Re-quoting a Darjeeling–Gangtok Group After Costs Move
Himalayan Trails is a three-person travel agency in Siliguri. In August it quoted a Kolkata school a 5-night/6-day Darjeeling–Gangtok–Lachung package for 18 teachers travelling 14–19 October at ₹11,200 per person on twin sharing, covering a Tempo Traveller, permits, breakfast and dinner. Two weeks before departure the Gangtok handling agent reports vehicle rates up 22%, and the coordinator reveals that one traveller, a 61-year-old teacher, now uses a wheelchair. The school also wants Tsomgo Lake and Nathula added, which need protected-area permits applied for with photo ID, and one teacher's school record spells her name differently from her Aadhaar card. Only ₹20,000 advance has been taken; the balance is due on arrival. The coordinator warns that the school committee will cancel and re-tender if the price rises by more than ₹800 per head. The owner must decide what to re-quote, what to drop, and how to protect the agency if permits are refused.
1. Re-cost the package under the new vehicle rate and decide which additions can be absorbed within the ₹800-per-head ceiling. Show your arithmetic.
Read the worked answer
Step 1 - rebuild the cost sheet. Total contract value: ₹11,200 × 18 = ₹2,01,600. Of this, the vehicle is about ₹38,000, i.e. ₹2,111 per head. A 22% rise adds ₹8,360, or ₹464 per head. This is a hard supplier cost, not margin, so it must be passed on.
Step 2 - measure the headroom. The school tolerates ₹800 per head = ₹14,400. After the vehicle rise, ₹336 per head (₹6,048) is left.
Step 3 - price the additions. Tsomgo Lake needs a permit plus extra vehicle time, roughly ₹250 per head = ₹4,500, so it fits inside the ceiling. Nathula must not be bundled: it depends on army clearance and closes on certain days, so quote it as an optional ₹250-per-head add-on payable on the day, non-refundable if the road is closed.
Step 4 - judge feasibility, not just cost. Lachung with a wheelchair user is not workable: rough roads, altitude, no accessible toilets. Replace it with an extra Darjeeling night and confirm ground-floor rooms in Gangtok and a companion seat in the vehicle.
Step 5 - lock the paperwork. Permits need names matching photo ID, so get the corrected spelling in writing with a school letter before applying, and carry two photographs per traveller.
2. The coordinator wants a written reply the same day. State what you tell the school about Nathula, Lachung and the wheelchair traveller, and why that wording protects the agency.
Read the worked answer
The reply should separate confirmed, conditional and not possible, in writing, before money changes hands.
- Confirmed: the revised per-head cost with the ₹464 vehicle increase and the Tsomgo permit, both inside the ₹800 ceiling; ground-floor rooms; a named contact in Gangtok.
- Conditional: Nathula - "subject to army clearance and road opening; permit applied for on receipt of ID; if refused, the ₹250 per head is refunded and the day is spent at Baba Mandir and Tsomgo." This keeps the school's expectation honest and removes the agency's liability for a closure it does not control.
- Not possible: Lachung, with the reason (road, altitude, no accessible sanitation) and the substituted night. Saying this now is commercially safer than a complaint and refund demand on day three.
Also state the document rule: names must match photo ID exactly, photographs must reach the agency by a fixed date, and permit refusal caused by wrong details is not refundable. Close with cancellation terms and a request for 50% before vehicles and permits are booked, since only ₹20,000 is held against ₹2 lakh of exposure.
3. The bus company demands full payment one week before departure, but the school will only pay the balance on arrival. Suggest a workable financial arrangement and explain the risk being managed.
Read the worked answer
Agency exposure is roughly ₹1.5 lakh of committed supplier payments against ₹20,000 collected. The risk is not margin but cash timing: if the school cancels late, the agency still owes the vehicle owner and hotel.
Options, in order of preference:
- Split collection. Ask the school for 50% by a fixed date against a written, itemised invoice and a signed confirmation of the itinerary, with the balance on arrival. Most school committees can release an advance against an invoice even when they cannot release the full amount.
- Pay the vehicle owner in two instalments using the advance plus a small agency buffer, and get his written confirmation that the balance is due on the morning of departure. Offer a post-dated cheque if he insists.
- Buy protection cheaply. Take a cancellation clause in writing: cancellation within 7 days forfeits the advance and any non-recoverable supplier cost. This converts an open-ended loss into a known, capped one.
The principle: never commit supplier money the client has not funded. If the school refuses any advance beyond ₹20,000, reduce the agency's risk by booking only refundable hotel rooms and paying the transporter partially, even if that trims the margin.