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Achieving Consistent Bookings and Growth in Serviced Accommodation · The Property Unleashed Podcast

• 0:00
  Speaker 0: Are you finding it hard to get the nightly rates that you want on your SAU?
• 0:03
  Speaker 0: Hello, my name's Mark Fitzgerald.
• 0:05
  Speaker 0: It's great to have you joining me here today.
• 0:06
  Speaker 0: I'm gonna talk about why a lot of people right here right now finding it very, very hard when operating serviced accommodation units, and how you can get around these problems that people are having.
• 0:19
  Speaker 0: So, firstly you'll have heard me say this a lot you need to know your market, your niche market.
• 0:25
  Speaker 0: At the end of the day, now, it might not be a niche, but you do need to dub down and not just try and market to everybody.
• 0:31
  Speaker 0: Fundamentally, we will be marketing our serviced accommodation to everybody, but we want to make sure we've got some fundamental things in place.
• 0:39
  Speaker 0: So, right here, right now, the market is filling up with people getting started or building their serviced accommodation businesses, and that is great.
• 0:48
  Speaker 0: It's great to see people getting out there.
• 0:50
  Speaker 0: It's great to see people getting into the entrepreneurial bug, starting their property, investing in many cases as well or just converting buy-to-lets that aren't working, and I think that is one of the reasons why the market is so busy at the moment as well is because of interest rates going up.
• 1:07
  Speaker 0: Over the last year or so it really has meant that people who have got buy-to-let properties, which are the single-let houses, flats that they're just letting to one family over 12 months, are struggling now to get those rents to actually meet the demands of the interest rates.
• 1:26
  Speaker 0: So if they have a mortgage on the property, of course that mortgage rate, potentially if it's locked in and it's been locked in for a while is great, but that will come to an end at some point.
• 1:36
  Speaker 0: So even if you had a 2% mortgage, 2.5%, 3% mortgage interest rate, then that will be coming to the end and of course now it is a lot more around the 5%.
• 1:47
  Speaker 0: You can get some fours and things, but it doubled in most cases.
• 1:51
  Speaker 0: And of course profits on single lets, on buy to lets, isn't that high.
• 1:55
  Speaker 0: It's not as high as you get with serviced accommodation.
• 1:58
  Speaker 0: It's certainly not as high as you get with HMOs as well.
• 2:00
  Speaker 0: So landlords have been struggling.
• 2:02
  Speaker 0: People that own these sorts of properties, these single-let properties, are struggling now.
• 2:06
  Speaker 0: So a lot more people are looking to turn them to serviced accommodation, which is great, and of course you've got a lot of people as well getting out there with serviced accommodation management companies, rent-to-rents and all the other creative strategies as well, which has meant that the staycation boom that we had during the COVID times has really really started to skyrocket over the last couple of years as we've come out of the pandemic.
• 2:33
  Speaker 0: Of course, the pandemic was great in a sense if you converted your properties for NHS workers, for key workers.
• 2:40
  Speaker 0: A lot of people built very successful businesses then, but on top of that, a lot of people went out of business.
• 2:46
  Speaker 0: As, of course, you couldn't go out there, you couldn't do anything.
• 2:49
  Speaker 0: So if people could sit it out, that was great.
• 2:52
  Speaker 0: But if people had rent-to-rent business and were offering guaranteed rents and things, then they would have been struggling.
• 2:58
  Speaker 0: So the market has been growing and growing and growing and of course, the governments now are going to be bringing in some new rules and regulations with regards to holiday lets, short-term rental, serviced accommodation, call it what you will, but we are going to have to abide by these new rules and regulations that are coming in.
• 3:16
  Speaker 0: Now I'll do a whole new video on that as soon as we have clarification on 100% what is going to be coming in.
• 3:22
  Speaker 0: At the moment it's a lot of guessing.
• 3:24
  Speaker 0: There are some pretty much fundamentals that are going to be coming in.
• 3:29
  Speaker 0: Licensing is probably going to be a thing potentially needing planning permission or change of use planning on the properties as well, but that's not stopping people from doing serviced accommodation right here right now, and it's also meaning that the market is getting, in a lot of areas now, saturated.
• 3:47
  Speaker 0: Now, when I first started my property investing journey, I was doing rent to rent with HMOs.
• 3:52
  Speaker 0: I chose HMOs over serviced accommodation for the plain and simple reason is, once I had a tenant in there, I had a guarantee on the tenant.
• 3:59
  Speaker 0: I pretty much knew what I was doing.
• 4:01
  Speaker 0: I always looked at serviced accommodation as a bit more work.
• 4:03
  Speaker 0: Now we do serviced accommodation.
• 4:05
  Speaker 0: I have a company that runs that for me, which is very, very nice and it's a great way to make a good profit.
• 4:11
  Speaker 0: But the margins are coming down and down and down.
• 4:14
  Speaker 0: So you need to make sure that you get some fundamentals right Now.
• 4:19
  Speaker 0: Firstly, when you're looking at doing serviced accommodation or maybe you are and you're finding those margins are very tight those nightly rates is so, so competitive now that maybe you're not making money.
• 4:30
  Speaker 0: Even worse, you could be losing money and that can be a race to the bottom in a lot of areas.
• 4:36
  Speaker 0: So it's about understanding who you want to put into that property?
• 4:40
  Speaker 0: What are the type of clients that you're catering for?
• 4:42
  Speaker 0: Are you working with contractors?
• 4:45
  Speaker 0: Now, contractors, of course, will be going through businesses, so you may be doing corporate lets, company lets and things like that, putting contractors in for two weeks, three weeks, six weeks, six months in some cases as well.
• 4:58
  Speaker 0: But it is a great market to be getting into.
• 5:00
  Speaker 0: But, of course, contractors and businesses do not want to pay massive nightly rates.
• 5:05
  Speaker 0: If you're trying to entice contractors to stay in your properties over staying in hotels, then most of the time all the businesses will look at is A, obviously, the accommodation suitable for their contractors, for their staff, their people to be going into.
• 5:20
  Speaker 0: But B, they'll be looking at price as well.
• 5:22
  Speaker 0: And, of course, big hotels, big companies, can, of course, offer more.
• 5:27
  Speaker 0: They can offer lower for bulk orders, so to speak, for bulk bookings.
• 5:31
  Speaker 0: Now, we might not be able to do that if we've only got a couple of properties.
• 5:35
  Speaker 0: But the other case of that is Can we make sure that it's worth the money that they're staying there for?
• 5:41
  Speaker 0: Do you know that it's worth paying for?
• 5:44
  Speaker 0: And we can do that by making sure that the properties suit their needs.
• 5:49
  Speaker 0: Ok, it is a home from home, but you want to go above and beyond.
• 5:53
  Speaker 0: At the moment, the market is saturated with a lot of average service accommodation.
• 5:57
  Speaker 0: They look great on the pictures, but they're not always practical.
• 6:00
  Speaker 0: So one of the words of advice, or bits of advice, that I would say to you is make sure that you do at least spend one night in your own serviced accommodation before you start letting it out, before you start advertising it and everything.
• 6:13
  Speaker 0: Well, you can advertise it, but you want to make sure that it's functional.
• 6:16
  Speaker 0: Did you have a good stay yourself?
• 6:18
  Speaker 0: Did you think something was missing?
• 6:19
  Speaker 0: You know, it really is getting to know your own operations so that you can get the very, very best out of them.
• 6:26
  Speaker 0: People who are doing different property strategies can afford different nightly rates.
• 6:33
  Speaker 0: So if you're doing rent to rent as a strategy and you're giving the landlord a guaranteed rent, you need to make sure, when you're doing those deals, that you're not, of course, offering too much guaranteed rent for the money that you're going to be able to make.
• 6:47
  Speaker 0: Now we always say, when you're stacking up a deal and you're looking at your occupancy rates, you want to be setting it that at least 50% occupancy over the course of a month if you only had your property filled for 50% of that time, you are, at the very least, breaking even.
• 7:05
  Speaker 0: Okay, now, obviously we want to be 60, 70, 80% occupancies.
• 7:10
  Speaker 0: So we know we're going to be making money.
• 7:12
  Speaker 0: But what you don't want to do is take on rent to rent deals, looking at 50% occupancy and it costing you a lot of money.
• 7:19
  Speaker 0: Now, if it's 50, 60 quid, I might just say, yeah, it's still a pretty good deal because we're not really going to be trying to operate around those margins and at that time.
• 7:27
  Speaker 0: But make sure, on the average nightly rate, that you're getting 50% occupancy.
• 7:32
  Speaker 0: It breaks even.
• 7:33
  Speaker 0: It washes its face.
• 7:34
  Speaker 0: It's not losing you hundreds, if not thousands of pounds.
• 7:36
  Speaker 0: If it is, it's not a deal you can be doing.
• 7:38
  Speaker 0: I see a lot of people getting caught up in that.
• 7:41
  Speaker 0: So do make sure that you get your numbers right, that you get your average nightly rate.
• 7:45
  Speaker 0: Don't just look at nightly rates in August or July or June and say, right, well, they're getting 120 a night here, they're getting 200 a night here, they're getting 150 here.
• 7:57
  Speaker 0: You really want to take the average.
• 7:58
  Speaker 0: You want to have the lower end average as well.
• 8:00
  Speaker 0: Worst case scenario if I had to let this place for £100, £110, what sort of occupancy would I need and would it still work?
• 8:08
  Speaker 0: And that's very important when you're doing rent to rent okay, because if you are paying these guaranteed rents, and even at 50%, maybe you need 60%, but maybe you're having some quiet months you need to remember that when you have the good months, that you can cover the quiet months as well.
• 8:22
  Speaker 0: Don't go spending all your money on fancy toys and your lifestyle and everything like that.
• 8:27
  Speaker 0: Remember to treat it all as a business.
• 8:29
  Speaker 0: But also there are people out there that are putting properties on for potentially, you know, 80, 60, 50 pounds a night, and that all comes down to your price management, your revenue management, your dynamic pricing, call it what you will, but that is your nightly rates.
• 8:46
  Speaker 0: Now, your nightly rates and your revenue management or dynamic pricing, depending on what you want to call it is something that needs to be looked at on a weekly basis, if nothing else, probably a little bit more than that as well.
• 8:57
  Speaker 0: What is coming up in the area?
• 8:58
  Speaker 0: What are we doing?
• 8:59
  Speaker 0: Obviously, booking, taking bookings further on in the distance is great, but you can put your prices up slightly for those.
• 9:06
  Speaker 0: If you haven't got anything this week, then maybe you put your prices down to make sure that you break even.
• 9:12
  Speaker 0: Now somebody that owns their property unencumbered ie they don't have a mortgage on the property or anything that is operating in your area is going to be able to put their nightly rates down, because everything, after all costs of the property, is pure profit and, of course, if you're competing in an area where there's a lot of these, it can make you trying to make profit from your rent to rent deals or what else you're doing there very, very difficult.
• 9:38
  Speaker 0: Another thing that you can look at as well if you're already operating maybe a few rent to rents and you're worried about this or you're struggling with this is you can start offering a management only service as well, so you don't have to be offering that guaranteed rent.
• 9:51
  Speaker 0: You can go in there.
• 9:52
  Speaker 0: You can get the landlords and help the landlords earn more money each and every month, but you can do it through a management operation as well.
• 10:00
  Speaker 0: In the ultimate service accommodation business builder training program that we offer, we teach a lot of our students these very methods now so that they don't get caught out in nightly rates, in fighting for price and everything.
• 10:13
  Speaker 0: They actually build a good, sustainable business.
• 10:15
  Speaker 0: In fighting for price and everything, they actually build a good, sustainable business.
• 10:17
  Speaker 0: And, of course, if you check out any of the other podcasts and videos, you'll have heard from a lot of our successful students that we've shown and taught how to do this.
• 10:23
  Speaker 0: And check out thepropertyunleashedcom as well.
• 10:26
  Speaker 0: There's some free service accommodation, training and tool guides and stuff like that there.
• 10:30
  Speaker 0: And, of course, if you need any further help, let us know and we'll be more than happy to see if we can help you.
• 10:36
  Speaker 0: But going back to this, you've got to make sure that you are competitive but that you're not classed as a lower end SA, which means you do need to make sure that your properties are to a good standard if you want a good price.
• 10:51
  Speaker 0: You need to know who you're marketing to.
• 10:52
  Speaker 0: Are you marketing to contractors?
• 10:53
  Speaker 0: Are you marketing to families?
• 10:55
  Speaker 0: Are you marketing to large groups, tourist trades?
• 10:58
  Speaker 0: Is it going to be government workers?
• 11:00
  Speaker 0: Is it going to be, as I say, contractors, corporate clients?
• 11:03
  Speaker 0: Those sorts of things Speak to your target market.
• 11:06
  Speaker 0: Is it people that have potentially got pets?
• 11:08
  Speaker 0: You know a lot of SA units do not want animals in there, but can you set your service accommodation up in such a way that it's easy to clean.
• 11:16
  Speaker 0: It's got, you know, leather sofas and things like that which are easy to get any hairs and things like that off, and you can, you know, go down that family with a dog sort of route as well.
• 11:25
  Speaker 0: Maybe get yourself out and about there different from everybody else.
• 11:30
  Speaker 0: Get yourself out there, separate yourself from everybody else, be a little bit different and know your key and target market as well, because serviced accommodation, with the new regulations and everything that's coming, is a great, great strategy to be using in property investing, in earning great profits, in potentially changing your life as well and getting out of that day job and things.
• 11:51
  Speaker 0: Whether you own the properties, whether you're rent to rent in it, whether you're management or whether you're going to be doing joint ventures.
• 11:57
  Speaker 0: That is all down to you.
• 11:58
  Speaker 0: But right here, right now, I do believe it is a golden time to be getting stuck into these sort of deals, to be getting out there and building that property business, because, as the new rules come in that the government say are going to be happening, I do believe that if you're set up, you're compliant and you got your license and you're working to the specifications and the rules and regulations that they put out there.
• 12:18
  Speaker 0: It could potentially be what is known as grandfather rights, which is where, if you're already operating to the letter of the law, they will give you automatic rights to get this license.
• 12:29
  Speaker 0: You might not have to go through planning.
• 12:30
  Speaker 0: If you want to change the usage of the property as well, it might be able to do it under permitted development.
• 12:36
  Speaker 0: They did these sort of things with HMOs, so if people were running fully compliant HMOs and could show that they'd been running for a while before these new rules came in, they got grandfather rights and they were able to keep their licenses to keep operating as HMOs.
• 12:51
  Speaker 0: They didn't have to go through full planning when the Article 4s areas came in as well.
• 12:56
  Speaker 0: I think a similar thing will come in for serviced accommodation with the Article 4, so there'll be certain areas that the councils will map out to say, if you want to start operating and doing short-term rentals in these areas, then you will have to have a license.
• 13:11
  Speaker 0: You will have to potentially go through planning and things.
• 13:13
  Speaker 0: So it's just something to be aware of.
• 13:16
  Speaker 0: Also, if you are getting creative, if you are building a rent-to-rent business, make sure that your landlords the people that own the properties know that you do short-term rentals with the properties.
• 13:25
  Speaker 0: You should do anyway, because I've done videos on this before as well.
• 13:29
  Speaker 0: Check those out where they should make sure that they've got the right mortgage terms.
• 13:32
  Speaker 0: Any lease agreements are obviously adhered to and everything like that.
• 13:35
  Speaker 0: But if you do have to change planning and stuff and you need to go through the homeowner, so to speak, the person that owns the property, they have no idea what you're doing.
• 13:44
  Speaker 0: That can make life very, very difficult.
• 13:46
  Speaker 0: So make sure you've got a good relationship with them, with the people that own the properties, and, of course, you can potentially get them to help you if you need to change any of those operations, because a lot of landlords, a lot of people that own the properties, they don't want to hassle.
• 14:00
  Speaker 0: So if you can take the hassle away and continue to do it and they still get them cash flow and the money that they're expecting as well, it can be a win-win for everybody.
• 14:08
  Speaker 0: So I hope you've enjoyed this episode.
• 14:09
  Speaker 0: I hope you've understand and realized that there are some fundamental problems out there.
• 14:13
  Speaker 0: If you're just marketing to everybody, then you're not really marketing to anybody.
• 14:17
  Speaker 0: So make sure you know who it is that you want to be talking, to Make sure that your marketing is on point.
• 14:23
  Speaker 0: Remember, with service accommodation, you will not stop marketing.
• 14:26
  Speaker 0: You want to be running ads, you want to have a website.
• 14:29
  Speaker 0: You want to be all over social media.
• 14:30
  Speaker 0: You want to be obviously on the online portals as well.
• 14:33
  Speaker 0: You want to be pushing, pushing, pushing to get the clientele, to get the customers, as I like to say, coming through so that you can make sure that you are a step ahead of everybody else.
• 14:43
  Speaker 0: And if you need help with that, then check out thepropertyunleashedcom.
• 14:47
  Speaker 0: I'll reach out to me on social platforms or even in the comments section under here, if it's available to you.
• 14:53
  Speaker 0: We are more than happy to help and support you in your property investing journey.
• 14:58
  Speaker 0: You take care and I'll see you in the next episode.
• 15:00
  Speaker 0: Bye for now.