Allotment vs guarantee: what a Greek hotel should know before signing
An allotment gives a tour operator a set number of rooms, but it pays only for the rooms it sells. Unsold rooms return to the hotel at the release date. A guarantee means the tour operator pays for the rooms whether it sells them or not, usually at a lower rate. Allotment protects your rate. Guarantee protects you from empty rooms.
By Florian Schaufler, Founder, 360° Consulting
What is an allotment contract?
An allotment is a block of rooms the tour operator can sell at contracted net rates. The hotel keeps the risk.
- The partner sells the rooms in its source markets.
- Unsold rooms return to the hotel at the release date.
- If they return late, they may stay empty.
What is a guarantee contract?
A guarantee is a commitment by the tour operator to pay for an agreed number of rooms, sold or not.
- The risk of empty rooms moves to the partner.
- The partner usually asks for a lower rate in return.
- Some guarantees include prepayments before the season.
- The hotel normally cannot stop sales on guaranteed rooms.
What is the difference between allotment and guarantee?
| Allotment | Guarantee | |
|---|---|---|
| Risk of empty rooms | Hotel | Tour operator |
| Rate | Higher | Lower |
| Stop sales | Possible | Usually not possible |
| Payment | After the stay | Sometimes prepayment |
| Release period | Yes | Normally not needed |
Which is better for a Greek hotel?
Neither is better in every case. The right choice depends on the month.
- Shoulder months: a guarantee protects you from rooms you struggle to fill.
- Peak months: an allotment keeps your rate, because you can resell returned rooms.
- Many contracts combine both: a guaranteed base plus an allotment on top.
What should you check before signing?
- Rooms per period and per room type
- Release period for each season
- Net rates, board supplements, child and extra bed reductions
- Stop sale terms
- Payment terms and prepayment schedule
- EBD and SPO rules, and whether they combine
- Minimum stay
- Exclusivity or rate parity clauses
Frequently asked questions
- Can one contract include both allotment and guarantee?
- Yes. A guaranteed number of rooms plus an extra allotment is a common structure.
- Can I stop sales on guaranteed rooms?
- Normally no. The partner has paid for them.
- What happens to unsold allotment rooms?
- They return to the hotel at the release date and can be sold on other channels.
- Is a guarantee always safer for the hotel?
- It is safer, but not always better. In strong months, a low guaranteed rate costs revenue.