The Tadoba Advance: A 12% Markup Against a 100% Non-Refundable Payment
Dnyaneshwar runs a three-person tour business in Nagpur. A school approaches him for 42 people - 38 students of Class 9 and 4 teachers - for two nights at a Tadoba lodge in the last week of December: two morning safaris, all meals, and two buses from Nagpur. The lodge quotes ₹4,500 per person per night and demands 100% payment 45 days before arrival; its contract makes the advance non-refundable inside 45 days. Safari permits are in the lodge's name, and the reserve is closed to tourists on Tuesdays. Bus hire is ₹38,000 for the whole trip. Dnyaneshwar works on a 12% markup plus 5% GST at the tour-operator rate. The school will sign only on its standard template: 50% on confirmation, balance 10 days before departure, and a full refund if cancelled more than 30 days before travel. Board approval is still pending. His bank balance is ₹1.2 lakh and the booking must be confirmed in five days.
1. Work out the money and decide whether to accept the booking as offered.
Read the worked answer
Cost: lodge 42 × 2 nights × ₹4,500 = ₹3,78,000; buses ₹38,000; total ₹4,16,000.
Selling price: ₹4,16,000 × 1.12 = ₹4,65,920; GST at 5% = ₹23,296; total to client ₹4,89,216, or about ₹11,648 per head. Gross margin ₹49,920 for a 42-pax, three-day, two-safari operation that carries medical, transport and forest-rule liability. That is thin but not unreasonable for a school account that tends to repeat.
Cash flow is the real test: the school pays 50% on signing = ₹2,44,608. Plus ₹1,20,000 of his own money = ₹3,64,608, against ₹4,16,000 payable to the lodge at T-45. Shortfall ₹51,392, before any bus advance, and the school's balance only arrives at T-10 - 35 days after the lodge's deadline.
Decision: accept conditionally. Conditions: (1) written board approval within 48 hours, (2) lodge agrees to 70% advance with the balance at arrival, or a 30-day credit line, (3) bus advance capped at ₹10,000. If the lodge will not move and the board does not confirm, decline - the margin does not cover a forced ₹4,16,000 exposure.
2. Identify the single biggest risk in this contract and propose the clauses that fix it.
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Biggest risk: the 15-day gap between the lodge's non-refundable date (T-45) and the school's free-cancellation date (T-30). If the school cancels on day 35, it gets a full refund under its own template while Dnyaneshwar has already paid ₹4,16,000 to a supplier who will not return it. That is a total loss on a ₹49,920 margin.
Clauses to insert in the school contract:
- Supplier pass-through: the client's refund is limited to amounts actually recoverable from suppliers, and the non-refundable supplier deadline is disclosed in the quotation.
- Earnest deposit: 25% non-refundable on signing, which also plugs the cash gap.
- Date change instead of cancellation: the lodge should give one free date shift within the same season - most lodges prefer this to losing the booking.
- Force majeure that both sides accept: park closure by the Forest Department, a district order, or a transport strike triggers a date shift or a credit note, not a cash refund.
- Trip-cancellation insurance quoted as a line item, with the premium payable by the school.
Send the lodge's contract as an annexure with the quotation. Principals accept disclosed risk far more readily than a clause they discover at cancellation.
3. What operational checks must be done before the file is confirmed, given the December dates and Tuesday closure?
Read the worked answer
Date and safari check: confirm which weekday each of the two safari mornings falls on. The reserve is closed to tourists on Tuesdays, so a 26–28 December style schedule must be mapped day by day; if a safari lands on Tuesday, shift the dates by a day before paying anything, not after.
Permits: permits sit in the lodge's name, so extract a written passenger manifest - full name, age, gender, ID type and number - 30 days out. Forest entry needs photo ID per person and vehicle; a mismatch at the gate means a lost safari. Confirm the number of jeeps and whether the lodge's gypsy count covers 42 people across two shifts.
Buses and behaviour: two buses need parking clearance and entry coordination with the lodge; brief the four teachers on forest rules - no plastic, no loud music, no getting down from the vehicle, silence at sightings.
Welfare: December mornings in Tadoba are cold (6–10°C), so tell parents about warm clothing; carry a first-aid kit, ORS, and the lodge's medical contact; one teacher per bus with a headcount protocol at every stop.
Supplier terms: get the lodge's force-majeure clause in writing, specifically for park closures ordered by the Forest Department.