This type of company is generally a disruptive business. The Ford Model T revolutionized the automobile industry; Dyson did the same with the vacuum cleaner; Amazon took advantage of the Internet to change the way we buy books and all kinds of other products; and now AirBnB has made it simple to book accommodation not in hotels but in people’s homes.
Who doesn’t like to be nosy when observing how other people live and how their homes reflect their lifestyle and personal taste in home décor and furnishings? So it looks like AirBnB really hit the nail on the head.
While most people will have stayed in a hotel at some point in their lives, they now accept that alternative accommodations exist. The term “serviced accommodation” refers to property that offers a place to eat and sleep, but in a property that offers much more than a conventional hotel by including a fully equipped kitchen, a living room in which to relax and bedrooms. additional for the rest of the day. the whole family within one property that will offer a ‘home away from home’ experience.
They have raised the bar, so this type of accommodation is now what most people traveling for both business and leisure want to stay in. They want a place that is flexible so they can stay one night or more; and where they can enjoy spacious accommodation, the comforts of home, the opportunity to cook to save the cost of eating in a restaurant; the opportunity to catch up on their laundry and, above all, the opportunity to share their experiences with the host, as and when they are residents.
The other contributor to the success of serviced hosting has been technology. Without this, it would not have been possible for the model to gain traction, and therefore attract hosts to register their properties, at the speed they have.
Guests have also benefited from having the power and speed to locate properties at the click of a button, possibly to book on demand; have a friendly person to communicate with throughout the reservation process; and have peace of mind knowing that past guests have written reviews to say how wonderful the host and property was.
It seems that now travelers have experienced AirBnB and other online travel websites, as leisure guests now insist that their employers allow them to use the same option for their business trips.
Therefore, this market is expanding at a rapid rate. Research suggests there are now around 750,000 serviced apartments worldwide, an 80% increase in just 8 years. In the UK, serviced accommodation supply is expected to grow by 8% in the two years to 2017, outpacing hotel growth by 6% according to a study by Savills, the estate agency.
While the supply has increased, so has the demand. It appears that more than 36 million foreign visitors came to Britain in 2015, a 50% increase on the previous 12 years. The number of UK residents going home for holidays is also increasing, especially as the exchange rate between sterling and the dollar and euro has depreciated following the referendum to leave the EU. This would suggest a long-term boom for the British tourist industry and unprecedented demand for overnight accommodation.
The location and the facilities offered are the two main contributors to the higher occupancy levels. If a property is located close to good transport links, large companies and popular tourist attractions; As well as being well furnished and equipped to a high standard, it will be popular with guests and therefore in demand.
Obviously no one is forecasting the imminent demise of the hotel industry or the private rental accommodation sector as a whole because both are important, but anyone interested in a real estate investment with a generous long-term fixed income could do much worse than Investigate this emerging sector of real estate investment.
Individuals have often invested in HMO multi-tenancy properties to secure a higher rate of return, but recent tax changes in the UK have made this proposition less attractive.
Now that the serviced housing industry is growing at such a rapid rate, there are greater opportunities to earn higher rental income in services compared to HMOs. One just needs to be sure that demand and therefore occupancy levels are high enough to provide the margin required to offer a healthier rate of return than is achieved by leaving money in bank savings accounts. .
