Does this make you go ‘wow’?
Glad to know you are interested in learning more about maximising self-catering income of captivating homes.
You know that Cape Town is popular. Extremely popular. And self-catering accommodation is massive. Airbnb’s total self-catering listings in Cape Town is more than the second biggest Airbnb country in Africa. And growing fast. In South Africa Airbnb grew by 163% in one year.
You may think this is good news. But is it? In the past you could dicate. Now everyone with an internet connetion is listing online. It can still be profitable but the game has changed forever. Those who do not compete on price will win the game.
And I am sure that you want to tap into this profitable opportunity, but where do you start?
What are the risks?
- * You are worried about allowing people you don’t know into your home
- * Legal and insurance issues
- * Marketing and management
- * Payment, rates, breakage deposits and protecting your risks
- * Low occupancy
I am making fun of relationships. The idea is that after a while you will say: If I knew how easy it would be I would not have been so scared at the time.
Being naive would be irresponsible. It can become tough. But that's why good cooks stay and face the heat.
To make it easier we created this 10 part resource guide to introduce you to most of the self catering issues you may have. You can also learn more about the hassle free option to maximise income even if you are far away.
You can get access to all ten ideas today. But I will also drip feed you one every day for the next ten days. Below the ideas to address some of your concerns.....
10 IDEAS TO MAXIMISE SELF CATERING INCOME - Menu
Where and how to list your accommodation.
Okay. You want to market and earn excellent money from the exploding Cape Town self catering market. Excellent idea. Let's look at how to list Cape Town self catering accommodation.
You have two options to list (market) your home:
Do it yourself. If you want to do it yourself you need effective online marketing skills and be available to all your guests. You can list with various other international booking sites.Today it's very easy. Airbnb would be your first option. Airbnb is easy, and effective. We have found they do very well with short stays but not really great with long stays over peak period. When you market you need to manage your home; meeting and greeting the guests and keeping them happy. You can read more on how to list on Airbnb here.
If you want to maximise your income:
You can use an agency like CapeHolidays to market your home to maximise your income.
Good agencies will market your home on many international sites like Airbnb and Booking.com - the most important.
While you use an agency you will pay commission but the idea is that an effective agency should generate more income than you would. CapeHolidays and others can manage your home as well. This gives you the freedom to continue doing what you do and leave the hard work to the experts.
We will discuss occupancy later in more detail: Self catering accommodation owners in Cape Town who achieve only 30% occupancy through the year are not doing a great job.
You can potentially get more than 50%. With WOW homes occupancy of more than 80% is possible.
Will Your Cape Town Self Catering Accommodation Qualify?
Let my say that if you want to list (market) your own accommodation; you are the boss, you have the time and skills then do it.
Here is the criteria, I believe, that will contribute to maximising your Cape Town self catering income. You can also use these ideas to decide where to invest in Cape Town for self catering accommodation.
First, I will list some of the most important criteria then share a short list of things we consider before we list a home.
General short term accommodation listing criteria to maximise income on Airbnb and Booking.com
- * Wowness! People are looking for experiences. To captivate them you need to demand higher rates. To demand this you need to ensure your home has that extra special appeal.
- * Direct beach access.
- * Across the road form the beach.
- * A pool.
- * Jacuzzis are popular (but a real pain to run).
- * Camps Bay and Clifton comes before any other Cape Town suburb.
- * Views, parking, balconies (apartments), security.
- * Luxury finishes, modern appliances to minimise maintenance.
- * Business ready - Uncapped internet, faster than 5 Mbps.
- * Photogenic with professional photos.
- * Lounging in the sun. Do you offer 2 sun loungers when your home accommodates up to 8 guests? What about the other 6 paying guests?
- * Great public testimonials (similar to 300+ testimonials at Airbnb).
- * Owners with great attitudes; towards guests, money, and home maintenance.
Which homeowners should not list their accommodation?
This is not set in stone and each person will be different. You may be new to this and concerned as you go through the learning process. We understand your concerns and will guide you through this.
Most issues you may have are addressed with your attitude, your terms and conditions, indemnity, third party liability insurance and a decent breakage deposit. You can also screen your potential guests. But more about this later.
You should not list your home if you are a person who:
- *cannot decide (worried) if other people can or should stay in your place.
- * discriminates against anyone. (Some owners sugar coat this by saying they only want foreigners).
- * cannot trust people in general - thinking all people are there to abuse your home
- * cannot handle criticism: Everyone may not like everything about your home. If you cannot handle it don't get involved. If on the other hand, your home is in great condition and you add more value than expected you will do well.
- * focuses on cost instead of income.
- * wants to oversell your place.
- * cannot agree on the income goals for your home. This is critical. Missunderstood or poorly communicated expectations can ruin any relationship. If you expect us to manage and generate income but your rules about minimum length of stay, expected minimum rates make it impossible then we will waste your time. (Your agents must feel they can achieve the goals you set for them).
How do you protect your interest? Are guests qualified before they stay in my house?
Let me start by saying that the Cape Town self catering market is massive. We have the ability to offer 3000 places and counting. I am saying this to show that many people are making lots of money already and they would not be in the market if it was a risky business.
How do you protect your interest?
- * You need effective terms and conditions, an indemnity clause, and a cancelation policy.
- * You must have house-hold insurance as well as third party liability insurance. Inform your broker you do short term rentals.
- * Keeping a breakage deposit. This deposit will never cover all your valuables but it discourages people from doing what they should not and ensures they treat your home with respect.
- * Screening your potential guests. This is relatively easy with social media as you can get the most important info on your guests. Airbnb also shares reviews and ratings of guests. Obviously this will not eliminate all issues. Based on experience 98% of all guests behave extremely well. People love to share horror stories, but remember bad news sells. If we have all your bases covered we will not be inviting those guests to book with us.
- * Your guest pays all the money before they arrive (we get 50% when they book and 50% four weeks before arrival).
- * Many owners are familiar with long term rentals, but short term is completely different. Short term guests do have their own places where they live and work. They want to go home after their stay. Long term guys, on the other hand, want to pay for a month and then pay as they stay. Long term guys have a very different mind set and the fact that they don't pay all the money upfront makes them a risky proposition compared to short term guests.
Next we will look at what income can you expect....
This is the question! The real question.
And it will depend on a lot of factors. Our experiences over time have helped us develop our own marketing philosophy. We believe we have a good idea of what you can get depending on the features of your home, the location (one beach or not), the luxury finishes, number of bedrooms and the suburb.
In Cape Town we have three seasons:
- * High Peak: 20 December to 10 Jan
- * Winter: 1 May to 30 Sept
- * Summer before and after peak. Summer after peak tends to be more popular than before peak with February the most popular of the summer months with the Mining Indaba, and foreigners escaping the winter for a month or more. (People can enjoy a holiday with less kids around and the wind tends to be better during Feb).
For more on rates read these articles.
As a very general guideline you can use the number of bedrooms, the suburb and the season to get an idea. The best is to ask for a free rate consultation and we will assist you with our self catering rate calculator.
The further you move away from Camps Bay and Clifton, the lower your rates get.
Let's say you have the exact same home in Camps Bay/Clifton, City Center, Southern Suburbs and Southern Peninsula.
- * Let say Camps Bay/Clifton is 100%. Then the other areas would be 50%. (NOTE: I am generalising). Let's look at an example: If you can get R50 000 per night in Camps Bay/Clifton you will probably look at R25 000 for the same house in other areas.
- * If high peak rate is 100% then winter would be 33% and summer about 50%. In rand and cents this would mean a Camps Bay home would get say R50 000 during high peak, R2500 during summer and R16 500 during winter.
- * Bedrooms: Camps Bay/Clinton can be R4000 to R8000 per night per room during high season. This means about R2000 to R4000 per night during winter. Other areas would finding it difficult to get R4000 per room during high peak - this is not factoring in your fully serviced, ultra luxury homes. Other areas with nice homes could expect more than R2000 per room. (Excluding entry level homes).
- Another idea is to look at what you could make with long term rentals as a guideline. Or decide what you want to make annually. We will take this amount and plug it into our calculator. If we believe it's possible to make this amount at an occupancy of between 33% and 45% then we will be interested in assisting you with marketing and management. If your expectations can only be achieved during the first year at above 50% occupancy then we will seriously consider not making our services available to you.
Now you should have some idea. If you need a free self catering rate consultation leave a comment. Also read this article.
What's next: How to set your home up for guests arriving.
We need to add more value than expected. We need to captivate them and create a 5 star experience.
First impressions are important. Your guests may be tired when they arrive, they may be critical; they have spent a lot of money - now they want to get fair value back. If you fail the first impression test you are in for a nasty ride.
- * Here's a document we prepared for you. Read it, print it and do it.
Will you manage your home or will your agency manage your home?
Management involves liaising with your guests from booking to pre-arrival to post departure. It is a crucial management task.
New owners, and mostly, owners who make their homes available for high peak and other holidays think they can get the money from the guest, and go sit on the beach, switch off the phone and hope the guest survives the broken geysers, power outages, appliances breakages, flea attacks, etc. Management will cost money, but pay for it and have peace of mind so you can enjoy your holiday.
If things can go wrong they will. And it will turn your holiday into a disaster.
We have discussed how to set your home up for guests arriving. If you have done the basics well, and ensured your home is up to date with any and all maintenance issues your guests will have no issues and you will in turn have no problems.
Self catering agencies like CapeHolidays provide a marketing function, and a management function if owners cannot manage their own homes. As I mentioned; managing is not a free function; it takes a lot of work, preparation and liaison with guests.
The Main Managing functions are:
- * Creating experiences for guests - this includes ensuring the home is always in tip top condition. We constantly improve and work on the interior and exterior of the home.
- * Ensuring the homes meet our standards long before guests arrive.
- * Assisting with preparation of the home for guests and staging for professional photos.
- * Meeting the guest upon arrival; brief them on the home, exchange keys, take care of any needs/concerns they have.
- * Liaising with the guests while they stay at the home. If something goes wrong, from a lack of water, electricity, broken items, flea attacks, burglary and other.
- * Collecting keys on departure; checking the home for issues, and refunding the breakage deposit.
- Overseeing maintenance and upgrades for owners not in the area.
If you want to save a few bucks and want to manage your home; know that you'll be on call 24 hours a day.
If you have trained personnel who can take care of these issues we are happy to define our relationship while ensuring they provide the 5 star quality we demand.
What's next? Do you want to market your home or will you ask an agency to assist you?
I have said it before; you can market your own home. Airbnb has made it simple. Very simple. And you can do it.
A short term rental agency can assist you when you don't want to get involved, when you are not present and when you believe an agency can in any case generate more income than if you did it yourself.
Marketing is a skill and if you love online marketing, social media, setting up your own website, answering client enquiries then go for it.
But as you may know; marketing is more than just listing it on a few websites; you need to know your rates, seasonal minimum stays, having terms and conditions, Tax implications, indemnity, and third party insurance.
If you want to market but cannot manage your home then you need to employ a cleaning company, someone who can meet and greet as well as liaise with your guests.
Most agencies like CapeHolidays will not manage a home if they are not also the sole marketers of the property.
Let me say this: We get prospective owners who only decide based on costs.
If you focus on cost primarily and not on net income then you should not work with CapeHolidays. Capable agencies are supposed to maximise your income while reducing costs.
In other words: although an agency will cost you money to market your home, the great ones should make you more money than if you did it yourself.
Some agencies base their money making model on management costs. They ask for all kinds of monthly retainers. We don't. You pay a rate per incident. If there's no incident you pay nothing. If we arrange laundry we don't add money on top. You pay for the cleaning incident. (We can discuss the incident costs in detail when we meet)
Why do I believe an agency can or should make you more money?
- * If you are an average marketer you may get 33% occupancy. If you already get 50% occupancy then keep on refining your skills. A great agency can push this to 50% and even 80%. Obviously this depends on the wowness of the home.
- * You may list your place on a few listing websites; you don't really know which ones. When you list on many live websites you'll have to manage many availability calendars. This is risky as live booking sites fine you if get a double booking. Good agencies will use services like Uplisting. Uplisting and others allow you to market on 20 or more booking sites while you manage only one calendar and one set of rates.
- * Setting your rates: I have seen many owner-marketers who have no clue how to set competitive rates. An effective agency knows how to set rates.
The above does not mean you cannot do it. But if you decided to do the marketing yourself do the necessary research into where to list, seasonal rates, setting of minimum stays, how you will get paid and costs involved.
Any questions? Leave a comment below.
What is next? Will you give the agency sole marketing rights?
This is a very simple question to answer.
If you want to do your own marketing you would not need an agency like CapeHolidays
CapeHolidays gives priority to sole mandate homes. This means that we send all enquiries to sole-mandated homes first and when they are full or do need meet the guests needs do we send business to non-sole mandated accommodation.
Why is a sole mandate important to you as the owner?
- * It's is the only way we can maximise your home's income.
- * Booking.com, Airbnb and other listing sites expect us to honor bookings. If we say your place is available, we get a booking and we have a double booking we still have to pay Booking.com fees. If we don't have full control of the calendar the risk is too high.
- * Booking.com and Airbnb gives priority to instant booking. If the guests meet the rules we set they can book and pay without enquiring. And we must honour the booking. If you have instant booking on Airbnb you may be visible on page one but if you don't you may only be listed on page 40. These listing sites dictate the terms. You either play to their rules are you wait for your ship to arrive.
- * We may list your accommodation on many live listing sites to ensure we can maximise your income. But it must be clear that we cannot list on these sites without a sole mandate making us the only boss of the availability calendar for your place.
- This does not mean you cannot block dates off for yourself; obviously you can and you should, but you need to do it well in advance and only after you have checked availability with us. Our bookings always comes first.
What are the costs involved in managing and marketing your accommodation?
There are two major cost categories:
- * Marketing commission
- * Management costs.
If you decide to use a self-catering rental agency you can manage yourself and let them only market your home or you can choose to let them market and manage (We don't provide a management only function). In general the agency marketing commission is 20%. This cost does not include management.
Some agencies add a percentage for management but we offer a fee per incident as I have mentioned. Therefore a maintenance free home will benefit from lower management fees.
Management Incidents include:
- * Creating wowness
- * Meeting upon arrival - exchanging keys and briefing the guests.
- * Greeting upon departure collecting keys, follow up on issues like breakages etc.
- * Cleaning - once a week and upon departure. This includes washing of linen, cleaning of the home
- * Garden and pool - this is normally subcontracted by the owner.
- * DSTV, WiFi, electricity costs the owner pays direct to providers.
- * Maintenance issues - we start the process via the owner and see that the responsible people get access. Giving access is a fee incurring activity.
- * Resolving problems with any of the above.
- * House manual
- Keysafe: In order to ensure smooth guest arrivals (after 8 pm) we opt for key safes. You can get a fancy one or a plain one. The biggest challenge ...... is handling the key transfer. Often guests flights are delayed or they just get in really late. Having someone meet them at the apartment can turn into a logistical nightmare very quickly.
If you decide to use CapeHolidays we can share with you our per incident management cost.
Thanks for reading. I hope you learned something.