Tour and Activity Industry Terms Every Operator Should Know

This industry has a lot of vocabulary, much of it borrowed from hotels and airlines, and most of it never explained to anybody arriving from outside. What follows is a working glossary — plain definitions, grouped by the part of the business where you meet each term, with links to fuller guides where they exist.

Alphabetical within each group. If you are hunting for something specific, the groups below are probably faster than scrolling.

Distribution and channels

• Allotment — a fixed number of places set aside for one channel. The older way of distributing capacity, and the reason operators used to run departures with empty seats while a platform showed sold out. More on capacity across channels.
• Channel — anywhere your tours can be booked: a marketplace, your own website, a hotel desk, your own team taking a call.
• Channel manager — software keeping one pool of availability synchronised across every channel, so a seat sold anywhere closes everywhere. Full definition.
• Commission — the share of the booking price a platform or partner keeps. For tours and activities it commonly sits in the twenties as a percentage. What operators actually pay.
• Connectivity — the technical link between your system and a platform, carrying availability out and bookings back. Quality varies even where two products both claim support. Connecting platforms.
• Freesale — letting a channel sell from the shared pool rather than from a fixed allocation. The alternative to allotments.
• Net rate — a price below your public rate given to a business that adds its own markup. Unlike commission, you no longer control what the traveller pays. Commercial models compared.
• OTA — online travel agency; a marketplace selling your tours to travellers for a commission. OTAs explained.
• Rate parity — an expectation, in many platform agreements, that you will not undercut their price on your own site. Worth checking your actual terms. Pricing around it.
• Reseller — a business selling your product to travellers on your behalf, whether an agency, a hotel or another operator.

Booking and availability

• Abandoned booking — somebody who started booking and did not finish. The number that tells you whether your checkout is working. Recovering them.
• Booking engine — the software that takes a reservation and payment without anybody on your side acting. Full definition.
• Booking widget — the booking interface embedded in your own website. The engine is what powers it. Widget or hosted page?
• Cut-off time — when you stop accepting bookings before a departure, so numbers can be finalised and a guide briefed. Too early costs late bookings; too late leaves no time to prepare.
• Departure — one instance of a tour on a specific date and time. Your unit of capacity, as distinct from the product itself.
• Instant confirmation — the booking is confirmed to the traveller immediately. Platforms favour it heavily and it converts considerably better than the alternative.
• Lead time — how far ahead of travel a booking is made. Varies enormously by product and season, and knowing yours tells you when marketing can still change an outcome. Building a booking curve.
• Overbooking — selling more places than exist. The failure channel management prevents. How to stop it.
• Request to book — a provisional reservation pending your approval. Sometimes unavoidable, and it converts worse than instant confirmation.

Operations

• Check-in — marking guests present at the meeting point, and separately confirming the tour ran. The second half is skipped most often and carries most of the value. Manifests and check-in.
• Dispatch — allocating jobs to drivers or guides in real time and reacting as the day changes. Distinct from booking software, and mainly a transfer-operator concern. Where booking ends and dispatch begins.
• Empty leg — a vehicle journey with no paying passengers, typically repositioning to or from a pickup. A real cost with no tour equivalent, and frequently unpriced. Pricing vehicle time.
• Guide ratio — the maximum guests per guide you commit to. It caps your real capacity regardless of how many seats a vehicle has. Capacity as a stack of constraints.
• Manifest — the list a guide carries: who is coming, what they booked, how to reach them. What belongs on one.
• Minimum numbers — the guest count below which a departure does not run. Decide it and the decision deadline when you build the product.
• No-show — a guest who does not appear and did not tell you. Worth separating from a cancellation, and a large share are actually people who could not find you. Reducing them.
• Pax — industry shorthand for passengers or guests. You will see it on manifests and in supplier correspondence.
• Turnaround time — the gap a vehicle, guide or piece of equipment needs between departures. Scheduling without it works until the first tour runs late. Scheduling properly.

Money and payments

• Balance — the remainder due after a deposit, usually collected before departure. Deposits and balances.
• Chargeback — a card payment reversed at the cardholder's request. Your defence is a record that the guest travelled. Handling disputes.
• Deposit — a partial payment taken at booking to secure a place. The commitment matters more than the amount.
• Hard decline — a permanently refused payment: closed account, card reported lost. Retrying achieves nothing and counts against you. Soft vs hard declines.
• Merchant of record — whoever is legally the seller for a transaction. It determines who holds the money, who fights a chargeback and how fast you are paid. Who holds your money.
• Payment gateway — the service that processes the card. Whether you can use your own affects your rates and your payout speed. The real cost of processing.
• Payout cycle — how often and how long after delivery a platform remits your money. Usually after the tour has run, not when it was booked. Reconciling payouts.
• Soft decline — a temporarily refused payment: insufficient funds at that moment, a bank system unavailable. Retrying frequently succeeds.

Pricing and demand

• Booking curve — the pattern of how far ahead your bookings arrive, month by month. The most useful thing you can build from your own data. How to build one.
• FIT — free independent traveller; somebody travelling on their own arrangements rather than in an organised group. FIT bookings arrive individually and late, where group business is negotiated in advance and committed further ahead.
• Load factor — the guests you average per departure against capacity. Pricing off capacity rather than average load understates your real cost per guest substantially. Calculating your cost floor.
• Private tour — exclusive use of a departure by one party, whatever its size. Priced for the booking rather than per head. Group and private pricing.
• Shoulder season — the periods either side of peak. Best filled by building products for who is actually there rather than by discounting the summer tour.
• Supplement — an addition to the base price for a night departure, a holiday date, extra waiting time or a single traveller.

Business types

• DMC — destination management company; the local specialist an overseas business buys through when it has no staff in the destination. Sells B2B at net rates. The three roles compared.
• Inbound operator — looks after visitors coming into a country. In many markets the label is interchangeable with DMC.
• Outbound operator — based where its customers live, sending them abroad. The mirror image of an inbound operator.
• Tour operator — designs and runs its own product, and pays for the guide and vehicle whether or not anybody books. What operators need from software.
• Travel agency — arranges and books other people's products for travellers, earning commission or a markup rather than delivering anything itself. What agencies need from software.
• Wholesaler — supplies the trade rather than the public, selling on to agencies and operators who then retail it.

Two distinctions worth getting right

Most of the terms above are just vocabulary. Two of them are frequently conflated in ways that cost money.

Capacity and load factor. Your capacity is how many people fit; your load factor is how many you actually carry. Cost calculations, pricing and channel decisions all depend on the second, and operators reliably use the first.

Commission and net rate. Under commission you keep control of the price a traveller pays; under a net rate you do not, and may never learn what it was. Agreeing one when you meant the other is among the more common commercial mistakes in this industry.

Where Travelity fits

A fair amount of the vocabulary above exists because these things are hard to keep straight by hand — availability across channels, a manifest that is current, payouts reconciled against what you expected. Travelity keeps bookings from every channel in one place with shared live availability, which is what turns most of these from daily problems into settings.

Frequently asked questions

What does FIT mean in travel?

FIT stands for free independent traveller — someone travelling on their own arrangements rather than as part of an organised group. The contrast is with group travel, and the distinction matters commercially because FIT bookings arrive individually and late while group business is negotiated in advance and committed further ahead.

What is an allotment in tour bookings?

An allotment is a fixed number of places set aside for one sales channel. It is the older approach to distribution — dividing twelve seats into three allocations of four — and its weakness is that each channel can only sell what it was given, so you can run a departure with empty seats while a platform showed sold out.

What is a cut-off time?

The point before a departure at which you stop accepting bookings. It exists so you have time to finalise numbers, brief a guide and print or generate a manifest, and setting it too early costs you late bookings while setting it too late leaves no room to prepare.

What does net rate mean?

A price below your public rate, offered to a business that will add its own markup and sell at whatever retail price it chooses. It differs from commission because you no longer control what the traveller pays, and frequently you never learn what that was.

What is the difference between a no-show and a cancellation?

A cancellation is a guest telling you in advance that they are not coming, which gives you a chance to resell the place. A no-show is a guest who simply does not appear. They are worth measuring separately, because they have completely different causes and different fixes.

Related guides

• What is a channel manager for tours and activities?
• OTAs explained: Viator, GetYourGuide, Expedia and how they work
• What is a booking engine, and do tour operators need one?
• Tour operator vs travel agency vs DMC: what's the difference?
• Managing tour operations: guides, schedules and capacity
• What is dynamic pricing for tours (and should you use it)?
• Net rates vs commissions explained for tour operators
• Booking cut-off times and allotments explained