A profitable year and a bank account that scares you in July | Sarah Colgate

Seven in 10 tourism operators in Australia and New Zealand had a profitable year. The number reporting losses dropped from 22% to 13%. On paper, the industry is in good shape.

And yet most operators I talk to still dread winter. The accountant says the year was fine. The bank account says something different. Both are telling the truth.

The problem is not profit. It is timing.

Profit is annual. 

It's the number your accountant shows you in a meeting, months after the fact. 

Cashflow is daily. It's whether you can pay the wages this Thursday when the bookings have gone quiet.

You can have a genuinely profitable year and still lie awake in July. Most operators do. A profitable year does not protect you from a quiet month. The two live on different calendars.

Why winter catches good operators out

The costs don't stop in winter. 

The wages, the insurance, the lease, the maintenance, they all keep running at close to full speed. The bookings are what slow down. So you have got a business built for the peak, paying peak costs, earning off-season income.

And there's a second, quieter reason. 

The biggest cost in your business is invisible. When you sell through agents, the commission is deducted before the funds land in your account. You never write a cheque for it. You never see it leave. So you never count it, and you certainly never set it aside for winter.

Let's say you're doing decent volume through the OTAs and agents. You are paying min 20%, but more likely 25% comms, and you have never turned that into a single dollar figure for the year. That money went out the door in your busy months, when you could least afford to notice it. By winter, it's long gone.

What it looks like when it's fixed

I know this because I have lived it. 

When we ran Aquaduck, most bookings came through third parties. We shifted a lot of them to direct, built our own channels and gave people a reason to book with us rather than through someone else.

Net profit per passenger went from $1 to $3. Three times what it was, on a high capacity, low cost experience. Same passengers. Same vehicle. We didn't carry more people. We stopped giving the cut away, and we kept more of every dollar that came in. I then designed the same strategy for Hot Air Balloon Gold Coast and Cairns.

An operator who's done that work walks into winter differently. The quiet season is a rest they planned for, not a panic they're absorbing. They saved in the good months because they could finally see what they were earning per guest.

The first step you can take today

Take your full year of OTA and agent bookings. 

Work out the commission as one dollar figure for the year. Not a percentage. The actual dollars. It takes about half an hour with your booking reports in front of you.

Then ask yourself one question. What would 10% of that figure, back in my pocket through direct bookings, do for my winter cashflow. That's not a fantasy number. That's a channel shift you can start this month.

Want to see your real numbers? Visit exceptionalexperiences.com.au for the Tourism Business Health Check. It works through your profit per passenger and shows you exactly what your booking channels are costing you.