Why Should I Rent to Serviced Accommodation?

In the evolving world of property investment, owners, landlords and property managers are continuously searching for new ways to maximise the return on their investments. One increasingly popular trend is converting rental properties into serviced accommodations, especially with the rise of platforms like Airbnb and Booking.com. But what exactly does this mean, and why should you consider it for your property? Let’s dive into the key benefits of renting your property as a serviced accommodation and how it can be a game-changer for your rental strategy.

What is Serviced Accommodation?

Serviced accommodation refers to fully furnished properties available for short-term or long-term stays, offering hotel-like amenities such as housekeeping, Wi-Fi, and sometimes even concierge services. It blends the flexibility of a short-term rental with the comforts of home, making it a popular choice for business travelers, tourists, and even professionals on long-term projects. Whether it's a city apartment, a countryside cottage, or a luxury townhouse, any type of property can be transformed into a serviced accommodation.

Why Consider Renting as Serviced Accommodation?

1. Higher Income Potential

One of the main reasons landlords choose to rent their properties as serviced accommodations is the potential for higher returns. Unlike traditional long-term rentals with fixed monthly income, serviced accommodations are priced on a nightly or weekly basis, similar to hotels. This means during peak seasons or busy periods, you can charge premium rates, significantly boosting your rental income. Even when occupancy fluctuates, the higher rental fees can often make up for any vacant periods. If you manage to negotiate a deal to rent a landlords property with the freedom to transform this into serviced accommodation then these profits can also be utilised by yourself. However, remember you will need to deduct the costs of renting the property from your profits. 

2. Flexibility with Property Use

Renting out a property as a serviced accommodation allows you greater flexibility. If you want to use the property for other ventures, you can block out the dates. You aren't tied down by long-term contracts with tenants and have more control over your asset. 

3. Attract a Broader Market

The audience for serviced accommodations is vast, from tourists looking for short-term stays to business professionals needing a base for a few months. Offering amenities like kitchen facilities, laundry services, and spacious living areas makes serviced accommodations highly desirable for guests seeking more than just a hotel room. This diversity increases your chances of keeping your property booked throughout the year.

4. Potential Tax Advantages

In some countries, there are tax benefits associated with operating a serviced accommodation business. For example, in the UK, serviced accommodation properties may qualify for "furnished holiday let" tax status, which comes with various financial incentives. It’s essential to consult with a tax professional to understand the specific benefits that apply to your location.

5. Reduced Risk of Bad Tenants

With traditional rentals, there’s always a risk of dealing with problematic tenants who damage the property or fail to pay rent on time. In the serviced accommodation model, guests usually book for short stays, and platforms like Airbnb or Booking.com manage payments upfront, reducing the risk of rent arrears. In addition, guest reviews and ratings help filter out potentially troublesome guests.

Key Considerations Before Starting a Serviced Accommodation Business

While the potential rewards are high, converting a property into a serviced accommodation isn’t without its challenges. Here are a few factors to keep in mind:

1. Initial Setup Costs

Turning your property into a serviced accommodation requires an initial investment in furnishings, décor, and essential amenities like Wi-Fi, quality bedding, and kitchen appliances. You’ll also need to budget for regular maintenance, cleaning services, and restocking essentials between guest stays.

2. Local Regulations

Many cities and regions have specific regulations governing short-term rentals. These may include limits on the number of days you can rent out a property or licensing requirements. Before making the switch, it’s crucial to research local laws to ensure compliance.

3. Effective Property Management

Managing a serviced accommodation can be time-consuming. You’ll need to handle bookings, communicate with guests, arrange check-ins, and manage cleaning between stays. If you don’t have the time or expertise to handle these tasks, you might consider hiring a property management company that specialises in serviced accommodations. While this will eat into your profits, it can be a worthy investment to ensure smooth operations.

4. Seasonal Demand Fluctuations

Depending on your property’s location, demand for serviced accommodation can vary throughout the year. Properties in tourist-heavy areas might be fully booked during peak seasons but experience lower occupancy in off-peak periods. Careful planning and pricing strategies are essential to maximise income throughout the year.

How to Get Started

If you’ve decided that serviced accommodation is the right route for your property, here are some steps to help you get started.

1. Research the Market

Look at comparable properties in your area. How much do they charge per night? What amenities do they offer? Understanding the local competition can help you position your property effectively.

2. Invest in High-Quality Furnishings

Guests expect a high level of comfort and convenience, so investing in quality furniture, bedding, and appliances can make your property stand out. Think about what would make your property feel like a home away from home.

3. List on Multiple Platforms

To reach a broader audience, list your property on multiple booking platforms like Airbnb, Vrbo, and Booking.com. Each platform has its strengths and weaknesses, and diversifying where your property is listed can lead to higher occupancy rates.

4. Create a Strong Marketing Strategy

Professional photos, compelling descriptions, and positive reviews can significantly impact the success of your serviced accommodation. Make sure your online presence is top-notch and keep an eye on guest feedback to make continuous improvements.

5. Consider Professional Management

If you want to take a hands-off approach, a professional property management service can handle everything from guest communications to cleaning and maintenance. They typically charge a percentage of your rental income but can alleviate much of the day-to-day stress.

Final Thoughts

Renting your property as a serviced accommodation can be a lucrative and flexible alternative to traditional rentals. It allows you to capitalise on higher income potential while offering guests a unique experience that combines the comforts of home with hotel-like services. While it does require careful management and compliance with local regulations, the rewards can be substantial for those willing to make the investment. If you're ready to take the plunge and want to explore how your property could thrive as a serviced accommodation, we’re here to help! Explore our services and connect with industry experts who can guide you every step of the way.