How to maximise your PBSA assets: part 1 - summer
May 18, 2020
Student operators are facing a projected dramatic decrease of 230,000 first-year students in the upcoming academic year, half of which are international, according to a study by London Economics. However, the current crisis actually creates new opportunities for PBSA asset owners. In this blog series we will take a closer look at the issues and opportunities facing PBSA:
- Maximising the summer period
- Filling available units during term time
- New PBSA assets in construction
- Future of nominations and students in HMOs
- Increasing the long-term trading value of PBSA assets
In this first installment, we will examine the opportunity for summer 2020 and what moves to make to capitalise on the opportunity.
Shifting regulations, uncertainty around student numbers and changing financial positions has put many of the usual PBSA summer business options in serious doubt. While some PBSA operators have stated they are prepared to take a hit, many are exploring a range of new strategies to generate revenue.
One such strategy is the growing trend around "mixed-use” schemes: PBSA schemes with consent for non-student usage. The shift towards "mixed-use” is quite natural for many reasons including:
- They make optimal use of otherwise empty residential housing, resulting in less waste.
- They drive incremental revenue for the asset owners, many of whom are academic institutions who need the income. These additional revenues then ensure that accommodation prices are kept as low as possible for students during term time, making university education more accessible.
- High-spending tourist footfall in the summer months generates earnings for local businesses and boosts the local economy.
However, with so many PBSA assets sitting with high vacancies this year, they are already a step closer to readily generating additional NOI. The window of opportunity could open as early as July 4, according to section 4.3 of the UK government’s COVID-19 recovery strategy. That means, in order to maximise NOI over the summer months, PBSA asset owners should be acting now to open vacant units to the potential of high-yielding short-term rentals. We have seen a typical 80% reduction of vacancies, with units earning up to as much as +20% vs their long-term rental value, through the summer period.
Making short-term viable
Taking on short-term rentals does not need to be as daunting as it may sound. Some student operators stop short of exploring short-term rentals because it is often seen as an operational nightmare - soaking up months of valuable time and resources, planning and managing a non-core part of the long-term rental business. In conversations with some of our PBSA partners, they highlighted these concerns around short-term rentals:
- Having to manage distribution across multiple channels separately, across many websites - each with their own logins and layouts.
- Turning around units for short-term, at the end of term time, is complicated and does not fit well with the current setup, cleaning schedules or business structure.
- Short-term rentals can be seen as a distraction because of the level of effort it takes for the in-house team to embrace a different way of working.
The solution to all of those concerns lies in technology. The right technology partner can help you to navigate and meet challenges such as:
- Consultation around the configuration of units
- Automate distribution and communication on the multiple marketing channels
- Implementing dynamic pricing tools to automatically adjust to market shifts
- Providing flexibility to tap into outsourced operations or operate in-house
- Smart automation of traditionally resource-intensive operational workflows
The ideal partner is one that provides a way to simplify and automate distribution across multiple channels from a single technology platform that can be used by a single in-house team. Additionally, if operational fit is the key issue, the option to outsource the entire short-term rental business to a trusted operator is important - 100% hassle-free.
If increased summer demand is on the cards, an automated technology solution could be the difference between an asset sitting empty for weeks (possibly months) or generating revenue during a tough recovery period, which could last quite some time. Regardless of where you are on your journey to make the most out of the upcoming summer, Lavanda is happy to share our knowledge to help you find the solution that works best for your assets.
Have a suggestion for an area you would like us to explore further in this blog series or have further questions? We are always happy to talk, contact us on firstname.lastname@example.org. Be sure to join us for our next blog focused on filling available units during term time.
Lavanda is an award-winning SaaS platform used by the world's leading vacation rental, student and multifamily operators to increase NOI through short and medium term rentals. Clients include Greystar, CA Ventures, JLL, Savills and LaSalle amongst others.