Serviced Accommodation (SA) seems to be the latest buzz word in the property world, with several landlords, and investors, seeing the opportunity to let their properties on a nightly basis as opposed to a 6-12+ month AST. Following the hype, 18 months ago we embarked on a journey into the world of serviced accommodation starting with 5 units located in Hull.
In the last year my wonderful partner Jessica has come on board and really helped to improve the more hands on part of operating SA units, allowing me to focus on the business at a top level.
Whilst the journey has been rewarding it has not been without its difficulties. From problems with guests, to unsatisfactory cleans, to house parties of over 30 people in one property, we’ve seen it all. With that in mind, here are the top 5 things I’ve learnt running and operating a serviced accommodation business.
1). Location, Location, Location:
One of the biggest things we learnt was how critical location was. If possible always aim to be within 0.5-1.0 mile from the city center. If you need to be further out always ensure there are shops, takeaways and attractions very close by with regular direct transport links into the city center. Whether is contractors or holiday makers/tourists we’ve found that for both demographics easy access to the city center has been one of the key requirements when choosing to book with us. Whilst other areas may work we’ve found that the city center locations yield the higher occupancy rates over the locations further out.
2). Have strict and detailed terms and conditions:
Having very strict terms and conditions has saved us many times over the last 18 months. From guests trashing the place, to people refusing to check out at the required time, the related sections in our terms and conditions has enabled us to recover almost all of the costs and subsequent losses of income as a result of these challenges. As long as you outline the effects of any of these causes most booking portals will work with you to recover any losses or extra costs.
Not only should you have strict terms and conditions but you should also be emailing these out to your guests along with the booking confirmation. We use a system called Kigo that allows us to track what emails have been opened so there is no chance a guest can deny receiving the email with the terms and conditions outlined.
3). Work with your guests on payment plans if needed:
One thing we hadn’t considered was payment plans with our guests. Over the initial 6 months from launch we played around with the payment schedules. Initially we charge 50% upon booking, held in holding account, and then the remaining 50% 2 weeks ahead of arrival. We also had a 50% non-refundable deposit. Although this was good for us we found it to be very off putting to our guests. After months of tweaking we decided on the following:
The reason for this was because we identified a large part of our demographic was contractors travelling to the SA units for work during the week. Although their companies were covering the cost, they were required to pay and then claim back the cost. We found that by spreading the cost over 2 payments we suddenly became more attractive to the contractor market and received a higher volume of bookings. We also dropped our non-refundable % to 0% unless you were 2 weeks away from arrival of which it was still 50%. This also helped to greatly increase demand and subsequently occupancy.
Whilst this worked for us I can’t guarantee you will see the same results. I would however advise anyone operating SA units to play around with the pricing structure to find what works best for you in your area and for your demographic.
4). Deal with feedback and problems immediately:
Responding to quires and problems immediately and effectively has been paramount to our success. We’ve had it all from poor cleaning on behalf of the cleaning contractor, a lack of hot water and even guests in the property upon arrival (a mix up of the keys).
Although these have all been challenges we’ve had to overcome mid stay, the speed in which we dealt with the problem at hand in 9/10 cases has resulted in these stays being reported with positive feedback. In fact, some of our guests have come back for multiple visits despite encountering unsatisfactory standards during previous stays.
We’ve found that in times of trouble the guest wants to be heard and made to feel that their quires and complaints matter. Constant communication with the guests and proof of change has proven to be a key driver in our SA success.
5). Have a man, or woman, on the ground:
The final thing we’ve learnt that has been critical to our success has been to have somebody on the ground or close by. We operate our SA units primarily in Hull but both myself and Jessica live in Lincoln, a good 50-minute drive away on a good day. As mentioned in point 4, when something goes wrong it needs to be dealt with and fast. That’s why from an early stage we looked to employ someone local and on the ground.
Having someone just around the corner has given us not only peace of mind but has enabled us to get less and less involved in the operational aspects of the business, allowing us to focus on other areas and other business interests altogether. In fact, I would estimate that I spend no more than 10 hours a week working on our SA business, whilst Jess spends no more that 15-20 hours a week on her role within the business.
They also act as the intermediately between us and the guest, meaning we don’t have any alerting calls as 2:00am on a Sunday morning. This almost gives us a hands off approach and enables someone else with better customer skills to deal with the face to face or hands on aspects that aren’t our strong suit.
So there you have it. My top 5 take ways from operating and running a serviced accommodation business. We’ve learnt an awful lot over the last 18 months and continue to as we move further ever forward. A lot of what we have learnt to date can be applied to our other business interests.
Whether you’re considering doing so or are already operating a serviced accommodation business yourself the above 6 points should be considered in detail if you wish to succeed in the serviced accommodation sector. With constant changes to the industry I can’t tell you where SA will be moving forward but all I can say is we will continue to test and improve to provide the best service possible.