Revenue is a glamour number | Sarah Colgate
In July 2018 we finally took over Aquaduck Gold Coast. The conversation had started at the end of 2016 and went on and off right through 2017, so by the time we had the keys I had been thinking about that business for the best part of two years.
Ten months in, revenue was up 36.1%.
That is the number everyone wants to hear. It is the one you give someone at a Chamber breakfast when they ask how the business is going. And I have to be honest, it is the least interesting number in the whole story.
The one that mattered was this. Over the same ten months, net profit per passenger went up 200%.
Same duck. Same route. Same city. Every person who walked up that ramp was worth three times more to the business than they had been the year before.
That is the difference between being busy and being profitable, and most tourism operators I talk to have never looked at it.
Why your passenger count is lying to you
Here is what happens. You get to the end of a big summer. You are shattered, your staff are shattered, and you pull up the numbers.
Passengers, up. Revenue, up. You feel like you have done something.
Then you look at the bank account and there is nothing in it. You did not take a proper wage. You are already worrying about how you get through May and June.
So what happened?
Nothing mysterious. Every one of those extra passengers came with a cost attached, and somewhere in the chain that cost was bigger than you thought. Maybe they came through a channel paying 30% commission instead of the 15% you had in your head. Maybe they came on the product with the worst margin in your business. Maybe your price never moved while your wages, fuel and insurance all did.
Volume magnifies whatever is already true about your unit economics. If you are making money on each sale, more sales is wonderful. If you are barely making money on each sale, more sales just means you are exhausted as well as broke.
The four numbers that actually run your business
I do not need you to become an accountant. I need you to know four things.
1. What you make on one sale
Not revenue per passenger. Profit per passenger, after the commission, the wages, the fuel, the consumables and the direct costs of putting that person through your experience.
This is the number that changes everything, because there are two ways to grow it and only one of them involves more people. At Aquaduck we sold more merchandise, and over three years that went from $63,000 a year to $308,000 a year. Same passengers, walking on and off the same vehicle. We just got better at what happened while they were with us.
Let's say you carry 12,000 people this summer. Every extra dollar of profit per person is $12,000 straight to the bottom line. You do not need a marketing campaign for that. You need to know the number and then go looking for it.
2. What each channel actually costs you
I ask operators what they pay in commission and they tell me about 15%.
I am pretty sure if you signed up to one of the big platforms this year, you are on closer to 30%. Then there is your reservation system fee. Then there is the payment processing. Then there is the agent sitting in front of that.
I am not anti-OTA. I ran businesses that lived on that distribution and I would do it again. The OTAs are a channel, and a good one, and when your direct booking side is doing its share, both of them win. But you cannot price properly for a channel you have not costed properly. Sit down and work out what a booking really costs you through each door, then look at your market mix and see how much of your business comes through the most expensive one.
3. Which products make you money and which ones do not
Not all your products are profitable. That is not a criticism, it is just true, and almost nobody has checked.
We are trained as an industry to keep building. New product workshops, destination marketing, the platforms pushing fresh listings to the top. So you add another tour, and you tell yourself it costs nothing because you are using the same bus, the same guides and the same everything.
It does cost something. It costs your attention, your marketing and the momentum you had built on the tour that was working. And if the new one is not profitable on its own, you have quietly funded it out of the one that was.
Run each product separately. Find out which one carries the business.
4. What the business pays you
You are not a volunteer.
If the business does not pay you a wage and still make a profit on top of that, it is not a business yet. It is a job with benefits. I say that with love, because I have been there, working every day of a peak season and calling it commitment.
When I ran three businesses across three regions with staff spread everywhere, I was in it every minute of every day. My dad told me not to make the same mistakes he and my mum did, and to choose my family over the business. He was right, and in December 2022 I sold the lot.
I am not telling you to sell. I am telling you the number that decides whether you have built something or just bought yourself a very demanding job is the one you pay yourself.
What I suggest you do this week
Stop and look at what you are doing. Pull up your last full season and work out those four numbers. Not roughly. Properly.
Then ask yourself the question I ask every operator I work with. What do you want this business to look like and feel like for you? Because the numbers do not exist for their own sake. They exist so you can make a decision with your eyes open.
You cannot change a business overnight. Nobody can. But you can change enough in the next six weeks to walk into February feeling completely different about where you are.
Revenue and passenger counts tell you how busy you were, not how you did
Profit per passenger is the number to chase, and you can lift it without adding a single booking
Cost every channel honestly, then look at your market mix
Check every product on its own, because one of them is probably carrying the others
Pay yourself, and count that before you call it profit
The numbers tell the story. Go and read yours.
If you look at all that and think you are not sure where to start, book a Growth Gap Call with me. No pitch, just a proper conversation about where you are stuck and whether I am the right fit.
https://www.exceptionalexperiences.com.au/growth-gap-call
Let's build a business that you love and that loves you.
