Investing in high-performing short-term rentals is clearly the name of the game – but how do you pick the wheat from the chaff? Co-founder & COO of last-minute booking app Staze, Henry Popiolek, walks us through how to identify the right UK short-term rentals in this new, critical climate.
For those long standing property management businesses that have survived the pandemic, and for the nascent entrepreneurs, there is the ongoing question of which property next? Each extra property brings with it a notable operational overhead – and so it’s vital that portfolio expansion is targeted to high return on investment properties. Choose poorly, and you’ll invest huge effort for negative or marginal return. Choose well, and your effort will have an outsized impact on your business’ profit. Here’s the data-driven answer on how to do just that.
What does the data say on how much investing in high-performing short-term rentals actually matters?
We studied an example UK market, Blackpool, to quantify how much investing in high-performing short-term rentals actually matters. The answer: it matters a lot! The average RevPAR (Revenue per available rental) in Blackpool is £33. However, the best performing 10% of listings achieve double this with a £61 RevPAR whereas the worst performing 10% of listings achieve lower than £15 RevPAR. In other words, a high-performing property will yield 4 times the revenue of a poorly performing property.
So how do you identify high-performing short-term rentals?
Target properties with capacity for 2-6 guests for maximum profit
Properties that can house 6 or more guests generate the most revenue per night sold, but once this is adjusted for benchmark cleaning rates and per capacity, it’s clear that properties with capacity for between 2 and 6 people are the sweet spot in terms of profit. Properties below 2 people miss significant demand, while properties above 6 people make less profit due to larger cleaning costs.
Achieve above average occupancy by distributing across platforms
The top 10% of properties in Blackpool outperform local occupancy benchmarks by 33%, and to achieve that they are listed on up to twice as many platforms as low performing properties. To get the most profit out of a property you need to keep it occupied as often as possible by listing on last-minute channels such as Staze.
Delight guests to drive 5-star reviews
The top 10% of properties in Blackpool had a high average review score (4.8+). In other words, achieving a high return on investment on a property is strongly correlated with an outstanding guest experience. Select and prepare your next property with that in mind! Tools such as the review analysis offered by Transparent’s Smart Rental PRO dashboard can help you get an edge here to respond effectively to guest insight.
Which UK markets will offer the best returns for property managers?
Bet on high RevPAR markets that have performed well with the shift to domestic travel
The single best number to rely on when reviewing the data on a short-let market is RevPAR. RevPAR shows what the average property makes per night, a number which captures all the supply/demand dynamics shown in figures like occupancy, average daily rate & number of properties. All else being equal, you’ll make a higher return on properties in high RevPAR markets. Given that the shift to domestic travel looks likely to persist over the next 18 months, the smart bet is on destinations with high RevPAR that have performed relatively well in a covid world – I’m looking at you Cirencester!
Henry Popiolek is cofounder & COO of Staze, a last-minute booking app that helps property managers maximise profit by reaching a new audience of millennial travellers. Click here to learn more about listing your properties on Staze!
During lockdown we reached out to vacation rental industry-leaders to ask for their insight on maximising profit over the rest of 2021. Sign up to get your free copy of the guide here.
You can also find out about how to maximise your revenue with data here. Track rates, occupancy, supply & reviews, with Transparent’s Smart Rental PRO and access the ROI property estimator. The estimator returns expected ADR, occupancy & revenue for global addresses and property types to help inform your investment and owner communication.