In this guest piece, Mark Simpson from Boostly looks at how holiday let owners can navigate the cost-of-living crisis and keep their businesses profitable.
The last few years have been an excellent time to invest in a holiday let.
This summer was driven by the staycation boom, with more people planning to stay in the UK than ever before. As ‘revenge travel’ and ‘work from anywhere’ became defining terms in holiday booking, the UK became a popular hotspot to stay and work - and it’s no surprise that many property investors saw ample opportunity.
Over the summer months, research found heightened interest in holiday let investment, with 9% of adults in the UK considering buying a holiday let over the next five years. Whatsmore, mortgage options for borrowers looking at holiday lets have increased by 72% since September 2021 to meet increased investment appetite.
But recently, the Bank of England announced that the UK is facing the most prolonged recession since records began. Rising mortgage rates, crippling energy costs, and increasing inflation threaten to burst the holiday let bubble. Understandably, it’s a period of uncertainty for the industry - particularly with intense competition on Airbnb, Booking.com, and Expedia (who all take a hefty chunk of the profit).
As someone who has worked with thousands of short term accommodation owners to boost their marketing tactics and direct bookings, I know how daunting the next six months feel. Equally, now is not the time for hosts and property managers to withdraw; with the right tactics and tools, it is possible to weather the storm.
Here’s my take on how short term rental owners and investors can tackle the cost of living crisis and ensure their business survives under mounting financial pressure.
Leverage smart home technology to cut costs
As energy costs soar, people across the country closely monitor their energy usage and cut down their heating bills where possible. But as a holiday let owner, telling guests to wear an extra layer or to use the heating during certain hours will certainly not result in a positive guest experience or five-star reviews.
What you can do, however, is utilise smart home technology to monitor and control energy usage in your holiday let. Don’t ignore those emails from your energy company offering to install a smart meter; take them up on their offer and use the real-time information on energy consumption they provide to track usage.
I’d also advise investing in a smart thermostat, like the Nest Learning Thermostat. Smart thermostats will learn routines and analyse use patterns - but better still, property managers can adjust temperature settings and remotely control heating and cooling. If a guest checks out and the heating is still on, you can quickly log on and switch it off.
My top tip here would be to utilise the energy-saving mode on the Nest thermostat - if you see a leaf icon on the display screen, your property is in optimal energy-saving mode.
Other ways to combat the rise of energy bills include:
Installing LED lightbulbs
Investing in energy-saving apps
Switching ovens for air fryers
Cut out online travel agents to save on fees
I’ve spoken to many property hosts who feel frustrated by the fees they pay to big OTAs (online travel agents) each month - and the answer is, you don’t have to. Often, hosts and property managers opt to use OTAs because it’s considered the ‘safe’ option (or sometimes simply because they don’t know any other way), but taking back control of your bookings is one way to cut the hefty costs associated with online booking platforms like Airbnb and Booking.com, and your wallet will thank you.
You may have seen the ‘Airbnbust’ trend circling Twitter and social media; as it stands, guests are becoming frustrated with the fees they pay, and hosts are increasingly noticing gaps in the booking platform’s service. Following the Summer 2022 Update, hosts reported increased difficulty finding their listing within search results, resulting in low visibility.
Rather than competing for visibility and paying costly fees, I advise hosts to step away from the OTAs and focus on driving direct bookings. Creating a website to showcase your properties gives you the power to control your bookings and reap 100% of the profits and benefits rather than handing them over.
Setting nightly rates in a challenging climate
Choosing nightly rates for holiday lets can seem like a minefield, particularly when everyone tightens their pockets during a recession. Generally, I’d advise setting a minimum number of nights to stay (somewhere around the three-night mark is a good idea). This means you won’t be running around completing changeovers following a one-night stay, and it’s an excellent way to keep cleaning costs down.
To attract guests to stay during an economic downturn, it’s crucial to stay competitive. Offering early bird discounts or special offers for those who book longer stays is a good way to stand out, and loyalty discount schemes for repeat guests can attract people back.
Utilise online communities for support
I always tell my clients that all hosts and property managers are in the same boat - and there’s plenty we can learn from each other. Communicating and networking with fellow hosts is a great way to gauge what the rest of the industry is doing and how the short term accommodation industry is tackling these economic headwinds.
Online communities, like Hospitality Community, are set up to connect hosts and property managers, providing a space to share tips and network. Lean on these communities; you’ll likely find out something you didn’t know or learn a new trick from another host that could save you money.
Beating an economic crisis and riding the wave is possible - but you have to take things into your own hands. Focus on direct bookings, leverage smart technology and pay attention to the surrounding community. There are rough seas ahead, but with the right tools, tactics, and approaches under your belt, we can all weather this storm and continue to enjoy a thriving industry.
*Mark Simpson is founder of Boostly, a website design agency and online training academy that give hosts the tools, tactics, and training to boost their profits through direct booking.