What Allotment means
Allotments trade certainty for commitment. The hotel secures distribution and some protection against empty rooms; the buyer secures inventory it can confirm instantly, often at a discount, for its packages or trade customers. Contracts can cover a full season, part of one or specific dates.
The key term is the release period, also called a cut-off. It is the number of days before arrival at which unsold rooms in the block go back to the hotel's general inventory. A contract may set one release period or a staircase, for example 30, 21, 14 and 7 days, so the block shrinks as arrival approaches. Some contracts are guaranteed: the buyer pays for the rooms whether it sells them or not.
Allotment differs from free sale, where the buyer has no fixed block and can sell rooms from the hotel's general availability until the hotel sends a stop sale. It also differs from on request, where every booking must be confirmed by the hotel before the customer is told it is secured.
Allotments are common with bedbanks, DMCs and tour operators building packages, and for event and pilgrimage travel, where demand peaks on fixed dates. They are loaded as part of the hotel's inventory through an extranet or channel manager.
How Allotment works
An allotment runs from contract to release, with the buyer selling down the block in between.
- Contract the blockThe hotel and buyer agree room types, dates, number of rooms per night, net rates, release periods and any payment guarantee or deposit.
- Load the allotmentThe rooms are loaded into the buyer's reservation system and held in the hotel's PMS or channel manager as reserved for that buyer.
- Sell and confirm instantlyWhile rooms remain in the block, the buyer confirms bookings straight away and sends names to the hotel, often as a rooming list.
- Release unsold roomsAt each release date, unsold rooms return to the hotel. Bookings after that point are on request or from free sale.
- Settle and reviewThe buyer pays for rooms used, or for the full block if guaranteed. Pick-up figures inform next season's allocation.
Allotment in practice
Illustrative case: a tour operator contracts 20 standard rooms a night at a Red Sea resort for the winter season with a 14-day release. Ten days before a Saturday arrival it has sold 16 rooms. The 4 unsold rooms went back to the hotel at day 14, so a late booking now has to be requested from the hotel or bought through another supplier.
Illustrative case: an Umrah operator agrees a guaranteed block near the Haram in Makkah for Ramadan. Because the block is guaranteed, the operator pays for every room whether it fills them or not, in exchange for secure inventory on dates when the city sells out.
Software example: the Netstorming hotel contract guide defines release as the hours or days before check-in within which unsold rooms can be released, set per date range in the contract.
Who uses it
Advantages and limitations
Advantages
- Buyers can confirm bookings instantly instead of waiting for the hotel to accept each request.
- Hotels receive committed volume and, with guaranteed allotments, revenue even for unsold rooms.
- Release periods give hotels a predictable point to resell rooms the buyer has not used.
- Contracted net rates let buyers build packages with stable margins over a season.
Limitations
- Guaranteed allotments transfer the risk of unsold rooms to the buyer, which can cause large losses in a downturn.
- Rooms held for one buyer are unavailable to others until released, which can limit a hotel's revenue on strong dates.
- Missing a release date by mistake can leave a buyer paying for rooms it meant to return.
- Allotment rates leaking onto public channels can break the hotel's pricing and parity strategy.
Frequently asked questions about Allotment
What is a release period in a hotel contract?
It is the number of days, or sometimes hours, before arrival at which unsold rooms in an allotment go back to the hotel. A 7-day release on a 10-room block means any rooms not booked a week before arrival return to general sale. Contracts can set different release periods for different dates.
What is the difference between allotment and free sale?
With an allotment, the buyer has a fixed number of rooms reserved for it until the release date. With free sale, it has no block and can sell from the hotel's general availability, confirming instantly, until the hotel issues a stop sale. Free sale carries no commitment but can close without warning.
Is a hotel allotment guaranteed?
Not always. In a guaranteed allotment the buyer pays for the rooms whether or not it sells them. In a non-guaranteed allotment it can return unsold rooms at the release period without penalty. The contract sets which applies, sometimes with a mix of both for different dates.
What is a stop sale?
A stop sale is a notice from the hotel that closes new bookings for certain dates or room types on a channel. It is commonly used when the hotel is full. Under free sale a stop sale can take effect at once, while rooms already held in an allotment are protected by the contract terms.
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