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How to get the best ROI on your holiday let

For years, buy-to-let has been heralded as the most lucrative form of property investment. For those with money to invest, the holiday let industry, however, is quickly gaining ground in terms of financial returns. 

The size of the staycation market is growing, particularly as exchange rate uncertainty drives more people to holiday in the UK. Last year alone, almost £24 billion was spent by UK holidaymakers ‘staycationing’ – and 74% of the population expect to holiday in the next 12 months.

Data from the Sykes Holiday Cottages Staycation Index reveals a holiday let owner can expect to earn up to £40,000 a year on average, and this can easily rise for larger properties. 


So, what should property investors and holiday let owners be doing to take advantage of this growing trend, and secure the best return on investment possible?

1. Do your homework 

Firstly, if you’re new to the concept of holiday letting, it’s crucial to do your research. Like any financial decision, you should seek expert advice before starting up, making sure you can afford to buy and upkeep the property.

Holiday letting is a property let out to guests throughout the year, although the average stay per let is around a week. It can be a second home, part of your home or a converted outbuilding.

When you’ve decided it’s the right investment opportunity for you, the first step is to choose the right location. There’s a huge variety of holiday lets, from remote shepherd’s huts to city centre period homes, so keep your options open.

Buying a property with a coastal view or in a national park can boost earnings by 10% while research shows that the most popular areas for holiday-goers are the South West of England, North Wales and Cumbria and the Lake District, all of which have strong scenic credentials.

It’s also important to think of the surroundings. Your guests may be families, couples or groups of friends so make sure to highlight what’s going on locally that will suit different audiences.

Unlike the buy-to-let market, there’s a much bigger focus on the whole experience with a holiday let and you want to be able to provide the complete package to draw in guests and persuade them to return.

2. Decorate with your target audience in mind

Secondly, bear in mind that any upfront cost of buying a property or renovating it from scratch will need to be offset by that generated by bookings.

People are prepared to pay more for certain perks. Inside the property, most guests will expect WiFi while features such as open fires and allowing guests to bring their pets along can result in a 20% and 10% uplift in earnings respectively. 

If you’re targeting higher-paying customers, consider investing in a hot tub, pool or gym to add a luxury touch.

Other guests will be looking for an affordable option so choose the audience which suits your property and budget best.

A good tip is to look at other holiday lets in the local area – see what standard they are decorated to so you can use this as a guide.

3. Get your pricing strategy right

Deciding how much to charge guests is a difficult decision, so if you’re with an agency make sure to get their advice.

Firstly, ask your family and friends to stay in the property, and give an honest opinion about how much they would be willing to pay. Research similar properties in the local area to see what the average cost per week is.

It’s worth remembering that the price of a stay will change throughout the year, peaking in summer due to high demand. 

Despite the season being the most popular time for holiday homes, more than a third (36%) of bookings are completed in the first quarter of the year. People like to plan ahead so make sure your property is available for bookings in January.

Accounting for running costs in holiday letting depends on how much you’re willing to do yourself. If you’re hands on and live locally, you can manage changeovers yourself, as well as managing the cleaning and maintenance of the property. Doing so will mean higher margins but can be time-consuming.

Increasingly holiday let owners are outsourcing to management companies, but if doing so make sure to shop around for the best price. If you’re with an agency, they may be able to offer a discount through a partner company.

4. Build a reputation

Securing bookings and future earnings depends on both your property’s reputation and yours as an owner. Repeat bookings are valuable while public reviews are a great opportunity to promote the property to other guests. 

Make sure to go the extra mile for guests and prioritise customer service. Small touches such as walking maps and helpful hints go a long way. Take any constructive feedback on board, as it will be particularly useful when starting out in the industry.

Working with an agency is a great option for promoting your property as you’ll benefit from higher marketing and advertising spend, helping you secure a strong pipeline of bookings and income.

*Peter Harrison is chief commercial officer at Sykes Holiday Cottages.

  • Chris Jackson

    An interesting article, Its worth noting that Sykes is not the only Holiday Letting Company out there... Our, multi-award winning family business, Heartofthelakes.co.uk, markets, lets, manages and services approx 10,000 weeks of holidays per year all located within the Lake District National Park.
    For the investors, we also run a find, buy and renovate service (no other company in the area does this) with 70% return trade and most properties returning 5%+, if set up right, after agency costs. It's a very attractive option. One massive benefit is that the owner can choose to use the property in a holiday hotspot for his or her personal use, while also benefiting from the solid capital growth that surrounds the property in the Honeypot areas of the National Park.
    For more information contact Chris, Jo or Marie and we will guide you through the easiest way to help you achieve your goals.

  • Peter England

    £40,000 a year from 1 property is a great return.
    When we've rented aboard, we have always taken up any offers of local catering and entertainment at the property, which is great fun and again makes a little extra for the owner.


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