This a question I get asked a lot. There are many factors to consider and lots of boxes to tick but it’s simply a case of meeting as many of the criteria (which I will cover shortly) as possible and not over analysing it. One of the most important factors in my opinion is finding an area where there is a demand for SA which is as close to where you live as possible. I call these SA demand points. In my opinion most towns and cities will be fine to do SA in, it’s simply a matter of finding a good spot in that town or city. The reason that I recommend doing SA in a town or city as near to where you live as possible is that most people in the early stages of their SA business will be heavily involved in the set-up of each of the properties as well as meeting with cleaners. If you choose a location that is too far away, you are going to be spending far too much time travelling. Yes, it is possible to outsource all of the onboarding work of an SA and if you are super confident that you have the person or people in place to do this for you then yes it is ok to pick an area that isn’t close by. However, please be aware that circumstances change, and relationships change, so don’t make the decision to choose an area far away from you lightly.
Knowing where to locate your Serviced Accommodation property business and renting properties out on Airbnb and Booking.com is becoming more and more popular property investment strategy. When choosing your SA Goldmine Area, you should always focus on demand for SA.One of the helpful indicators of demand is whether there is a hotel relatively close by. If there is, then the hotel will have done a lot of legwork for you. Remember I wrote earlier about why people will choose to stay in an SA rather than a hotel, and the main reasons are saving money, extra facilities and privacy.
Locations for Serviced Accommodation property investments
So, if people are going on to Booking.com to look for somewhere to stay in your town or city and they find a hotel in that area, they will also find your SA unit if you’re listed on Booking.com. When there isn’t a hotel in a certain area, it doesn’t necessarily mean that there isn’t a short stay demand, it might just mean that despite the fact that there is demand a hotel just hasn’t been built there yet! Where there is no hotel, you simply need to be assessing the demand yourself and I will list some examples of this demand.
What to look for when investing in property for Serviced Accommodation
This is not an exhaustive list as there are many things that will cause people to go and stay in a different town or city for a while and so you just have to use your own judgement on a specific thing you spot in an area that might create demand. What you are looking for is all year-round demand to maintain profitability in the winter to supplement the typically high summer months. Here are some examples:
Near to a Train or Bus Station
People may want to stay near a bus or train station if they intend to commute from your location to another. It may be that the cost of accommodation is significantly cheaper where you are which makes the commute financially worthwhile. This is certainly the case in places like London where accommodation can be very expensive. It is worth mentioning here that the need to provide a parking space for travellers arriving by train or bus is less, although your guests might hire a car on arrival. It’s likely that the main train or bus station in a city is going to be in the city centre where it can be the case that parking is very limited and many hotels and SAs do not offer parking there.
Construction or Building Sites
Many of the trades/builders/contractors working on site will not live locally and so they will need temporary accommodation in hotels, guest houses and SAs. Remember that you can be extremely appealing to groups of these contractors for the reasons mentioned earlier. When it comes to parking you need to remember that often the vehicles that they drive are high sided so check the headroom of your allocated parking space if you have one and make it very clear to your guests via your listing on the OTAs and your website when they book. Construction sites like this can provide year-round demand if it is a large project.
This could be something like a power plant or a steel works, or a large port which will have a natural “rhythm” of work which will require larger amounts of specific trades at different points in the year. Travelling trades will need a place to stay.
Large businesses, companies and organisations often have mobile workforces to supply skilled staff to construction, industry or directly to customers’ homes. Big business is an opportunity for repeat custom as they may visit the area repeatedly for annual services for example.
The centre of a large urban area will represent a cross section of differing demands which might include construction, industry, big business, holidaying or a combination of all of them. People visiting could therefore be for both work and leisure purposes.
Yes, there is going to be good all year demand, but please be mindful of the fact that you are likely to attract mostly one-night stays from people travelling on flights and this will significantly increase your costs. The main costs involved in an SA business are the cleaning and laundry. It’s much more profitable for you when your guests book for longer because for up to a seven night booking you still only have to pay for one clean and change of linen. When near to an airport I would encourage you to reach out to the airport staff and the airlines that operate out of that airport and offer your SA as an alternative to hotels. One of the main complaints of aircrew is that they are always living out of a suitcase and they never have a base to be able to leave things in between flights. I know of lots of people who have SAs near airports who are block booked by groups of air crew or by an Airline on behalf of their flight attendants. You can offer a significant discount on your nightly rate in order to secure a nice long booking and in the process make a lot more money than you would from multiple frequent short stays, which also come with a higher admin burden.
As well as the obvious reasons people will visit, these places are also used by artists and bands. A nearby SA to a sporting ground can also be booked long term by the respective club to provide a better and perhaps more cost-effective solution to hotels for visitors to the club. Many sporting venues also have conference centres that will attract people from out of town too.
The more prestigious the better. As well as the reasons given for “Sporting Venues”, groups of golfers are likely to book an SA for a week when on a golfing trip or break. If it is a championship course, then you can expect to earn serious money when the course hosts a tournament. Please just be aware that I wouldn’t choose an area for SA if it only had a golf course as the main attraction. I would be looking to tick other boxes as well, because golf as well as many other sports can be very seasonal, with demand in the summer and not so much in the winter.
The busier the better, the larger the better. The conference centre is extremely likely to have hotels located nearby and for the reasons given earlier you can provide a better alternative for your guests.
These can be national parks or areas of natural beauty, historical sites as well as theme parks to give just a few examples.
Clearly there are going to be lots of scenarios where people are going to be admitted into hospital for long periods of time, and often a relative or family will want to be nearby to make visiting more convenient. The other scenario to consider is the people working in the hospital for long periods of time. We had a consultant who was working in the local hospital book one of our one bed apartments for just over five months whilst on assignment.
These are a regular source of bookings. There will be multiple open days and graduations that will cause families to travel in order to see their loved ones graduate and be in the photo that ends up on the mantelpiece for ever.
Where is a good place to have a Serviced Accommodation?
The list above is not an exhaustive; each area is going to have its own unique reasons for people wanting to go there for short stays. It’s just a case of finding as many of these as you possibly can before making a decision. If you are straddled between two areas, then I suggest you just do your research and make a list of the different SA demand points in each location and choose the one with the most! The other thing that might sway your decision here is if a particular location has people there who would be willing to help you if required, because we all need a little help from time to time!
Another thing that will help you find the SA demand points is to Google your town/city and then click on the Wikipedia option. Here you will find lots of information about your area, and if you’re like me you will find out lots of information that you previously knew nothing about. Often people live in an area their whole life and they know less about it than a visiting tourist finds out on one visit. By doing some research you will discover some SA demand points that you might have overlooked otherwise.