How Do I Know if My Tourism Business Has a Profit Leak? | Sarah Colgate

A profit leak rarely announces itself. There is no alarm. The business just works harder and harder for a profit that does not move, and the owner assumes that is normal. Most of the time it is not normal. It is a leak nobody has gone looking for.

I have been in and run tourism businesses for over 20 years, and I have found leaks in nearly every one I have looked at closely, including my own. The money does not vanish. It drains out slowly through a handful of places that never show up when you only look at the total at the bottom of the page. Here is how to tell whether yours has one.

The signs an operator learns to watch for

You do not need an audit to suspect a leak. A few patterns give it away.

The business is busy but the profit does not match. Bookings are strong, the calendar is full, and the bank balance still does not reflect the work. That gap is the clearest sign.

You know your revenue but not your product-level profit. If you cannot say which of your products actually makes money at your average group size, one of them is probably leaking, subsidised by the others.

You have not worked out what each channel costs. If you do not know what a booking costs you through each channel, you cannot see the commission bleed, and it is usually bigger than it feels.

Your prices have not moved in a while. If costs have climbed and your prices have not, the gap is leaking straight out of your margin.

Where the leak usually is

In a tourism business, the money almost always drains from the same few places: a product running at a loss on smaller departures, a channel costing far more per booking than the owner realises, prices that have fallen behind costs, and an owner so busy running the business that there is no time to stop and find any of it.

None of these is dramatic. That is exactly why they go unnoticed. Each one leaks quietly, and together they can be the difference between a business that pays its owner properly and one that does not.

How I know this

When I ran Aquaduck, finding and fixing these leaks is how I improved net profit per passenger by 200% and shifted online sales from 4% to 47% of turnover. The revenue did not need to change for the profit to. The leaks were already there, in the product mix, the channels and the pricing. Finding them was the whole job.

The first step is finding the leak

You cannot fix a leak you cannot see. The first step is to look at the business in the places leaks hide: product by product, channel by channel, and your pricing against today’s costs.

The Tourism Business Health Check is built to point you straight at where the leak is most likely sitting in your business. It takes about ten minutes and it is free.