A few years ago, property investment was the obvious route to long-term financial goals with capital appreciation; it also conveniently paid for its own outlays, maintenance, and interest on borrowings.
Fast-forward to the present. We are facing high interest rates, a significant shift from the past. The conservative government’s use of the Airbnb brand and minority groups as a political tool has led to interventions in FHL, which are now being blamed for the housing crisis.
Now we have the Labour government, and we have yet to hear their detailed approach to solving this perennial issue. However, the housing crisis exists, and there needs to be increased inbound income from business growth (their words) or tax! Short-term rentals will be under scrutiny, and the changes to FHL rules announced by the conservatives in the last budget may still be on the horizon.
As a rental agency, we must keep abreast of industry changes in marketing, ownership, and legislative matters. My Getaways knows the challenges of increased numbers of privately marketed properties for rent; many bought as the market plateaued, now seeing reduced occupancy and often panicking and lowering prices. This is very short-term thinking and can spiral out of control, leaving an owner in debt.
The answer is to hold fast and think laterally, looking at the market, the guests, and the economy. Rentals are like water; they will find their volume and price level, and all owners need to be smart about where to invest and how to market their homes to maximise income to be upstream of the competitors. This means “going “outside the box” for bookings!
Owners who invest in maintaining and adding amenities to their properties will see the cream rise to the top and be seen at the top of the booking funnel, provided real-time online pricing analysis and revenue management are involved, and enquiries are dealt with promptly.
This requires technology, service and training.
The second and increasingly important element is the marketing mix. Ask yourself why Airbnb pushes experiences and icons. They want guest data, which allows them more opportunities to sell newer and less property-populated, less legislatively challenged destinations and to laser-focus property to types on guests. The average income of an Airbnb owner is approximately $13,000, mainly managed directly by the owner. Agencies typically see much higher returns due to a solid mixed marketing focus.
ADR, RevPAR, and occupancy are investors’ three most important metrics. Quality of service and support are also a given. Typically, balancing these is the key to maximising income, but the booking channels are very important indeed, but OTAs have their own marketing spend. For example, they will push Brighton in the summer months, as it’s a peak period, but lose interest in the winter and spend their marketing money overseas. With the industry quoting 26-28 weeks of bookings a year, we aim to be better than average and seek new boundaries and channels to attract interest.
In an increasingly competitive, financially strapped, and overpopulated economy, residential accommodation is at a premium, and holiday accommodation is under threat. However, the new government is making strenuous efforts to promote growth, which means business travel.
We all know global warming is causing issues, such as more extraordinary floods and temperature variations. This is no doubt influencing insurance claims and prices. There are many other associated influences: global warming means more green energy, such as wind farms or incineration facilities. With business growth, service industries will flourish. Lawyers, accountancy, and management firms often spend months in apartments and hotels and building contractor work will flourish. All these categories need temporary accommodation.
Large companies that manage thousands of staff have separate departments to deal with people’s movement. In turn, they appoint stable, professional, well-qualified companies to represent them in sourcing accommodation, a specialist business. To win contracts, these agency companies must be ESG-compliant, GDPR-compliant, and financially compliant. Seldom will an individual owner win blue-chip business from them due to the administrative burden, and they are doubtful to see this type of business off the likes of Airbnb.
These mid-term stay agencies are increasingly using technology, and their staff, when offered a choice of accommodation, may decide on a holiday home- a two-bedroom apartment or a cottage—where the family can visit while on secondment. A holiday home offers independence, space, privacy and the opportunity to share if they so wish. Hotels, although often chosen, are increasingly being replaced by the STR opportunity.
With its technology platform, MyGetways can connect with the best mid-term agencies seeking accommodation, speed up the booking process, and regularly see mid-term stays that add great value to the owner’s yearly income. MyGetaways, an award-winning agency, also has all the pre-requisite compliances an agency needs to be appointed as an official supplier.
In the last two weeks, MyGetaways has partnered with Situ through an API connection, the first STR in the UK. It has distributed its entire portfolio into the Situ booking machine with 100+ staff working on satisfying their clients with appropriate accommodation. Bookings have already flowed in from this new approach, and some owners enjoy the rewards.
This, along with the other approaches to mixed marketing we at MyGetaways adopt, reduces industry and legislative risk and improves owner income. More to come! We will keep you posted.