Just a re-cap, a SHORT TERM / HOLIDAY RENTAL refers to renting a furnished property on a short term basis, considered to be for a period of less than 3 months. In the previous post I explained The Pros in detail. Now it is time to turn to The Cons.
- MORE MAINTENANCE AND UPGRADES
When your business is managing short term/holiday rentals you will need to maintain the upkeep of the property to a high standard or you could receive negative guest reviews. Not only does this include things such as regular cleaning, maintenance such as running taps, blocked drains and paint fixes, it also takes into account changing technologies, such as Smart televisions, Foxtel, Netflix, Wi-Fi access and the like. Rental amenities will need to be updated every so often to include all the essentials and more for a pleasant stay – this can come with a hefty price tag.
You may need to refurbish every few years or so as the guests who seek this type of accommodation from the higher socioeconomic bracket expect the highest quality fit-outs and all mod cons. They are also prepared to pay at the higher end.
- INCOME NOT GUARANTEED
This option may not suit you if you need a consistent rental income. Short term accommodation can mean an increase in vacancy periods, particularly where occupancy is seasonal. This can be overcome if your accommodation agency has a good relationship with relocation companies, government agencies or global corporations needing furnished properties for their clients or employees all year round.
While peak seasons are fully booked, off-peak bookings are scarce which will cause a drop in income. While rates can be adjusted to compensate for seasonality – raised for periods of higher demand and lowered for quiet periods – regular bookings and income are not always guaranteed.
- COMPETITION FROM SURROUNDING PROPERTIES
Unlike the residential housing market where properties are swamped with interest from prospective tenants, the holiday rental or short term market sees many more homes listed than travellers/guests searching. Depending on location and availability there may be fierce competition between properties in the area.
- FINANCIAL OUTLAY
If property management is outsourced, management fees will be higher to account for the additional hours associated with resolving more frequent bookings, scheduling housekeeping services, servicing and maintenance of equipment, management of supplies and so forth.
There will be establishment costs depending on the owner’s requirements, including a full inventory, professional photography, refurbishing and redecorating advice and assistance.
- TOO MANY THINGS TO MANAGE
For some owners, short term/holiday rentals are a retirement-hobby vocation, for others it is a full time role. There are plenty of tasks to occupy time involved in every guest stay, from ensuring accurate calendar availability, facilitating a seamless booking process including ‘meet and greets’ and departures, not to mention arranging cleaners, gardeners and the rest – short term holiday rental accommodation can be hard work if you don’t have the right tools to do the job.
Finally, it is important to say that owners need to be aware of both the Pros and Cons to choose the option that best suits them.