Serviced accommodations as a business model in the hospitality sector without possessing real estate is gaining traction among several business people. With the popularization of Airbnb and Booking.com, more and more consumers understand that it is possible to operate a successful serviced accommodation business without being a property owner. This guide will cover everything essential for starting a serviced accommodation business, including rental arbitrage, management agreements, and partnerships.
Why Start a Serviced Accommodation Business Without Owning Property?
In traditional property investment, buying a property may require a lot of money and comes with risk which not everyone is willing to take. However, the serviced accommodation model allows you to take advantage of these barriers by enabling you to earn income from managing or renting properties owned by other people. This method has many advantages.
Lower Initial Investment: In this case, the initial costs of setting up the business are less since there is no need to invest in acquiring properties.
Scalability: Without owning the properties, their number can be increased rapidly as their management is the only aspect in which you’ll be engaged.
Flexibility: You will be able to investigate various geographical areas and kinds of properties and adapt them to the needs and demands of the market.
Step 1: Learn the Operation of the Serviced Accommodation Business Model
Serviced accommodation is usually aimed at business and leisure visitors looking for short stay periods within a home-like environment equipped with basic amenities including clean rooms, internet, and check-in as well as check-out flexibility. Before deciding to venture into the serviced accommodation business, it’s very important to grasp the nature of customers that these accommodation businesses target as well as the concept itself:
Identify Your Target Market: You can offer services to businessmen, holidaymakers, or even niche segments such as eco-friendly or pet-friendly accommodation.
Determine Pricing Models: Maintain overnight charge but vary the amount to be paid depending on location, time of the year as well as demand for such accommodation services in that region.
Know Local Regulations: Each locality has its own rules concerning short-stay rental, licensing, and taxes which should be well understood beforehand.
Step 2: Select the Right Model for Your Business
There are many ways to set up a serviced accommodation business without owning the property. Below are the most popular of them:
This strategy works almost the same as making a lease. If the owner has a property, you’ll lease it, and then post it for a short-term rental. Here’s how it works: Here’s how it works:
Sign a Lease: Sign a lease with the property owner and make it clear you will turn the place into a short-term rental.
Generate Profit: You can charge a night rate that includes your rent and other charges, which allows you to make a profit.
Pros: Minimal initial investment, offer rent without having to own the property. Cons: Legal issues because some leases or locations might prohibit this sublet or short-term rentals.
Property Management Agreements
Or should you wish to set up a serviced accommodation business without using your property, you can set up management services for property owners. For this model:
Get Property Owners Onboard: Get an agreement with them in which you will manage the property for a specific revenue share.
Oversee the Operations: Deal with guests, cleaning and maintenance, and in return, share the rental income.
Pros: No requirement to pay rent; low chances of risk. Cons: Reliant on the owner’s help; lower profits than rental arbitrage, perhaps.
Joint Venture Partnerships
introduced two teams of people in the short-term rental management space that could have great value for all parties. Does that grab your attention? I said joint ventures. For example, I and a couple of property owners are interested in money. Below are some split ventures and their elements.
Agree on Terms: Set a percentage and work out the details of what each participant will do so that these participants benefit in the end.
Pros: The cost base is cheaper because the insolvency is shared. Cons: It is just a matter of going through the pain of the partnership and doing proper legal work.
Step 3: Find Suitable Properties
Sourcing the right property is arguably one of the most important things that’ll help expedite growth when taking serviced accommodation business from others who own them. Useful tips on sourcing suitable properties include:
Look for popular areas: Higher In terms of business reception or tourists, areas that are centered around the city, airports, or hot vacation points have more chances to have great performance.
Evaluate desirable features: Decrease the distance of guest services and facilities available like parking space kitchens and desirable esthetics.
Introduce yourself to the property owner: Be clear when renting of the property owners about the decisions to be taken and give reasons as to why they should have reasonable expectations of the income from renting out space.
It is also worth trying to shift the focus to lesser property managers or developers who do not have the best long-term tenants and are looking for rental arbitrage or management contracts.
Step 4: Set Up Your Business Legally
Out of the tools and methods available for managing your business, take the necessary steps in establishing your company legally to avoid legal issues. This includes all applicable ordinances including:
Status of your Business: Form a limited liability company or partnership to avoid legal and or financial repercussions.
Licenses and Permits: Be aware of the zoning regulations and obtain the necessary rental permits or short-term licenses.
Insurance: Short-term rental for specific regions and policies just like all rentals require comprehensive policies for liability, property damage, and other risks.
In most cases operational short-term rentals unfortunately often require permits, hence check for regulations to avoid potential financial penalties or being shut down.
Step 5: Furnish and Set Up the Property
The first impression and ambiance of your serviced accommodation will stick with your guests and dictate the impressions and feedback they offer. Here’s how to furnish and set up properties to increase the odds of booking:
Invest in Quality Furniture: Provide good quality and stylish furniture such that the environment is very attractive to visitors.
Provide Essentials and Extras: Have the basics available for the place such as clean sheets and towels, case materials, and kitchen items, and add coffee, snacks, and local guides.
Automate Check-In: Installing a keyless entry system or smart lock makes the check-in process seamless, especially for self-check-in guests.
Step 6: Set Up Booking Channels
The property should be visible on sites where travelers look for lodging to maximize occupancy. Thus, this is what you can do to improve your property’s visibility:
List on Multiple Platforms: Apart from a direct booking website, do not forget to use big booking channels such as Airbnb, Booking.com, and Vrbo.
Optimize Listings: Take and upload good pictures, write a better description, and point out any interesting features that would help book a room on the various sites.
Offer Direct Bookings: Making use of a direct booking website such as Lodgify or Guesty helps avoid booking fees and the level of guest interaction can be altered to suit your needs.
A strong presence on as many platforms as possible enables you to have your properties in the rental market at all times and in effect maximizes your profitability.
Step 7: Manage Day-to-Day Operations
To run your serviced accommodation business successfully, proper operations management is required. Below are how you can ease daily activities:
Automate Guest Communication: To automate some operations within your business such as check in instructions or any message that needs to be sent after a booking is confirmed, platforms such as Smartbnb or Hostaway can be utilized.
Manage Housekeeping and Maintenance: After each guest Internal cleaners turn over the property and platforms such as TurnoverBnB or Properly will notify what other staff members are required to do.
Optimize Pricing: Pricelabs can perform such functionality and alter rate cards according to specific locations making certain that there are always venues available to guests.
Step 8: Deliver Excellent Customer Service
When you have contented guests, they will be most likely to leave a good review, come back for another booking, and refer other people to your property. Custom service is very important in this line of business; please remember to always try and leave a lasting impression on your clients by:
Be Responsive: Quickly address guest inquiries, requests, and complaints.
Offer Personalized Experiences: When checking the guest in, you may want to greet him/her with a card or a small gift basket with snacks.
Encourage Reviews: At the end of the stay, ask the guests to leave a review. Do not forget that these reviews will increase your credibility and the likelihood of attracting other clients.
Step 9: Market and Scale Your Business
After some time of getting the hang of your pace and getting good reviews, you will begin looking to grow your Serviced Accommodation Business and add more properties to increase your earnings.
Expand Property Portfolio: When you have a good consistent source of income, you may wish to diversify by acquiring more properties through rental arbitrage or management agreements or even through joint ventures without working for other people.
Develop a Brand: Coming up with a good business name, logo, and web address will help prospects recognize your business better as you incorporate all these elements into your business.
Leverage Social Media: Instagram and Facebook are some of the best outlets through which one can view the properties and witness the guest’s comments and excitement.
In order to scale your serviced accommodation business, it’s important to have a structured plan for growing and managing several properties; but with good systems, processes, and marketing, that is all possible.
Conclusion
Completely starting from scratch means starting a serviced accommodation business without a property to call your own which may sound impossible but without such assets you will have a low barrier to entry into the business. Whether in rental arbitrage, property management agreements, or joint ventures, the main thing to success is developing relationships with property owners, providing them services, and using management tools.
If executed correctly, those things would enable you to establish a serviced accommodation business wherein your clients come to experience a fascinating stay and you earn well. Again, the most important aspect of this business is being involved in management and operations in a manner wherein you please your guests, not the other way around.
