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Vacation payment terms: why should I ask about this?

Susan Wolfson

Payment terms: I can hardly think of anything more boring to most people.  Vacation planning should be to be fun!  Yet payment terms are really important for you to understand.  So in this post, we'll explore this topic a bit.

Payment terms Payment terms

It's a contract

Like it or not, when you book a vacation, you are making a contract.  The buyer agrees to certain terms like when and how much to pay.  The supplier, as seller, also agrees to certain terms like what they will and will not provide in exchange for your payment.  So the first reason you want to ask about payment terms is because you are signing a contract and you need to know what you're signing up for.

Payment terms - what are they really?

So what are payment terms?  Simply they are a schedule of when you need to pay for your vacation.  This is also associated with cancellation terms - how much money will you get back if you need to cancel your vacation.  For example,  you may be required to put a deposit down at time of booking.  Final payment might not be due until 3 months prior to departure.  Cancellation terms may dictate that you lose half your deposit if you cancel 4 months prior to departure and 50% of your final payment if you cancel 1 month prior to departure.  Payment terms are a measure of risk.  They let you know your cost exposure at a given number of days before departure.


Everyone is interested in knowing how much their vacation costs.  People like to compare costs when comparing options - and we encourage our clients to compare costs before making a decision.  But.... cost is only one component in the comparison.  You should also be comparing payment terms.  Some suppliers ask for more money up front than others.  Other suppliers have steeper cancellation penalties.

Why is this important?  The more money you need to pay upfront means you have less to spend on other things or less that could be in the bank earning interest.  Also, the longer your exposure, the sooner you need insurance. (See my posts on insurance here and  here ).   This means your insurance costs will go up or if you opt not to get insurance, it means your risk goes up.  So the next reason to care about payment terms is that you need to include it in your comparisons.

Things to look out for

So when comparing suppliers' payment terms, what should you look for?  Here's some common features that are typically hidden in the fine print:

  • How much and when is the initial deposit
  • How much of the initial deposit is non-refundable
  • When is the final payment due relative to departure date
  • What happens if you are late with payments
  • How can payment be made and are any fees involved
  • what is the cancellation schedule - how much will be refunded if you cancel by a certain date
  • Is there a cost to make changes once payment is made?
  • Are transfers included in the price or not (in many cases if air is purchased from a river cruise or tour supplier transfers will be included)
  • Are tips or gratuities included in the pricing
  • Can you pay in different currencies (some US suppliers allow payment in Canadian dollars for example)


Below is a comparison of 10 different suppliers:  river cruises, ocean cruises and land tours. Each line represents one supplier.  None include airfare.  The chart shows how much money you might lose on an $8000 vacation if you cancel at various dates before departure.  For example, the supplier represented by brown dotted line shows that if you cancel 60 days before departure, you would lose about $7000.  Contrast that to the supplier represented by the blue dashed line where you would lose about $2500 if you cancelled 60 days before departure.  So choosing one supplier over another could cost you $4500!

Payment terms vary by suppler How much money you lose by canceling depends on the supplier

Do you see why it pays to compare payment terms?  These are all real suppliers and actual payment terms.  I've not referenced which supplier offers which payment term since there's lots of fine print in each contract and the terms are slightly different.

Payment terms are important to consider.  Every supplier is different and you could be exposed for a lot more money choosing one supplier compared to another.  A great travel agent can help you compare and make sure you are not taking undo risk.  I'm not saying that your vacation should be based on minimizing your risk, but surely it's something to consider.  Boring or not, choosing a supplier with favorable payment terms can be a tremendously advantageous to you.

Many of my clients think they will never cancel and therefore cancellation terms don't apply to them.  All I can say is that I've booked thousands of clients and you'd be surprised at the number of people that cancel vacations.  The unexpected always seems to happen.


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