Do you own serviced accommodation or are you planning on getting into this type of rental market? At this point, with the uncertainty in the private rented sector, it might be worth consideration. There are several tax benefits because these properties come under the category of a furnished holiday let. Serviced accommodation has high yield potential but requires more management than your standard property tenancy. So if you are up for the challenge, read on.
This type of business has two main characteristics. It needs to have a high occupancy rate to be profitable and due to its nature; this is mainly driven by reviews posted on social media and review sites. Think about it, who do you think a tourist with no previous knowledge of a city would trust more, you or a customer? Yes, you’ve guessed it! It’s the customer. According to a study done by Search Engine Land, 88% of the people interviewed used customer reviews to determine the quality of a local business. That’s almost 9 in 10 people. Can you afford to lose 9 out of 10 potential customers? For most of us, the answer is no. So what to do in order to get good reviews?
The first thing is to identify the location of the property in line with your target audience; these have to match. There is no point in targeting business people if you have a holiday let in a beautiful natural location that is far removed from any business! If your accommodation is the only one of its type in your location and there is a clearly defined market…you have made it, you can rest. The remaining will likely face competition from other serviced accommodation in that target market. To differentiate your property you need to offer exactly what your target client wants. A good idea is to look at the customer reviews for the properties that are similar to yours on sites like TripAdvisor, Booking or Airbnb. This also happens to be the key place to advertise your accommodation, particularly if you are new to serviced accommodation and haven’t yet built up a repeat customer base.
According to the Association of Serviced Apartment Providers (ASAP), the most important thing for a business traveller is free Wi-Fi. Why? To communicate and conduct the business they came to do. They need to send emails, look for information about potential clients, participate in online meetings and access documents on the cloud. Therefore they need a strong and reliable Wi-Fi service throughout the property. If they can’t send the email that relates to an important meeting or they lose a sale because they can’t access the document they have been working on… they will not be happy and you will face some harsh reviews.
A study in 2014 found that free Wi-Fi was the second most important feature for tourists and holidaymakers; with one in three regarding Wi-Fi as “essential”. With technology advancing at such a fast speed, this number will only increase. This means that tourists care more about Wi-Fi than clean rooms, a good mattress and good food! Wi-Fi is important because they look for attractions through the internet, they also book tickets and restaurants, find how to get to places through google maps, post their pictures on social media, call back home through Skype, FaceTime or WhatsApp. All this consumes lots of data making it unfeasible, unreliable and costly to do through mobile phone networks like 4G. So Wi-Fi is essential. Having no Wi-Fi (or poor Wi-Fi!) equals less prospective clients and less repeat business.
As previously mentioned, this type of accommodation is high maintenance. To be profitable it needs to have a high occupancy rate and the stays are typically short. This will require systems to be put in place to be able to handle cleaning, key delivery and recovery, maintenance, laundry, etc. Without effective systems this can be very time-consuming, especially if you have several properties to manage. So you need the systems in place to work efficiently for you.
Since Wi-Fi is the most important feature that your guests look for, you need to look for an Internet Service Provider (ISP) that can deliver a strong and reliable Wi-Fi signal and if anything goes wrong you don’t have to spend hours trying to talk to someone to fix the problem. Looking for budget broadband may look like the best move, but it’s not cost effective. You will have to spend time fixing any problems and in this sector, your time is valuable. Firstly, there is the time you spend dealing with the problem, which effectively creates an hourly rate cost to your serviced accommodation business. Secondly, the opportunity cost; this is the task you don’t do because you had to spend time dealing with the Wi-Fi problem. Could you have been winning more business, or improving your management systems?
In a review driven market, can you afford to risk new enquiries and repeat business by neglecting one of the most important features? Finding the right ISP will be essential to your serviced accommodation business and should just link into your supply chain to handle ‘the 4th essential utility’ for you so you have peace of mind and a growing enterprise.