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If you enter no values for independent cancellation terms, but set up the shift of deadlines and increase of the initial supplier penalty charge, then the supplier penalty charges are applied in accordance to your settings.

Thus, if you set the shift of the cancellation deadline for 3 days and set the increase of the penalty charge to 10 per cent, then the penalty period will be extended to 10 days:

• cancellation period = 7 days according to supplier’s terms + 3 days according to your terms.

The penalty period starts on May 22, that is 3 days before the supplier's cancellation terms start. At the same time the amount of penalty charge additionally increases by 10 per cent of the initial supplier penalty charge including the markup of the tour operator. In this case if a reservation is canceled within the period from May 22 to May 31, the travel agency pays the penalty charge of 132 EUR.

• 120 EUR (50% of the initial supplier's penalty charge including the tour operator's markup) + 10% (penalty increase) = 132 EUR Penalty charge

You pay 100 EUR to the supplier. The remaining amount of 32 EUR is your company profit. Similarly you can configure supplier's penalty terms by changing only the deadline shifts or the penalty charge increase.

You can set up custom cancellation conditions and change the cancellation conditions of the supplier at the same time. In this case stricter penalty conditions are used to determine the amount of charge and the deadline.

Example A.

Suppose you set up a rule, according to which a penalty of 100% of the total service price is applied if the the service is canceled five days before it is rendered. Additionally you shift the supplier’s penalty deadline by 3 days and increase the penalty charge by 25%.

In this case the shifted penalty deadline attaches from May 22 and if the service is canceled during the period from May 22 to May 26, the travel agency pays you150 EUR of penalty charge (0,5*240+25%). Your custom penalty charges take effect starting from May 27 and since it is stricter than that of the supplier, if the service is canceled within the period from from May 27 to May 31, the travel agency pays you 240 EUR.

Example B.

Suppose you set up a condition, according to which the cancellation that occurs five days before the service is rendered results in 100% penalty fee of the first night. Additionally you shift the supplier’s penalty deadline by 3 days and increase the penalty charge by 25%.

In this case the shifted supplier's penalty charges take effect from May 22 and if the service is canceled within the period from May 22 to May 26, the travel agency pays 150 EUR (0,5*240 +25%) to you.
You custom cancellation terms take effect starting from May 27 (that include the penalty charge of 60 EUR payable by the travel agency), but since your conditions are less strict than those of the supplier (150 EUR), if the service is canceled within the period from May 27 to May 31, the conditions of the supplier are still active and the travel agency pays 150 EUR to you.