Pivoting from short-stay to long-stay? Here’s how
Short-stay to long-stay might sound like airport parking, but it’s a serviced apartment and co-living strategy that is taking off. With the Covid lockdown grounding the short-stay market and the ongoing uncertainty over new local tier restrictions providing extra turbulence, more and more operators are looking to long-stay as a means of securing long-term revenue.
For those thinking of pivoting, the res:harmonics flight plan includes a ‘long-stay apartment’, multi-channel and multi-pricing approach as well as directly connecting with real estate letting agencies. Fasten your seatbelts.
What is long-stay?
Is it a month, is it a quarter, is it a year? No, it’s long-stay. Long-stay occupancy has no fixed definition bar the rental period being an ‘extended’ period of time, which could be months or years, but is generally considered as six months+ when counting the days. However, it’s best to think of long-stay in terms of cash flow. Every operator works differently, but securing a long-stay booking of, let’s say, nine months should be viewed as three consecutive quarters of guaranteed revenue, which enables you to better plan for the future and de-risk the rest of your shorter stay portfolio.
Why is long-stay especially important now?
In a word: Covid. Short-stay suffered the most during lockdown with many operators finding occupancy falling from 90% to 10%. With new restrictions on the horizon in the UK and across Europe, short-stay will likely bear the brunt of the measures again as those that need to travel are looking less for a short-haul getaway and more a long-haul destination. In other words, a home where they can work, unwind and, if necessary, quarantine.
How operators can pivot from short-stay to long-stay
Offer ‘long-stay apartments’
This is not as obvious as it sounds. When pivoting towards year-long occupancies, operators should put themselves in guests’ shoes and ask: with the continuous threat of lockdown, what would I want in my apartment? From excellent working from home features - high speed internet, ergonomic chairs, solid work surfaces - to separate lounge areas, kitchens and laundry capabilities, long-stay apartments are more than just for sleeping in.
In fact, long-stay guests are more likely to want outdoor space (e.g. a terrace in case of a second lockdown), the ability to bring pets (apartments should be pet friendly) and the chance to see the square footage of the apartment (operators should video or facetime the apartment so guests can gauge size) before entering a long-term agreement.
Use a multi-channel, multi-pricing approach
Yes, daily and weekly rentals might earn 30% more per day, but in the current period they are also more likely to earn nothing per day. The revenue security of long-stay occupancy is invaluable to operators and innovative living companies should offer discounts to entice extended stay, such as 10% off the apartment rate for every three months booked.
What’s more, operators should look to diversify their approach away from traditional OTAs. Employing direct booking tactics gives operators more control over long-term discounts, while operators should also look to use sites that specialise in long-stay rentals.
Dip into the rental market
During the past few months, many operators have been using the same distribution channels but not picked up the same number of bookings. With the market weak, why shouldn’t operators dip their toe into a market that’s still in demand: assured short hold tenancies (ASTs).
By diversifying into rental on a temporary basis, you can control your costs, access new demand segments and de-risk the remainder of your portfolio. With long-term tenancies, operators can also negotiate terms (i.e. only need to clean once per month), reduce overheads and increase the net percentage from selected units, while keeping others short-to-mid-term.
Use a PMS
At res:harmonics, we have a direct connection with a major online real estate letting agent and have helped operators put a three-month property on year-long rental deals and access a market people are still looking for, so operators can sit back, relax and enjoy the profits.
But that’s not all. From features such as our Quote Portal - enabling operators to go from long-stay enquiry to long-stay quote in 60 seconds - to online contract signing and automated billing no matter whether it’s every month or three, we have the tools to help you switch and enable your revenue to soar.