Serviced Accommodation Pricing, Profit & Occupancy
Are your serviced accommodation units fully occupied but your business as a whole is not profitable?
Occupancy level and profitability level are two separate matters. Many new serviced accommodation operators get confused about the two. They are chasing a 100% fully booked calendar and by doing so, they often drop their prices too low and end up achieving low profit – despite the efforts they have gone to in order to fulfil the delivery.
To get a turnover of £1 million+, you can either sell 1 unit at £1million, or you can sell 1 million units for £1 – which one is easier, and which one makes most of the profit if the costs are the same?
Profit is turnover/income, minus the costs. Whatever it costs you to run your serviced accommodation business, including rent or mortgage, bills, labour, managing the business, cleaning/laundry, repair and maintenances costs – if your fixed and variable costs are similar every month, the more money you can make, the more profit you can achieve. It’s that simple really.
If your unit costs £100 per night, you can generate £3000 per month at a full occupancy level. Equally, if you charge £200 per night, you can generate £3000 per month at a 50% occupancy level with only half the operational costs such as cleaning etc. Which means if you can achieve bookings at a higher price, with less operational costs, then you should make more profit. For that reason, targeting corporate clients is an ideal business model for anyone who runs a serviced accommodation business.
Usually, family or tourists will stay in the area for one night, or a week, but our corporate clients will stay in the same property for weeks, months, or years. This creates a very high occupancy level, and operational costs are very low, meaning our profits are high.
We host FREE online workshops with the aim of improving your business. One of these, is our Serviced Accommodation Booking Strategy, which we implement to attract and retain our corporate bookings. By implementing the system, you can achieve higher profit, higher occupancy level and less operational costs.