“Where should I invest in serviced accommodation?” This is a question we get asked a lot. There are many factors to consider and lots of boxes to tick in order to identify the most optimum location. It is simply a case of meeting as many of these criteria (which we’ll get onto shortly) as possible – without over analysing them.
What is serviced accommodation?
Serviced accommodation, sometimes referred to as ‘self catered accommodation’, is a type of fully furnished accommodation which is available for a short or long-term stay. Serviced accommodation is fitted with all the comfort you need to feel at home. These include spaces to relax, wi-fi and phone. They also include utility costs as thy are built into the price. As their name suggests, they are also serviced. This can include housekeeping, 24-hour customer care as well as increased security and other luxury amenities.
Factors to think about before investing in self catered accommodation
One of the most important factors, in our opinion, is finding an area where there is a demand for serviced accommodation that is as close as possible to where you live. We label these ‘serviced accommodation demand points‘.
Most UK towns and cities will make good locations for serviced accommodation. You just need to find the right location within that town or city. Our reasoning for setting up serviced accommodation near to where you live is all about logistics. Most people, especially in the early stages of their serviced accommodation business, will be heavily involved in the set-up of each property. Meeting cleaners and other professionals will mean travelling. If your serviced accommodation property is too far away you will be spending valuable capital and time simply commuting. There is the possibility to outsource such tasks. This requires a level of trust and confidence in the person/business you use.
Remember: circumstances changes and relationships can deteriorate. If you make the decision to set up serviced accommodation a long distance for you, don’t make that decision lightly.
Knowing where to locate your serviced accommodation property business and how to rent properties out on Airbnb or Booking.com is becoming a very popular property investment strategy. When choosing your serviced accommodation ‘Goldmine Area’, you should always focus on the demand for serviced accommodation.
One of the helpful indicators of demand is whether there is a hotel relatively close by. If there is, then the hotel will have done a lot of legwork for you. We’ve already covered why people will choose to stay in serviced accommodation rather than a hotel. To quickly recap the main reasons are:
- saving money
- extra facilities
- privacy
Picking a location for Serviced Accommodation property investments
If people go on to Booking.com to look for somewhere to stay in your town or city and they find a hotel in that area, they will also find your serviced accommodation or self catered accommodation property as well. This is presuming that you’re listed on Booking.com.
If there isn’t a hotel in a certain area, it doesn’t necessarily mean that there isn’t a short stay demand. It may just mean that despite the fact that there is demand a hotel just hasn’t been built there yet. Where there is no hotel, you simply need to be assessing the demand yourself.
What to look for when investing in Serviced Accommodation property
This is not an exhaustive list. There are many things that will cause people to go and stay in a different town or city. You just have to use your own judgement on something specific you spot in an area that might create demand. What you are looking for is all year-round demand to maintain profitability. Consider the winter a supplement to the typically high summer months.
Here’s a list of what to look out for:
Property near good integrated public transport
People may want to stay near a bus or train station if they intend to commute from your property. It may be that the cost of your accommodation is significantly cheaper where you are, which makes the commute financially worthwhile. This is certainly the case in places like London where accommodation can be very expensive. It is worth mentioning here that the need to provide a parking space for travellers arriving by train or bus is less. Your guests may still hire a car on arrival. It’s likely that the main train or bus station in the city is going to be in the city centre. Where applicable, parking is very limited and many hotels and serviced accommodation do not offer parking there.
Current construction or building sites near your potential serviced accommodation
Many of the trades/builders/contractors working on site will not live locally and so they will need temporary accommodation in hotels, guest houses or self catered accommodation. Remember that you can be extremely appealing to groups of these contractors for the reasons mentioned earlier. When it comes to parking you need to remember that vehicles they drive tend to be high sided, so check the headroom of your allocated parking space, if you have one. You also need to make it very clear to your guests via your listing on your listings when they book. Construction sites like this can provide year-round demand if it is a large enough project.
Heavy industry
This could be a power plant, steelworks or a large port which will have a natural “rhythm” of work. This will require larger amounts of specific trades at different points in the year. Travelling trades will need a place to stay.
Big Business
Large businesses, companies and organisations often have mobile workforces to supply skilled staff to construction, industry or directly to customers’ homes. Big business is an opportunity for repeat custom as they may visit the area repeatedly, for example annual services.
Develop serviced accommodation in town centres
The centre of a large urban area will represent a cross section of differing demands. This might include construction, industry, big business, holidaying or a combination of all of them. People visiting could therefore be for both work and leisure purposes.
Serviced accommodation opportunities near airports
There is going to be good all year demand, but please be mindful of the fact that you are likely to attract mostly one-night stays from people travelling on flights. This will significantly increase your costs.
The main costs involved in a serviced accommodation business are the cleaning and laundry. It’s much more profitable for you when your guests book for longer. For a seven-night booking you still only have to pay for one clean and change of linen.
When near an airport we would encourage you to reach out to the airport staff and airlines that operate out of that airport and offer your serviced accommodation as an alternative to hotels. One of the main complaints of aircrew is that they are always living out of a suitcase. They never have a base to be able to leave things in between flights. Lots of people who have self catered accommodation near airports are block booked by groups of air crew, or by an Airline on behalf of their flight attendants. You can offer a significant discount on your nightly rate in order to secure a nice long booking. In the process, you’ll make a lot more money than you would from multiple frequent short stays, which also come with a higher admin burden.
Sporting Venues
As well as the obvious reasons people will visit, these places are also used by artists and bands. A nearby serviced accommodation property to a sporting ground can also be booked long term by the respective club. They can use your property to provide a better, and perhaps more cost-effective, solution to hotels for visitors to the club. Many sporting venues also have conference centres that will attract people from out of town too.
Conference Centres
Speaking of conference centres. The busier and larger the better. The conference centre is extremely likely to have hotels located nearby and for the reasons given earlier, you can provide a better alternative for your guests.
Golf Clubs
The more prestigious the better. As well as the reasons given for “Sporting Venues”, groups of golfers are likely to book a self catered accommodation property for a week when on a golfing trip or break.
If it is a championship course, then you can expect to earn serious money when the course hosts a tournament. Please just be aware that I wouldn’t choose an area for serviced accommodation if it only had a golf course as the main attraction. I would be looking to tick other boxes as well. Golf as well as many other sports can be very seasonal, with demand in the summer and not so much in the winter.
Tourist Attractions
These can be national parks or areas of natural beauty, historical sites as well as theme parks to give just a few examples. Orlando is a prime example of serviced accommodation. The local area around Walt Disney World, Universal Orlando Resort, Sea World and Busch Gardens is saturated with self catered accommodation. Yet there are still opportunities here as more and more people visit Orlando each year with a continued increase in prices.
Hospitals
Clearly there are going to be lots of scenarios where people are going to be admitted into hospital for long periods of time. They often have a relative or family who will want to be nearby to make visiting more convenient. The other scenario to consider is the people working in the hospital for long periods of time. The Progressive Property co-founders had a consultant who was working in the local hospital book one of their one bedroom apartments for just over five months whilst on assignment.
Universities
These are a regular source of bookings. There will be multiple open days and graduations that will cause families to travel in order to see their loved ones graduate and be in the photo that ends up on the mantelpiece forever. If your serviced accommodation is located near the more prestigious establishments, visiting professors will always need a place to stay.
Our final thoughts on self catered accommodation
Selecting an ideal location for your new property venture is always going to be difficult, especially if this is your first commitment. The team as Progressive Property are there to help and our courses on serviced accommodation are a great place to start. Here you’ll learn what types of properties work for serviced accommodation, how to prepare your property for market and much more!
Have a question or wish to find out more? Then simply get in touch with us today and one of our team members will be on hand to help.
