From a traveller’s perspective, a New Zealand holiday can look like a single, seamless experience. Behind the scenes, however, there may be a long chain of businesses involved in making it happen.

An overseas traveller or travel agent may book through an inbound tour operator (ITO), which in turn works with accommodation providers, transport operators, activity providers, attractions and other New Zealand suppliers.

Each business plays a different role – and carries different risks.

For ITOs in particular, contracts sit at the centre of those relationships. They are often the link between the overseas market and New Zealand suppliers, packaging the various components of an itinerary, negotiating rates and terms, and taking on commercial and operational risk in delivering the overall experience.

With multiple parties involved, it is worth understanding not only what your contracts say, but whether the risks they allocate make sense for your business.

Know what you are agreeing to

Standard terms can contain indemnities, liability provisions, cancellation obligations and other risk allocations that may have significant consequences when something goes wrong.

The question is not necessarily whether a term is favourable or unfavourable, but whether you understand the risk you are accepting and are comfortable taking it on.

Consider where the risk should sit

An ITO, overseas wholesaler and New Zealand supplier may each have different expectations about who should bear a particular risk. Overseas legislation, contracting practices and the relative bargaining position of the parties can also influence those expectations.

A contract that works well for one part of the tourism supply chain may not be appropriate for another.

Check that your insurance matches your contracts

There can be a disconnect between the liability a business agrees to contractually and the cover available under its insurance policies.

Before agreeing to a broad indemnity, liability cap or other significant obligation, consider whether your insurance will respond if that liability arises. Finding out after an incident is not the ideal time to discover a gap.

Be clear about whose terms apply

Where multiple parties are exchanging booking confirmations, rate agreements and standard terms, it can become surprisingly difficult to establish which terms govern the relationship.

This is the classic “battle of the forms”: both sides believe they are contracting on their own standard terms, but it may not be clear which set has actually been incorporated into the agreement.

Having a clear contracting process can help avoid that uncertainty.

Use AI as a tool, not a substitute for judgement

AI can be useful for reviewing contracts, highlighting provisions and helping businesses identify areas that warrant closer attention.

But identifying a clause is not the same as understanding its commercial significance. The important questions remain: what does this mean for our business, is this a risk we should accept, and what happens if things do not go to plan?

Contracts are part of the customer experience

Tourism depends on interconnected businesses working together to deliver an experience that, to the traveller, feels effortless.

The contractual relationships behind that experience deserve the same attention as the operational ones.

Good contract management does not mean negotiating every clause or trying to shift every possible risk to somebody else. It means knowing what you are agreeing to, making deliberate decisions about the risks your business takes on, and ensuring you are equipped to manage them.

If you would like to discuss your contracting arrangements, or how risk is allocated across your tourism business, get in touch with Jordan Wright.