What’s Involved in a Running Short Stays Business

Running a short term stay or serviced accommodation business can look like an attractive way to generate income, especially if you have the property for it. With so many platforms making it easy to reach travellers and other short-term tenants, property owners are working in droves to get their property rental business profitable and fully occupied.

That being said, running a property business doesn’t simply involve owning a property and having it refurbished and cleaned after each stay. It’s also about managing different operational aspects to ensure that the business is fit for service and compliant with local requirements.

Naturally, getting all these things done will mean some spending on your end. And just like with any other business, it’s important to be on top of these matters to make sure that you remain in the green at the end of each month. So, without further ado, here are some aspects of a short-stay accommodation business that you’ll have to spend money on that may not be immediately apparent at first glance. Let’s jump straight into it!

1.   Cleaning Costs

Keeping a short-stay property operational means maximising the time between two guests’ check-in and check-out phases to quickly tidy up the place.

After checkout, it’s vital to clean each room before the next guest arrives. As much as possible, it’s crucial to do this methodically with a standard operating procedure. This means professionally curating a to-do checklist every time you have to prepare the property for the next person.

Naturally, cleaning rooms will entail expenses. Some expenses to account for include hiring cleaners to perform the actual clean-up of the room, buying cleaning materials for laundry and linen, restocking supplies like toilet paper and disposable toothbrushes, doing deep cleaning for furniture like carpets, among other things.

These costs can naturally add up, especially if occupancy is full. As such, when calculating the profitability of your short stays business, account for these cleaning expenses and average it out per booking. This way, you can get a good idea of your total cleaning cost and base your pricing strategy from there.

2.   Utility Costs

Utilities are another ongoing expense that can be easy to underestimate when running a short-stays business or serviced accommodation.

Unlike a long-term rental, short-stay operators need specific business services on hand in the event that it’s necessary, such as when guests request in-house services. Think of devices such as EFTPOS systems from providers like Shift4, which can provide guests with another convenient way to make payments during their stay.

The most popular utilities to consider in a short-term rental’s cost structure include electricity, water, gas, internet, and streaming services. The cost of these utilities can fluctuate per month, so it’s important to look at historical costs and average them out when figuring out a cost range for this specific expense category.

The larger your property, or the more in-demand it is, the higher your utility cost will naturally be. For this reason, it’s useful to review actual usage and include a realistic allowance for utilities to ensure that you’re not undervaluing the cost of utilities as you determine the best viable price for your property rental.

3.   Maintenance Costs

Regular maintenance is essential for keeping a short-stay property appealing and comfortable for guests. Guests come and go, and it’s natural for them to use the various appliances for their own reasons. The constant use of these appliances and amenities will naturally cause wear and tear. This would require operators to perform general upkeep and cleaning to ensure that these appliances remain functional for the next set of guests.

Some appliances that would require maintenance include washing machines, fridges, air conditioner units, and TVs. Plumbing work is also something to take into account – and dealing with things like leaking taps, blocked drains, and electrical issues is essential to ensure the property is well-received by the guests.

Having a general maintenance check-up timeline can help you stay on top of problems and ensure that amenities are functional all year round. Of course, doing regular inspections is also crucial to ensure that any amenities that may start to lose their functionality sooner than their expected timeline can be addressed accordingly.

4.   Platform Fees

Online booking platforms are a convenient way to get your short-stay property in front of potential guests. However, this convenience comes at a price—and this price should be accounted for when calculating the property’s overall profitability.

Platforms such as Airbnb, Booking.com and the like often charge service fees and payment processing fees for every successful reservation. While these charges are often less than 5% of the overall booking, they can add up over time, especially when these avenues are the primary way you’re driving bookings.

On top of that, some platforms enforce discounts and promotions to customers that may affect your final earnings per booking. This may not reflect the actual amount you receive from a booking—so bear these little things in mind before creating your pricing strategy.

5.   Insurance Costs

Insurance is another expense that short-stay property operators need to consider when calculating their overall costs. Insurance helps pay off damages and other unexpected expenses that may interfere with the operations or quality of service of the property rental business.

Short-stay properties experience a constant flow of different guests, which can naturally increase the risk of accidental damage, theft, or other incidents. For this reason, it’s important to check whether your existing policy actually covers short-term or serviced accommodation.

Some examples of insurance policies include building insurance, contents insurance, and public liability cover. These policies can have varying costs, which ultimately depend on the property’s scale and level of cover. Premiums and add-ons are also a consideration here.

6.   Property Management and Guest Support

And finally, another hidden cost to take into account is guest support systems. Operators must handle enquiries, check-ins, check-outs, and the staff whenever there’s a call for them.

For owners who delegate these tasks to staff or contractors, this can incur expenses. It’s important to tally up all the expenses relating to guest support protocols to have an idea of the true cost of this particular expense category.

Alternatively, you can hire a professional property manager or service to handle these responsibilities on your behalf. This can make tracking the day-to-day operation costs much easier on your end, making you more efficient with spending and saving up for business and personal indulgences.

So, there you have it. We hope this article has helped you get a handle on the hidden costs of the short stays accommodation business. All the best in incorporating these into your own business!