens its cancellation policy, adds or cuts allotment, or opens a new market. The change usually comes as an amendment with its own effective date.
Unless the contract says otherwise, bookings made before the change keep the old terms and bookings made after it get the new ones. Recording the contract version used for each booking helps identify which bookings a change affects and verify the applicable terms if a dispute arises.
A checklist before you sign
- Pricing model. Does the contract say whether rates are net or commissionable, and whether taxes are included?
- Currency and exchange rate. Which currency are rates and payments in, and who carries the exchange rate difference?
- Allotment and release. Are room counts and release periods written out for each period?
- Stop-sale and allotment. Is the allotment protected from stop-sales until the release date?
- Cancellation and no-show. Do the terms you give your own customers fit the hotel's terms?
- Child ages. Are the age bands, and the rate for each child, clear?
- Market restrictions. Are the rates valid only for bookings from certain countries?
- Special dates. Are public holidays, New Year and trade fair dates priced separately?
- Sheet and agreement. Do the rate sheet and the signed terms say the same thing?
Not legal advice. This guide gives a general picture. Confirm your contract terms and the rules that apply to your business with a legal advisor.
How Adrasis handles hotel contracts
In Adrasis Console, a contract is the commercial agreement behind a property, and it carries the elements this guide lists: the counterparty, the scope, the validity, a net or commissionable pricing model, the currency, the allotment and release period, cancellation and child policies, payment terms and markets. Rate plans sit on top of the contract, and a change to the contract flows through to every plan it backs.
Upload the rate sheet
You upload the supplier's rate file. The import wizard reads the periods, the rate grid, the allotment and the child pricing, runs three independent checks, and shows you every cell before anything goes live. If a price recomputed from the contract terms does not match the contract's own number, the import stops and the contract does not go live. The supplier's room names come with a suggested match in your catalog, and you make the final call.
Watch the allotment night by night
The contract page shows held against sold rooms for every night in the contract period, with the release date highlighted. When the allotment is not enough, on-request rooms that the supplier confirms can be sold alongside it on the same date.
Stop-sales and sales rules
Stop-sales, minimum and maximum stays, days closed to arrival or departure and advance purchase rules are set on date ranges. Before you apply a stop-sale, a preview shows the affected dates, channels and existing bookings. When several rules apply to the same booking, the strictest one wins, and the channel is told which rule blocked it.
Versions and markets
Every amendment is recorded as a new version with its own validity period. Bookings made under an earlier version keep its terms, and new bookings get the current one. Rates negotiated for specific markets are offered only to bookings from those markets. Contracts that are about to expire are surfaced for renewal.
Adrasis AI Operator answers contract queries and previews changes for your approval before applying them. For example, you can ask it to “show every contract where the July allotment is more than 70% sold on any night.” See Adrasis for tour operators and the contracts documentation.