The 7 Most Common Mistakes People Make In Their Serviced Accommodation Business
When we first started out in property investment and serviced accommodation, we made tons of mistakes. These mistakes cost us a lot of time and money, but hopefully by sharing our experience with you, you can avoid these!
Mistake No.1: The ‘Service’ part of Serviced Accommodation
Yes, Serviced Accommodation is a fantastic business when you can generate a large amount of cash, but it’s important not to forget your purpose. When we first started out, we were desperate to make profit, and cash focused.
At times, we let our standards slip. We kept cash instead of re-investing in the property and the facilities to better the customer experience, which in turn led to negative reviews that could’ve easily been prevented.
The word “Serviced” means that guests have expectations. Until these expectations are met, customers are likely to (and entitled to) make complaints, which may mean that they give you a bad review.
A bad review for a new SA operator, could be catastrophic for future business. It does not look appealable to new business if you do not have satisfactory reviews within your hosting platform, or if the reviews are that bad, it could even result in a ban.
Having good reviews is crucial for new serviced accommodation operators. You will be able to attract more bookings, fill up your calendar quicker and be able to charge a higher price per night, all by simply satisfying your customers.
When we started out, we met all our guests when they checked in, but as you grow this will become harder, and you will likely want to automate the check-in process wherever possible. It is important to continue to make sure that guests receive a friendly service, support from us, and know who/how to contact if they have any issues.
Any issues that guests may have, it’s important to resolve them quickly and efficiently. Use that as your chance to impress with your service.
By building a relationship with our existing guests, we generate repeat direct bookings with corporate clients. More than 90% of our bookings come from direct bookings. This saves us a lot of time and money from paying commission/negotiating and in turn makes our business more sustainable and profitable.
Mistake No. 2: Not having a Company Policy/Terms & Conditions
Without a company policy, guests can dispute your service or booking, to ask for refund in almost any circumstance. It is important to remember you are running a business, you must have terms and conditions to safeguard your business to prevent any potential dispute.
We used to have guests smoking in non-smoking houses, people took our keys with them when they checked out and never returned them back, guests took or damaged our TVs claiming they know nothing about it. No matter the issue, if you haven’t got policy set up and you want to charge them for any damage, they have the right to refuse.
Another procedure you must take, is to insist that guests send you their IDs before you let them in, particularly if you let out the whole property. It’s important that you know who exactly you are letting into your property, to future proof yourself in case of any illegal activities.
It is also incredibly difficult to claim damage or charge a card for damage without evidence that they have checked in.
Further to this, TAKE PHOTOS! Video/Photographic evidence is a good way to back-up any charges or breach of terms and conditions.
Mistake No. 3: Wrong layout limits the revenue potential
We have converted many of our own properties to either HMOs or B2L into SAs. We deal with a lot of contractors, they are good customers, very easy going and pay well. Whilst they are happy to share a house or a room, they do not wish to share a bed. Because of this, we make our biggest room into a twin or family room, as that is our predominant market base. We have Smart TVs in communal areas and some bedrooms so that they can watch Netflix and play games through our high-speed Wi-Fi.
Knowing what works in your area and setting up your SA to the right layout to meet demand, will maximise your potential.
We mainly have contractor bookings Monday to Friday, and family bookings over the weekend, so our lay-out works perfectly for our bookings!
Mistake No. 4: Not understanding different SA models in your area
Newbie investors often think that there is only one type of SAs. Actually, there are many types of SA models in various areas.
Some areas are great for family, travellers, others are good for events or construction contractors. Every town, city or village can be different, and not all SA properties are equal; they don’t give you the same return.
You need to know what works in your area, before you scale it up. Don’t take on too many units too fast. First, try one, repeat your success, then take on more. When you start to take on more properties and scale your business up, you need to focus on repeating the most profitable model in your area.
Mistake No. 5: Making your business too complicated to run
Some people think that SA is a very complicated business. This is could be two things: they either don’t understand it, or they haven’t got a scalable system to run it well.
For us, SA business is easy. In our area, over 80% of our guests are contractors, they value relationships, they like to deal with us direct, they appreciate small discounts, they like us to email them invoices. They are happy with the houses and they keep coming back. We also have family/event visitors, who come in groups of up to 10 people, of which pay premium money for a weekend…
If you learn what works for you in your area, providing you set up a good system, running a serviced accommodation business takes almost no time from you.
Mistake No. 6: Not understanding how to Run SA as a business
Whilst setting up a SA is quite straight forward; it is important to ‘keep on top of things’ and keep learning as you go. ‘Keeping on top of things’ could mean investing in yourself or your skills, networking with others, monitoring market changes, or adopting new systems or ways to do things to keep your business sustainable, profitable and appealing.
You could be learning how to acquire your next property, how to submit your first VAT return, to hiring your first property manager or even how to utilise your booking engine. There are countless things to learn within SA.
The fact is, the more you learn the better you are. You can then teach your team and scale your business up. Only after we acquired 25 units did we start to understand what models work for our business and utilise them.
Even now we have a profitable, successful system in place you still see us joining different SA networks, events, seminars, and training courses. We learn new thing every day, to better our knowledge, our business and ourselves. Learning, adapting, and evolving is the key to success.
Mistake No. 7: Trying to do everything yourself.
We often get people through who want to do everything themselves.
Let me put it this way, do you think Richard Branson flies the Virgin Atlantic plane, drives the Virgin train and coaches’ people how to keep fit in Virgin Active? No!
He creates a business, so his team can run it! This works in the same way as your SA business should! You create your SA business, make it work, develop a system, so your team can run it without you being there.
Instead of focusing on setting up the business process, system, in order to make it scalable; people will do the bookings themselves, change bedding, clean the house, do all the laundry, greet the guests, pick up all the phone calls, set up the listings, and the list goes on. The reality is you can’t do everything yourself.
SA operators need to analyse deals, have the skills to build a team, then build a system to run their business. By doing these 3 things, you are on your journey to success.
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