There is a recurring financial pattern among tourism operators who have run into serious cash flow problems: they committed to prepayment schedules that assumed steady booking volume, and then volume did not arrive on schedule. A contract with a charter airline or a resort block-booking agreement might require 40 to 60 percent of the total contract value paid within 30 days of signing, with the remainder due 60 days before the season opens. That structure works if your sales pipeline is reliable. When bookings lag — because of a competitor promotion, a visa processing delay, or a regional conflict that shifts demand — you are sitting on a large prepaid liability with no corresponding revenue. Operators who failed to account for this in 2023 across several Eastern European markets reported that the prepayment terms, not the lack of bookings, were what actually caused insolvency.
Reading the refund and credit policy carefully
Many contracts offer a full refund that, on closer reading, is actually a credit note redeemable only in the next contract period. That is not a refund. It is a forced renewal. Operators who accepted these terms without flagging them found themselves locked into a second year with a supplier whose service quality had declined. Credit notes with expiry dates and restricted redemption windows are a common technique in hotel and airline agreements. If you see one, request either a cash refund provision or a significantly extended credit window — 18 months minimum.
Restructuring prepayment terms at the negotiation stage
Suppliers with strong demand rarely concede on prepayment. Suppliers with available inventory in slower markets often will. Bohdan Kryvenko, a tour operator based in Lviv who works with Aegean resort properties, restructured his 2024 agreements to a 25 percent initial payment with milestone-linked installments tied to actual booking confirmation. It required three rounds of negotiation and two contract redrafts, but the cash flow exposure dropped significantly.
Getting payment schedules aligned with your actual revenue timing is not a luxury — it is the difference between a contract that supports your business and one that creates permanent financial pressure.