Quick answer
Tourism operators handle the off-season by planning the quiet months before the busy ones end: holding back a reserve sized to fixed costs, treating customer deposits as owed rather than earned, trimming variable costs early, and arranging a flexible facility such as a line of credit while the books still look strong. Borrowing in the middle of the slow patch is the expensive way to do it.
Key points
- About 95% of Australian tourism businesses are small, and nearly half turn over less than $200k, so there is rarely slack to absorb a slow quarter
- Size the reserve to fixed costs for the whole quiet stretch, not to a vague 'few months' figure
- Advance bookings and deposits look like cash but are often a liability until the guest has stayed or the tour has run
- Lenders prefer to see a seasonal facility arranged during the peak, when your statements are at their best
- A line of credit usually suits seasonal dips better than a term loan, because you only carry the balance while you need it
The hard part of a tourism business is rarely the busy season. It is the arithmetic of the weeks after it, when the bookings thin out and the rent, insurance and core wages keep arriving on schedule. Operators who cope well usually decided what their quiet months would look like a long time before they began.
This guide walks through how that planning works in practice: sizing a reserve, handling deposits, adjusting costs, and arranging finance at the right moment, not the stressful one.
Why is the off-season so hard on tourism businesses?
Scale is part of it. Tourism Research Australia counted 360,202 tourism-related businesses in June 2024, and about 95% of them employed fewer than 20 people. Nearly half had turnover under $200k. A business at that size has little cushion, so a few soft months can use up a year’s worth of good trading.
The other part is shape. Costs are flat while income is lumpy. A cottage rental, a reef tour, a winery cellar door or a hire fleet carries the same insurance, licences and finance repayments in July as in January. Many operators also front-load spending before the peak: stock, repairs, casual training, marketing. That pushes the cash low point to just before the money starts arriving, a pattern we cover in more depth in how to fund seasonal swings.
How do you work out what the quiet months will cost?
Start with last year’s bank statements, month by month, not the annual profit figure. Annual profit hides the dip entirely.
- List the fixed costs you cannot switch off. Rent or mortgage, insurance, vessel or vehicle finance, core wages, licences, software, utilities base charges.
- Mark the months where income fell short of that list. There are usually two to five of them.
- Add the shortfalls. That total is your reserve target.
- Check it against the next year’s expected shape. If the busy season has been getting shorter, or a new competitor has opened, lean towards the higher figure.
Here is an illustrative example of the working. A small whale-watching and boat-hire operator has fixed costs of $24k a month. Between May and August, income averages $16k, $12k, $13k and $18k. The shortfalls are $8k, $12k, $11k and $6k, so the reserve target is $37k. The owner finds only $15k of it is set aside, which leaves a $22k gap to cover with a facility or by cutting costs. A cash flow gap calculator will do the same sum with your own figures.
A 13-week forecast rolls this forward week by week and shows exactly when the low point lands.
What do you do with deposits and prepaid bookings?
This is the trap that catches the most operators. A deposit in the account feels like revenue, but until the guest has stayed or the tour has run, it is closer to a loan from the customer. If you spend it on rent and the booking is later cancelled, or weather, a breakdown or a closure stops you delivering, the refund comes out of cash you no longer have.
Practical habits that help:
- Keep deposits and prepaid packages in a separate account and release them to the main account once the service is delivered.
- Record each prepayment against a booking, so the liability is visible rather than buried in the bank balance.
- When you sell gift vouchers early in the year to lift cash, track how many remain outstanding, since each one is a future obligation.
- Make cancellation and weather policies explicit before the booking, not after.
The point is that a healthy-looking balance in the shoulder months may belong partly to customers. Lenders reading your statements will also notice when deposits are being used as working capital, so how lenders read your bank statements is worth a look.
Which costs can you adjust, and which should you protect?
Think in two groups.
Costs to flex early: casual rosters (move them to the shoulder of the season, not the middle of the dip), marketing aimed at months you cannot serve, discretionary repairs and upgrades, and subscriptions nobody has opened since last summer. Some owners also negotiate with suppliers for staggered payments across the quiet months.
Costs to protect: the things that produce next season’s bookings. That means your online presence and reviews, your best staff and the maintenance that keeps your licence, safety and insurance intact. A vessel survey or accreditation lapse costs far more than it saves.
For a broader checklist, see how to cut business costs fast and the pricing ideas in how to raise prices without losing customers.
How can you fill the quiet months instead of only surviving them?
Operators often have more room here than they expect. Common moves include local-market offers aimed at residents who cannot travel in peak weeks, midweek packages, corporate and group bookings, events, off-peak experiences, and early-sold vouchers. Two cautions apply.
First, cost every discounted product honestly. If the direct costs of delivering a tour are $60 a head and you sell it for $55, a full boat loses money. Use a margin and markup calculator to check the floor price.
Second, do not let off-season discounts train your regular peak customers. Offers framed around a specific audience and a specific date hold up better than blanket sales.
When should you arrange finance for the off-season?
Earlier than feels natural. A lender looks at your recent months, and a request made in January, after a full summer, reads very differently from one made in July after four quiet months. Seasonal operators who set up a facility during the busy season usually get a calmer conversation and better options.
Banks are great here. They are often the cheapest source of funds, and a tourism business with steady annual turnover, a clean conduct record and some security can suit a bank line of credit or overdraft well. When you fit their criteria, take the offer seriously.
If your bank has said no, or the process is too slow for your calendar, you have other routes. Non-bank lenders tend to assess the full year and any property or other security behind the business, and some unsecured options are sized on turnover and bank statements. The line of credit vs term loan comparison explains why a revolving facility usually matches seasonal dips better than a fixed-term loan. If you are a tourism operator specifically, our tourism operators page covers how lenders view the industry, and business loans for seasonal businesses covers the practical options.
Keep the exit in mind. Any facility used for the quiet months should be cleared from the busy season’s cash. If you find yourself carrying the same balance year-round, the problem is margin or pricing, not seasonality, and borrowing more will not fix it.
A short worked example
This is illustrative only. A family-run glamping site in a regional area earns about $190k in the busiest four months, then around $9k a month for the other eight. Fixed costs are $14k a month, so each quiet month leaves a $5k hole, or $40k across the year.
The owners set aside $20k from peak profit, cut a planned $6k signage upgrade, and shift casual wages to weekends only, saving about $5k. That leaves roughly $9k uncovered. Rather than wait until August, they ask about a modest line of credit in February while the books are strong. They draw on it in June and July, clear it by December and keep the process going the following year.
Ready to plan the next quiet season?
If your reserve falls short of the shortfall you worked out above, the best time to talk about options is now, while the numbers are still good. Our enquiry form is short: it takes about a minute to complete, and asking does not touch your credit file. Your details are read by one person on our team rather than being passed to a crowd of lenders, so the phone will not start ringing from strangers. That person looks at your particular seasonal pattern and calls you back.
Fill in the form as accurately as you can, particularly your annual turnover, how many months run quiet and whether you have property behind the business, so we can suggest the right fit the first time.
Frequently asked questions
How much cash should a tourism business hold for the off-season?
Work it out from your own numbers. Add up the costs you cannot switch off in the quiet months: rent or mortgage, insurance, core wages, vehicle and vessel finance, software, licences. Multiply by the number of months income falls below those costs, then subtract any income you reliably expect. That gap is your reserve target. Last year's monthly bank statements are the best starting point.
Are customer deposits and prepaid bookings my money?
Treat them as money you are holding until you deliver the service. If a deposit is spent on running costs and the booking is later cancelled or the operator cannot deliver, a refund becomes a cash problem on top of the quiet season. Many owners keep deposits in a separate account and move them across only when the stay or tour has happened.
Will a bank lend to a seasonal tourism business?
Often yes. Banks are frequently the cheapest source of money, and a tourism business with a clean record, steady annual turnover and some security can be a good fit for a bank facility. The key is to apply when your recent months look strong. If your bank has said no, other lenders look at the whole year and at property or other security instead.
Is a line of credit or a term loan better for seasonal dips?
For a recurring dip, a line of credit or overdraft is usually the better match, because you draw only what you need and clear it as the busy season restores cash. A term loan suits a one-off purchase such as a vessel, vehicle or refurbishment. Using a term loan to cover running costs every winter can lock in repayments through the months you can least afford them.
What can I cut in the off-season without damaging the business?
Look at casual rosters, marketing timed for the wrong months, discretionary maintenance that can wait, and subscriptions. Protect what produces the next peak: your online listings, your key staff and your reputation. Cutting those saves a little now and costs a lot later.
Can I use the off-season to grow my revenue instead of just surviving it?
Yes. Local-market offers, group and corporate bookings, gift vouchers sold early, midweek packages and events are all used to fill quiet months. They only work if you cost them honestly, so a discounted product still covers its direct costs.