Torquay, United Kingdom, June 29, 2014 --(PR.com
)-- Discovery Holiday Homes Ltd. has seen a rash of enquiries for advice from potential second home owners recently, and is now providing the following answer to these questions.
With the economy on the up and interest rates threatening, is it time to buy and tie in a good rate? Is there future capital to be made with the government threatening to dampen the property spirit? The market for rentals is changing and so are the country's holiday needs.
What is abundantly clear is that the baby boomers and those on the cusp of these years are looking toward their retirement and planning for their heirs. The changes in demographics of the nation and changing travel habits are driving this interest and not all is about the commercial opportunity.
Market predictions are that short breaks will not recede in the travel industry. This pattern has been stable for a few years now - the big march towards the short-break having begun back in the very late 1990s. (ref:visitbritain.org) Also these trips will involve three generations: grandparents, parents and grandchildren. Taking a holiday like this in a hotel would be very expensive and not so social, but a rental, with all its recent industry publicity may be a good choice. There is also the opportunity to make capital in the long term and cover costs with a rental.
The marketing industry for holiday homes has exploded in the last few years and brought with it opportunities and also illusions however. Traditionally the self catering or holiday home industry has enjoyed years of simple pleasures.
Our statistics over 20 years of involvement in this industry show people booked 7 or 14 days, changeovers were the same days, prices were not negotiated. In addition a high percentage of guests returned year on year and expectations were not elevated on facilities and amenities.
The market is now a new world and is being driven to a hybrid hotel model with greater demands on all fronts. The forces engaged in this are both commercial as the marketing platforms try to monetize the business to their own advantage, but also guests expectations are rising.
This can all affect an owner's income and the return on investment. Many owners are seeking returns of 10% net, which are unlikely, but have calculated this possibility by looking at tariffs and weeks booked. The expenses however can damage this expectation.
The highest cost is invariably the management and cleaning. The more bookings the higher the cost. With more shorter break bookings there is a balancing point at price per night vs. costs that becomes unacceptable. Utility costs are also increased as people now travel for short breaks out of season and winter fuel costs can escalate.
So is it worth it? The simple answer is maybe. There are obvious ways to mitigate the difficulties and the primary ones are the property location, number of bedrooms and bathrooms, outside space and car parking. Plus the personal benefits of private use.
Combine this with correct furnishing, correct rental tariffs, good marketing and a decent income can be generated. The best returns are not necessarily from the properties that people automatically expect. The famous Shaldon beach huts
for example book out for much of the year at premium prices for 1-3 nights, whereas a two bed property with more space and amenities may see less income. The former is an "experience" and with an increasing interest in the unique and unusual and the one and two night break syndrome, they see a lot of interest.
Once you have made a purchase and fitted out your holiday home, you need to get it seen and be in front of potential guests. Agents such as Discovery also charge a fee and many absent owners use agencies to avoid the hassle of adopting this responsibility. These fees can vary wildly and penalties for leaving an unproductive relationship can be eye watering and need factoring in.
Many owners think that rentals are easy, but beware, renting a property can be onerous and can include numerous late night calls, advertising costs, replying to endless short breaks requests, detailed information on the area and property, sending arrival instructions, liaising with management, taking card payments, looking after damage deposits and more.
The average enquiry to booking ratio in the UK is now estimated to be 6 or 7 and rising as guests contact many different owners and agents to get the best price. Some businesses see in excess of 20+ enquiries to respond to before a booking materializes. Most guests between the hours of 8 am and 10 pm expect a reply within 1-2 hours, these days.
It is extremely important for any prospective owner to address all these issues prior to a purchase and speak to a second generation agent such as Discovery that has invested in global marketing, distribution and technology to support the higher levels of enquiries, online payments, synchronized systems and network marketing. Imperative is an agent that knows the area and has a close working relationship with owners and can also speak confidently to guests.
A simple check list can help appoint the correct agency:
- What are the booking commission costs?
- What are the contractual exit penalty clauses and costs?
- Are there any advertising premiums?
- What are the costs for professional photography and copy?
- What is the allowed discounting?
- Do they provide an owner's own website?
Discovery only charges a very competitive commission on a booking made, all other elements are free of charge.
Addressing all these points can save some heartache and financial losses, but could equally provide a good long term investment and a wonderful second family home for private use.