Joint Ventures & Collaborations

This guide is for those business owners and staff who work in the Tourism and Hospitality sector and who are considering collaborations with other businesses to develop their own business. This will involve developing packages of their own products/services often combined with those of others.

It is aimed at all sizes of business, from sole traders and partnerships, limited companies or even groups of companies.

While collaborations can happen at any level in the sector, scale will dictate the nature and complexity of the project. Sole traders and smaller businesses can use this guide to consider and develop their own collaboration strategies, while larger businesses involved in more elaborate collaboration projects can use this as a starting point however will likely need more bespoke advice and guidance.

This is for guidance only and you should always seek advice relating to your own individual circumstances.

There are also some specific legal issues involved in certain types of packaged products and services and you should ensure you are familiar with these and you seek independent legal advice if necessary.

What is Collaboration?

“Collaboration is the process of two or more people, entities or organisations working together to complete a task or achieve a goal.”
Source: Wikipedia

Collaboration is similar to cooperation and is also often referred to as a “joint venture”.

When should you collaborate?

For the most part businesses operate on their own. They develop and offer their own products/services, determine the prices for these products/services and then deliver them through their chosen channels to make sales and ultimately a profit for the business and a return for themselves.

In business we are all aware of times when we feel that we can’t offer the type or range of services that we would like to because of a lack of scale or limitations on skills, expertise, resources or even time. Or we see an opportunity to develop a product or service for which there is considerable market demand but we don’t pursue it because we can’t deliver all the elements ourselves.

That’s where collaboration could work for you.

Customers in the Tourism and Hospitality sector often seek out packages of offerings, where they can avail of certain products or services as part of a stay in a location or as part of an experience or event. Developing bespoke, innovative packages is still something that every business can do on its own. However there are times when reaching out to collaborate with others in the sector can enhance the offering and deliver unique products and services that attract a different and enlarged market that would not normally be available to the business on its own.

Package Holidays and Linked Travel Arrangements – special regulations

If you are considering any form of a package of your services, you should read the special regulations relating to Package Holidays and Linked Travel arrangements. This will help you to determine if you have to comply with the specific regulations and if necessary seek separate legal advice.

The following are useful sources of information for these regulations:

The Advantages of Collaboration

There are many advantages to collaboration in the Tourism and Hospitality sector including:

  • You can reach a market that you otherwise are unable to, due to some limitations of working on your own
  • You can offer bespoke and often unique products or services that reflect the combined energy and expertise of two or more businesses
  • You can grow your business income without potentially incurring significant extra costs
  • You can develop new relationships that in turn can create additional opportunities to diversify and grow

Pitfalls and Challenges of Collaboration

While there are many advantages, there are also potential pitfalls and challenges and it is important to be aware of these before you begin your collaboration journey:

  • A potential loss of your intellectual property
  • Sharing confidential information with your competitors
  • A lack of trust at the beginning or as the project develops
  • A meeting of “non-equals” resulting in an imbalanced sharing of the workload
  • Unclear roles of all the collaborators and/or stakeholders
  • Unequal profit, cash and risk sharing
  • No clear exit or contingency plan when things go wrong
  • Weak communication, leading to poor decision making and outputs

Being aware of these potential challenges will help you to overcome them.

Where to start with Collaboration

There are different ways to start your collaboration journey:

  • Check out the Regulations relating to Package Holidays and Linked Travel Arrangements – seek independent legal or professional help if you need to
  • Examine your own business model – what gaps exist and how could you fill them?
  • Review your customer feedback – what additional related services are they interested in?
  • Check out existing collaborations in your sector – how do they work?
  • Review your competitors’ collaborations – how and where are they collaborating? Is it working?
  • List potential products/services packages that you could offer – which ones need collaboration?

What are the steps involved?

  1. Establish the need – demand/competitors/feedback?
  2. Identify the joint venture partner(s).
  3. Establish the potential sales/cost/profit
  4. Agree the “profit share”.
  5. Agree the “business model” – formal i.e. Partnership or Ltd co or informal.
  6. Decide on confidentiality/non-disclosure agreements.
  7. Decide on “controlling the cash” and the cash flow timings – income/costs/banking/profit.
  8. Develop a “Service Level Agreement” or consider a formal contract (larger ventures).
  9. Develop a plan – SMART with responsibilities/timings.
  10. Agree a full review/feedback process on the package of products/services.

Collaboration Checklist

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