Why Is My Tour Business Busy But Not Profitable? | Sarah Colgate
Why is my tour business busy but not profitable?
If you are booked out and still not making the money the business should be making, you are not doing anything wrong. You are missing one number.
I have been in and run tourism businesses for over 20 years. I have been the operator, not the consultant who studied it from the outside. I carried the risk, made the payroll, and paid the OTA commissions, same as you. And this is the most common thing I see in a busy tourism business that is not as profitable as the owner expects.
You know your revenue. You can probably tell me last year’s turnover to the dollar. What you likely cannot tell me is which of your products actually makes money once everything is taken out. The commission. The guides. The fuel. The fixed cost of running a tour whether six people show up or sixteen.
That is the number that decides whether being busy is worth anything.
Busy is not the same as profitable
Let’s say you run three tours. One of them is your most popular. It is the one you push hardest, the one most of your online bookings come through. It feels like the engine of the business.
Now take that tour and work out what it earns you on an average departure, at your average group size, through the channel most of those bookings actually come from. Take out the OTA commission. Take out the guide. Take out the fixed costs that do not change whether the boat or the bus is full or half empty.
In a lot of businesses, that most popular tour is the one quietly making the least. Sometimes it is losing money on every departure that runs below a certain group size, and the other products are covering for it. The owner has no idea, because all they see is the total at the end of the month, and the total looks fine.
Busy hides this. A full calendar feels like success, so nobody goes looking. Meanwhile the business works harder and harder for a profit that does not move.
Where the money usually goes
When I look at a busy tourism business that is not profitable, the leak is almost always in one of these places.
Product-level profit. You are subsidising one product out of the others without knowing which one.
Channel cost. You know you pay the OTAs, but you have never worked out what a booking actually costs you through each channel, so you cannot tell which ones to push and which to pull back from.
Pricing. Your prices were set a while ago. Input costs have moved a lot since. If your prices have not moved with them, you are absorbing the difference out of your own margin.
None of these show up when you only look at total revenue. All of them show up the moment you look at the business product by product, channel by channel.
How I know this
When I ran Aquaduck, I shifted online sales from 4% to 47% of turnover and improved net profit per passenger by 200%. That did not come from being busier. We were already busy. It came from understanding the numbers underneath the busy: what each channel cost, what each product earned, and where the money was leaking before it ever reached the bottom line.
The hard part is not fixing it. The hard part is seeing it, because a busy business gives you no time to stop and look, and no obvious sign that anything is wrong.
The first step is finding your number
If you want to know where your profit is actually going, start by finding the one number most operators never calculate: what each of your products earns at your average group size, through the channel it actually sells on.
The Tourism Business Health Check is built to point you at exactly that. It takes about ten minutes, it is free, and it shows you where the gap between busy and profitable is sitting in your business.
