Save your short term rental

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Statistics show that 1 in 5 guests who visit New Zealand stay in Airbnb accommodation. That amounts to 8.8 million nights or 18 percent of the total short-term accommodation market.

It’s no wonder that the wider short-stay/self-book accommodation market neared $400m in revenue last year in New Zealand Alone.

That was of course until New Zealand closed for business this March, effectively ending the international tourist market for the foreseeable future.

Large numbers of short term accommodation suppliers, myself included, had 100% of their future bookings cancel in a few short days. The only saving grace being that some of us had a fairly robust cancelation policy in place to protect us from last minute cancellations, or so we thought.

Unfortunately for us “hosts”, Airbnb pulled out a swift move to protect the general public’s confidence in the platform with a change of policy called the “Extenuating Circumstances Policy”.

This basically allowed most people with a booking to cancel and get all their money refunded. Great for the booking parties who outside of Covid-19 would have honoured their booking, good for Airbnb as they retained their customer’s support and loyalty and terrible for hosts who have had up to 100% of their future revenue evaporate.

So to all of you other 37,000 New Zealand Airbnb Hosts/homeowers with empty properties and zero income – I feel your pain. However, there is some light at the end of the tunnel.

  • Note: The following advise is intended for those who “Host” properties as a whole, rather than people who rent out a room in their normal residence.

How are we going to get these properties filled? Particularly in a Level-4 lockdown with increased strain on the ability to clean or turn the properties over?

I think a fair few people will or have already given up. They will either leave their houses empty and non productive or rent them out long term and be hesitant towards going back to providing their property for the short term accommodation market.

Worst yet, they might choose to take the banks offer of a “Mortgage Holiday” which as discussed previously, should only be a last resort.

The bright side is this – when most investors take properties out of the short term accommodation pool and are unlikely to return it, this will upset supply and demand. That should push up nightly values in the mid term, even if this is highly speculative when exactly the “mid-term” is right now.

In the meantime, here’s some tips to fill the gap in revenue in the short-term:

  •   Drop your price substantially, I went from $225 a night to $125 a night. This won’t be forever, somethings better than nothing and it still reaps better return than what I was getting when my property was a long term rental
  • Adjust your “Minimum Nights” allowance. I went from 3 nights minimum to 7 nights minimum it allows for better overall profitability when you take into account the cost of cleaning you are charged per turnover
  • Take your cleaning fee off your listing, until you can clean the property again safely
  • Update your listing to state that you are still functioning in the lockdown
  • With the point above, do not mention “Covid19” in your listing, as Airbnb are screening this out
  • Mention that your property is private/make it a full house rental ONLY if possible
  • Give walking distances to crucial amenities such as the dairy, nearest supermarket etc
  • Allow for a longer down time between bookings, to ensure you can safely clean during turnovers
  • Outline a detailed cleaning and disinfecting process that you can provide, to give potential bookings confidence
  • Ensure your listing targets the accommodation of essential service workers if possible, rather than being more focused on the domestic or international tourism market
  • By this, I mean re-wording and re-framing your marketing and photos

Once you’ve done this, you need to find other avenues to market your property as well. It’s no longer enough to just place an add on Airbnb and see what you get. For example:

  • Put your booking on “Self Isolation Rentals”
  • Add your house to booking.com – there is a feature to link calendars with Airbnb, to avoid double bookings
  • Mention to friends and family that you have a property empty. If they know of anyone that is in an essential service worker who would like to live separate from their family bubble currently, offer a great weekly price to show your support
  • Put an ad on Facebook marketing your property and link through to your airbnb page. You can target the ad to only show domestically and to only show on the dates that the property is actually available, to save you marketing money. (As little as $3 per day marketing spend, could get the next booking)
  • Ensure your listing is appealing to local potential users
  • You can target Police or Medical essential workers by posting on physical or online notice boards
  • Post your listing on “Vic Deals” or your local educational hub noticeboard, to attract student rentals once we are out of level 4 and can cohabitate again

I’ve managed to use these tips to get a couple of several-week-at-a-time bookings, which has allowed me to fully book my property and provide relief until mid-June.

 

By all means do what you can to protect your cash flow. I would strongly encourage you at this time to remain safe and do not take undue risks with your “bubble”.

 

 

 

Steve Goodey – Steve is a property investor & coach with over 14 years of hands on experience in the New Zealand investment. He shares his wisdom on this blog and his facebook page as well as through his private coaching program.

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