Question 1

How can I accurately estimate 'Indirect Revenue'?

Accepted Answer

This is an estimate, but you can make it educated. Use data from your booking engine to see if guests from a certain region (where a partner promoted you) increased. Or, in post-stay surveys, ask guests if a specific partnership enhanced their stay and if it would make them more likely to return.

Question 2

What's a good profit margin for a local partnership?

Accepted Answer

There's no single answer, as some high-value partnerships may have lower margins but provide significant non-financial benefits (like brand alignment). However, a healthy target to aim for would be 20-50%. If it's lower, ensure the intangible benefits are strong.

Question 3

Should I include the cost of staff time in the 'Total Partnership Cost'?

Accepted Answer

Yes, absolutely. If your concierge spends 5 hours a week managing a partnership, that's a real cost. Estimate the hourly cost of that employee and multiply it by the time spent. Forgetting this 'soft cost' can make an unprofitable partnership seem profitable.

Question 4

My most popular partnership has a low profit margin. Should I end it?

Accepted Answer

Not necessarily. If a partnership is central to your guest experience and gets rave reviews, its value might be in guest satisfaction and loyalty, which drives repeat business. In this case, the low margin is a marketing cost. The goal is to understand the number, not be ruled by it.

Question 5

How can I use this calculator to negotiate with partners?

Accepted Answer

Data is leverage. You can go to a partner and say, 'We love working with you, but the current structure isn't financially sustainable for us. Last quarter, it cost us X. Can we discuss a higher commission rate or a co-marketing fee to make this work for both of us?'

Local Partnership Profitability Calculator

Results

Understanding Partnership Profitability

Frequently Asked Questions

Need Help Optimizing Your Hospitality Business?