Best Places for Serviced Accommodation
Serviced accommodation, with the help of companies like Airbnb, has become much more accessible to the regular investor. However, with it being a relatively new avenue, we aren’t inundated with data in the same way we are with other property investing strategies. Luckily for us the most important variable for being a success with short-term lets is the same as all other property investing, that is demand. As long as we know where the demand is and what type of property is in demand, we will always have a viable investment. When researching demand for serviced accommodation we will have to look for different indicators than usual as the factors that drive a property’s desirability have changed. Like other kinds of investment there will never be a perfect place to invest but let’s look at some of the best places to use this strategy and how to best access demand.
Serviced accommodation for use by tourists.
There are a number of other uses such as work but according to Airbnb 70% of their customers that visit the UK do so for holiday and leisure. So, by focusing on tourists we can access the biggest area of demand. We may cover other uses in later articles but for right now we stick to the main use. There are two main strategies within serviced accommodation that we should look into. They are a focused approach and a more generalist one. For the focused approach we would be looking at providing a specialised property for one attraction or event whereas when being more general we should be looking for a property that can be used by any tourist. The broader strategy generally lends itself more to city accommodation while a targeted plan can be anywhere as long as we know there is demand.
Let’s start with the generalist approach, and to begin we have to make sure we are even looking in the right place. If you are looking at buying a property for serviced accommodation or converting an existing one you have to make sure it is in a town that has lots of tourists. So, here are the most popular UK towns according to VisitBritain and their most up to date visiting figures from 2018.
It is absolutely vital if you are being more generalist that the city you want to invest in has lots of visitors so we would recommend making sure it is on this list if you are not targeting a particular set of tourists. Then we have to consider why they are visiting in each city. These will vary between city, so we have to make sure we are doing our research. For example, if you are looking at London, you will need to look for museums and galleries as they are the most popular attractions (popular tourist attractions shown in Telegraph article linked at the bottom of the article). As another contrasting example if you went for Brighton being near the beach is obviously more important than museums. So, make sure you do specific research to find the best location within a particular city. However, there are some less particular places we have to try and buy near. Here is the breakdown of what an Airbnb guest spends their money on:
There are a few pieces of information we can take from this. As you can see, despite the apparent appeal of being able to cook your own food in a serviced property, visitors would still much rather go to a restaurant. If we combine this with data from VisitBritain that states the most popular activities for tourists in the UK are going to restaurants and/or pubs, we can conclude that places to eat are absolutely vital. Looking back at the pie chart, many of you that already invest will be able to recognise that being near transport links and shops is still important even for visitors.
Now moving onto to the more focused approach this will require finding a popular attraction or event first then finding the location to accommodate its visitors. This is very area specific but as an example Chester Zoo is one of the most popular tourist attractions outside of London and so you could buy a property in Chester to access this demand. For this strategy we then have to think what best accommodates the visitors we are trying to attract. So, in the Chester example, the zoo is a couple of miles out of the town so good road links and parking spaces may be the most important feature of a property. The next factor to consider is whether you can double up, obviously the more attractions you can accommodate for the less dependent you will be. For example, Salisbury is an old town popular with tourists for architecture and the cathedral, it is also the largest town near Stonehenge and has regular tours visiting the site from the town. If you want to go the extra mile there are ways to stand out from your competition with the targeted strategy. You can design your property to fit in with your attractions theme. One enterprising couple within Fielding Financial saw demand for serviced accommodation near the Harry Potter Warner Bros. Tour and so bought a property in Watford. The thing that really made them stand out however is the magic themed décor. They added features like a leather-bound guest book with quill and ink, and a dining room with floating candles.
One hiccup that can occur with the focused approach is that it can be seasonal, for example if you are targeting tennis fans and you buy a property just south of London for people to go to Wimbledon from then where will the demand come from for the rest of the year? (If this is what you are looking to do then Tennis London allows you to list property for fans of up-coming tennis tournaments, the link is at the bottom). This is why doubling up can be very important. Another issue may arise if you ignore some of the simple necessities we brought up for the general strategy. According to Airbnb 43% of its guests’ money is spent in the neighbourhood around the property. This shows that people still spend time near their accommodation so don’t feel like you can buy a property in a rubbish area just because it is near a theme park. The area has to be nice and have things like restaurants and shops just like other property. The last problem you may have to deal with is that a lot of these attractions and events may not last more than a couple of days and so you may have to prepared for short term bookings and high turnover.
These two strategies are actually quite different and offer demand in different ways. The focused approach may offer higher demand as long as the appeal remains, while the generalist approach will probably be a steadier supply of demand. The risk is also different between the two. The more targeted strategy is so heavily dependent on one or two attractions if they become less popular then so will your property. Whereas in the more general plan the risk is lower as whole cities tourism figures don’t tend to fluctuate too violently. Despite being so different you can combine these approaches. Some examples we thought of while writing this is for festivals. Both Leeds and Edinburgh are big festival towns with extremely popular events for music and comedy respectfully. For the rest of the year however both towns are on our most visited list and so demand should still remain steady. That is the beauty of such a newly accessible market is that there is so much space to experiment and make your own strategy. Hopefully this article has given you some ideas of where to look but there is still much to learn. Make sure before you buy anything you find out the logistics of short-term lets and how to market yourselves using the most popular websites. For more information visit one of our FREE Property Investing Seminars we run across the country.
The UK’s top tourist attractions – https://www.telegraph.co.uk/travel/destinations/europe/united-kingdom/articles/britains-best-tourist-attraction/
Airbnb’s data on their guests – https://www.airbnbcitizen.com/wp-content/uploads/2018/10/AirbnbUKInsightsReport_2018.pdf
Stats on the most visited towns and what people do there – https://www.visitbritain.org/town-data
To list a property for use by tennis fans – https://tennislondon.co.uk/