The Full-House Paradox: Why Occupancy is Often a Vanity Metric

Being ‘fully booked’ is seen as the ultimate finish line in tourism, but Samantha Smits argues that occupancy can often be a vanity metric that masks operational chaos. In this episode, we explore how high capacity acts as a stress test for your systems, why inefficiency during peak weeks is a hidden financial drain, and how to transition from a volume-based business to one focused on durable, high-yield quality.

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Transcript

SPEAKER_00 0:00

So I would argue here that at time sure occupancy rate can be a valente metric, but it can also be very powerful when you link it to sustainability. So when you tie it together like that, the metric becomes much more specific. Hi, I'm Clementus Smith and welcome back to the Sustainability Edge, the tourism podcast. No Yargon, no fluff. We're breaking down sustainability and especially how to turn sustainability in a practical tool that gives you more profit, more time, stuff that's staying, and a business you can be proud of. Let's get started. Hello, hello, and welcome back to the podcast. And in tourism, we're often talking about yay, I'm fully booked, I'm fully covered, which is a metric, which is something great in general to reach. Because it shows, of course, your lodge or your operator or your services, they are in demand. And it's seen as the ultimate successful finish line for a successful season. But today I also want to talk about the danger of fully focusing on just being fully booked. Because when your tourism business, or I guess any business as general, is 100% at capacity, it does become an ultimate test. I think I've already hinted before that the most interesting data from your business and findings and learning lessons come from your high seasons, not in the low ones, even though we often use the low ones for this reflection. So all the when you don't have the time to overthink things, when you have to go on pilot mode, automatic mode, and be straight, then every small crack will actually show up and become huge. So if your systems are not in order, or if there's anything it's considered yet, or if you're not efficient yet or taking sustainability seriously, the full house will, I mean it will technically bring profit, of course, but be you will probably also have major costs. So actually you will have turnover, but not so much profit. So so much will come to light, and it's such an interesting period to actually look at and see how much profit do you actually get in the high season cost wise compared to when you're half full. That's what we'll be diving into. And this applies to any size really. I mean, if we first discuss accommodations, and of course, when you are a small accommodation, it means the world to you to be booked out because then you actually reach the point where you get the turnover that you desire, but then you're also more heavily affected by cost changes and the turnover changes. So your biggest opportunity lies in actually looking that way. And I I see this quite often when I'm trying to in general write my content or try to discuss this podcast. I am a sustainable tourism consultant, I am talking about tourism businesses, and I'm trying to watch myself by not crossing into the general business consultant area. But as I'm also an entrepreneur myself, and just have come out of the startup phase, I am realizing there is quite some overlap, and I've said it before, sustainability is a management system and a way of doing business. So at times there will be an overlap between these sayings, but I will definitely put a disclaimer that I'm not a business coach or a business consultant. Just want to talk to you about the effect of sustainability in your tourism business. But yeah, even when you have a big accommodation, for example, then there it might sometimes be something minor to look at the costs at the back end, or you you have a much bigger scale of thing of gas that you have to keep serving and have to keep running, which you will then use as an excuse to neglect some of the sustainability matters or to actually look at the data of what's going on. But even then the inefficiency can become a huge financial drain and cost that will be something you cannot ignore. And even if you ignore it during the high season, then you'll see it in the low season. And if we talk from a tour brader point of view, because I mean technically, if we take a safari as example, you can hire as many vehicles as you want. So if you work with freelance guides and you would just hire the vehicles, you would, I guess, technically not have a limit and never be truly fully booked. I mean, your own vehicles, of course, are fully booked, but then you just keep renting. But even then, when you at some point have so many vehicles on the road and are working with big, big network of freelancers that haven't worked with you for a long time, don't know your values as well, and that are representing you, there are many cases and many examples of freelance guides misbehaving and thus coming with bad marketing or bad PR for the company that they represent, well they barely know each other. It might be the first job that they are doing for this company, but just because the the season is huge, they they keep going, they keep going, and they haven't probably don't have a system or a guide or then I mean a guide for the guide, there's so much that you could dive into. And here again, as said before, you cannot measure, you cannot manage what you do not measure during these full weeks, and that's really the key of this episode, because quite some of the messaging might have already gotten a separate episode, but really do not always use your high season as an excuse to literally let everything else fall, not even just sustainability, but like a lot of things do not get prioritized until low season because then you have your time back. And yes, time-wise it's understood, but a lot of these things, including sustainability, are supposed to be continuous, especially if you want to reap the benefits commercially speaking, then you have to be continuous and in the high season it has to work with or without you. Because often you see that also easily when you are fully booked or when you are over your own vehicles, that also your costs are actually growing faster than the amount of bookings or your list because it's something that you let go. And especially in tourism, all a lot of the costs are paid before the high season. If we talk about permits, then of course, but realistically you would first receive the money from the client, and then it's even more cost when they're actually there. And interestingly, during high season, of course, you get some turnover from them being on-site and from on-site purchases, but the majority of it has come through before, and then it's very hard to track. I mean, also, I mean, I definitely have a different skill for business in my own experience. Cash flow then is really something important to track. And beyond the finance, the same applies to sustainability because the efficiency of your business and the durability of your business is highly tied to your economics. I keep always simplifying sustainability with that triple P model from people, place, and prosperity or profit. So, yes, money is a big part of the story as well. Something that I actually learned from my business coach is vanity metric. And the vanity metric is, well, for example, if you look at social media likes, that some people are obsessed with looking at the amount of likes on their post, but that likes don't really say much because I mean uh for example, me posting on LinkedIn. I am very active on LinkedIn, you might have found me there, you might have learned about this postcast from me there. And if I would be obsessed with the amount of likes I get on every post, then you would have good days and you would have bad days. But I have so often when I'm attending a trade show, when I'm somewhere physically, or when someone shows up in my email box, that they reference some of my content from months or years ago, and then I'm quite sure I didn't see you there. I don't think you've ever liked anything that I've put out, but people read it. So the point of a vanity metric is that you're obsessed with measuring something that doesn't matter as much. And how I'm trying to relate that to this story, of course it means the world, and it's good for you, for your ego, for you personally, and it shows your services in demand when you're booked out and when you get a lot, a lot of bookings, and it's amazing to be able to get such turnover. But how what do you do with the money that comes in and how do are your costs looking like? Here I'm going back to give a business speech. So I would argue here that at times your occupancy rate can be a valente metric, but it can also be very powerful when you link it to sustainability. You see quite some successful properties that then will measure the amount of water used per gas night or electricity per gas night, and you see schemes like Greenkey asking for this. So when you tie it together like that, the metric becomes, or at that point, even a key PI, key performance indicator, becomes much more specific and much more interesting to measure, and much more actually not a vanity metric anymore, because it starts to matter and it starts to become something that you can play with. Like I made that comparison earlier that it could be like a board game or a Sims board if you ever played Sims, you can then actually influence your business much stronger. So this all ties back together again to another argument I keep making that sustainability is a kind of professional efficiency. And here this could be a whole separate episode, and I might let me know if you wish. This is also part of this whole discussion. Uh, if you're on LinkedIn, you might have seen it or on trade shows, that people are saying that regenerative tourism is the next thing, or it's even bigger, bigger, or better, and this could deserve a whole episode, and both have their place. But as mentioned before, if you would look it up in a dictionary, the verb to sustain something is to make something more durable. So that's also where some criticism comes from that sustainability is about minimizing the damage that tourism is making and sustaining your business and sustaining the destination you are selling. And that's the whole discussion that allegedly regenerative tourism would even do more. And that actually goes beyond regenerating the all the positive impacts. So that's why it might sound scary to embrace sustainability, but honestly, today it is one it is becoming or at the moment already one of the bare minimum things of doing business and of running your business in any sector, not just tourism. You have nothing to sell if you don't sustain the destinations. So you can enjoy being fully booked for a few seasons, but then if there's nothing to visit, all of those people will go elsewhere as well. So it's really important to look beyond a full house or looking beyond all your vehicles being rented out. How is your stuff doing in this season? How are the costs and how is the destination looking like? Are the people actually there's the community even happy? Even though you have a full house, what is the guest experience like? What are they giving you feedback on? There is so much, I mean I know that a lot of the reflection happens afterwards, but definitely reflection during the high season is super key as well and should be built in. And to to relate this again to something I realized myself in my business journey, which is a prime example, even in tourism, that's being fully booked out is not even always the most financial interesting decision. A journey I've even made myself in the services I offer myself, I would think of a small small scale tour operator in Tanzania that I know of, and they focus specifically on premium clients, for example. So in their case, wealthy Americans, and I'm not saying everyone should do that, this is just a case study. And in their case, they do not need a lot of clients, they don't need to stretch themselves, they do not need to get crazy stressed and busy because per clients that they get, much more money is coming in. And this is just the generic business coaching speech, alright? I mean, we're relating this here to sustainability. So they also have a lot of power in, of course, educating the actual guests that they attract, being more selective, creating more impact, but it just shows it is not always about volume. I mean, you see this a lot with the fashion industry, of course, that they have to sell and produce as much clothes as possible, and that, as quite some of us know, this is absolutely not sustainable because so much fast fashion ends up everywhere. So volume is not always everything to your business. It's more about quality. And here, sustainability brings the efficiency and also quality agents and quality clients. And even if you do not attract those initially, you are in the power to educate them about this and to bring the awareness and does not only influence their life but also yours in a positive way. So I could claim here that sustainability is part of this management system that actually is protecting your profit, make it more durable asset, especially when your pressure is at its highest. I needed a breeder there. So stop looking at having a full house or your highest occupancy rate as the only successful metric and the only goal. And of course it's something exciting to reach, but there's so much more to it, especially in tourism and the power that sustainability can bring. The so a business that's perfectly efficient will be far more profitable than one that's 100% full, but has insane costs. So if if my point's here, if this episode has gotten you thinking, has raised some questions, criticism, concerns, feedback, if it just triggered anything in your mind at the moment, I would love to know. Please reach out to me on LinkedIn or email. There's a bunch of contact options down in the show notes. Let me know. I would love to hear your thoughts. And we could also hop on a call where we discuss your specific situation and see what would work best for you. Especially in the European summer's coming up, so I think for a lot of destinations, high season is around the corner, at least at the time of this episode being recorded. Alright. Look in the show notes, look at the links what works for you, and let me talk to you. Would love to meet you and see you next time. Thank you for listening, and congratulations on investing your time today to think strategically about your future, to make sure you never miss a step to understand sustainability better, how to grow your competitive edge. Follow the podcast right now, and if this was helpful, please leave a five star rating. It will help other people like you to find these tools. I'm Samantha Smith, and I'll see you in the next episode.