The idea is that if the tour operator subsequently does not pay them in a timely manner for individual F.I.T. reservations and/or group bookings, they can go to their bank and legitimately make a claim to “withdraw” the funds that are owed to them by the tour operator. 

This approach has a major hidden risk.  The hotel is delivering its services before payment is rendered.  While the “Irrevocable Letter Of Credit” is a “step better” than a simple business relationship of extending credit to the tour operator on a “net 30" basis, it is still not a guarantee that the hotel will be paid. 

A tour operator could run up thousands of dollars in charges, and; the hotel has no idea how much funds that the tour operator has deposited in the bank, which may be six month’s from the time the hotel has entered into the agreement with the tour operator.  So, if the hotel makes a claim, and there are not funds in the tour operators account...or, worse, the tour operator has “closed” the account, the hotel is out of luck. 

Here, again, the CrossCheck program of “Pre-Authorizing” payment to the hotel before the services are delivered (in this case hotel rooms and/or other hotel services) provides the hotel with a guaranteed form of payment. 

Once the hotel has implemented the CrossCheck program, it is also used as a sales tool.  When a hotel approaches any tour operator, the hotel will not have to offend that tour operator by asking them for an “Irrevocable Letter Of Credit”.  Since not all hotels that take tour operators require such a bank instrument, and since such bank instruments may have a fee of as much as $100 attached to them, it may influence the tour operator to do business with another hotel that does not require an “Irrevocable Letter Of Credit.” 

Finally, when a hotel can integrate the CrossCheck program of “Pre-Authorization”, it can sign up a tour operator on an “impulse” basis (the same day, if need be) to capture short-term business without risk.  This approach will increase sales for the hotel. 

The only requirement for this solution is that the tour operator must have an office and address in the United States or Canada.