Pros & Cons of Using a Holiday Let Management Agent
You’ve bought a holiday let, kitted it out, and now it’s ready for the first guests. The next step is to decide whether you should manage everything yourself, or to hand over the management tasks to a holiday let management agency?
Your final choice will depend on many factors and personal circumstances. To help you decide, we’ve listed the pros and cons of doing everything yourself versus outsourcing to a property management company…
If you’re thinking of going it alone
For someone who is just starting out and wants to maintain a close reign on their holiday rental or Airbnb business to begin with, the self-managed option has several advantages:
Potential for higher earnings
If you’re not paying agency fees and commission, you get to keep 100% of the rental income you make after deducting tax and expenses. This can significantly boost your bottom line if you manage to secure a good number of bookings by yourself.
Entry to market
Holiday rental portals (OTA’s) have empowered holiday let owners to easily create an advertisement and handle vacation rentals by themselves. In a matter of days, you could be receiving enquiries.
You can personally screen your guests and have the final say in who stays in your property.
You can decide when you want to stay in the property yourself – with no agency restrictions. You’ll also be able to visit the property to check on maintenance and any problems whenever it’s convenient for you.
More control over guest satisfaction levels
If you’re good with people and like the idea of a hands-on approach to holiday letting (for example, greeting guests in person when they arrive), managing the property yourself will give you lots of opportunities to ensure great guest satisfaction. You’re your very own quality control department.
Flexibility in setting rental rates
If you’re directly in charge, you can quickly adapt to the market and offer guests special deals or discounts easily and quickly if you choose. This may allow you to secure extra last-minute bookings more quickly and efficiently compared to, perhaps, needing to go through an agent who would first need to check discounts with you and might need some extra lead time to roll any new rates out.
If you’re living close-by to your holiday rental, handling your own management allows you to keep a close eye on your let. You’ll be more likely to see if items need replacing or fixing and have a much better idea of the state of your property.
DIY holiday let management isn’t all about benefits. There are several downsides too, and some of them are not to be sniffed at.
No guarantee of bookings
Quite simply, running everything yourself and doing the best job you can still doesn’t mean there’ll be a steady stream of income at the end of each week.
For most, this will be the biggest negative; the fact that looking after your holiday let will take up a lot of your time.
A HomeAway survey found that holiday rental owners spend an average of nine hours per week marketing and managing their bookings. This is often in addition to having a full-time job and being a busy parent. Running everything yourself means you’ll need to put in the hours during your evenings and weekends too.
The administration work involved in managing a holiday let is surprisingly time-consuming when you don’t have the benefit of an agency handling reservations for you.
And then there’s the greeting of guests, dealing with their requests, cleaning and changeovers to be done in between rentals, the continual maintenance that needs to be carried out – not to mention the handling of any other issues that may arise at any time of day (or night!).
Unless you’re based near to your property, managing it yourself won’t be as practical for you compared to those owners/agents who are close by and can have regular involvement with the operation. You may suffer from not being able to get there quickly enough should something go wrong or there’s an emergency of some kind.
Lack of expertise
If you’re a newbie to the holiday letting game, it’s a steep learning curve, and you’ll probably make mistakes (perhaps costly ones) whilst you’re finding your feet.
You’ll need to fork out for your marketing and advertising, which is a significant outgoing – especially when you’re just getting established.
Expenses may include getting a website designed and built, booking/management software, placing adverts on several listing sites, and perhaps even some pay-per-click or social media advertising campaigns too. You might not have a particularly clear idea of how much your marketing activities should cost over time – meaning you end up overspending or even spending too little on certain things!
If you do choose to do all of this yourself though, it’s likely that your marketing expenses will reduce considerably as time goes on due to repeat bookings and recommendations. You can also review and the ‘cherry-pick’ the listing sites you use based on how well they perform. Tactics like this can bring your monthly/annual expenses down.
Extra responsibility if you take on help
If you hire people to help you out with the running of your holiday let (e.g. cleaners and gardeners), you could be responsible for their contract, working conditions, health and safety and pay (including arranging tax for HMRC).
It also means you must have the appropriate level of insurance in place for staff employed under your watch.
This alone can cause another admin headache for you as a business owner; especially if you’re unfamiliar with employment law and legislation.
With more and more holiday rentals entering the marketplace, it’s becoming increasingly difficult to stand out amongst the competition. HomeAway, for example, now lists more than 2 million rentals and Airbnb 6m worldwide.
In addition to general competition from other holiday rental owners, you also face competition from professional rental agencies that have better online distribution for their rentals and more properties in their portfolio – as well as lower costs and more commercial experience.
To stay competitive, you’ll need to be very responsive and reply to guests quickly to secure bookings, choose where and how you advertise wisely and provide a top-notch guest experience to guarantee great reviews, word of mouth referrals and repeat bookers.
Using a holiday letting agency
Handing over the management of your holiday let to an agency also comes with advantages and disadvantages. On the plus side…
Using an agency will free up your time so that you can spend it doing other things, whether it’s for work or pleasure. Some hosts can end up spending 40+ hours per week running their business, and this can mean that important moments and time with family and friend are postponed or even missed out on altogether.
Using an agency can also be convenient for you. It’s not uncommon for holiday rental owners to live far away from their second home. Using an agent means that you’ve got someone close by in case any visits are needed.
Knowledge of the local area and rental trends
Good agencies have their finger on the rental pulse and know which market sectors to target – and when to lower and raise prices based on seasonality and demand.
This expertise should translate into higher occupancy rates and better guest satisfaction as they will find the right clients for the right properties
The experience they have should also help with your overall pricing strategy, as your agency should be able to professionally benchmark your holiday rental against others in the area – meaning that prices are set based on market conditions and to maximize your profits.
A good agency will have a tried and tested marketing plan ready and waiting for your property, and they’ll know who and where to target your ideal guest.
You can think of it as expanding the size of your ‘shop window’, as your agency will likely be set up on websites and channels to advertise which you may not ever have heard of!
They’ll take care of time-consuming tasks such as taking professional photographs of the property, copywriting, setting up and managing any online presence for your holiday rental.
It’s also likely that they’ll hold a marketing database of past and potential bookers, which can be used for mailing purposes to promote your property.
They deal with enquiries, guest liaison and complaints
As well as ensuring the way your rental is represented online is as impressive as possible, they’ll know how to deal with enquiries and bookers too.
An agency will take care of all guest queries, as well as dealing with arrivals, departures and cleaning the property. A good agent should also be on hand for guest emergencies at any time, so you don’t have to answer the phone in the small hours.
A well-established agency will also have experience in dealing with problematic guests, complaints and have a good idea of which bookings to accept into your property in the first place. Guest complaints can be stressful, frustrating, intense and feel very ‘personal’ for a holiday home owner. Your agent can support you as part of the service and use their experience and knowledge to deal with any arising disputes and diffuse/resolve situations as quickly as possible.
Control the paperwork
If you hire the services of an agency, they’ll take care of all the paperwork; from dealing with booking requests to issuing the booking contract and sending out the final arrival details to your guests.
Taking and chasing payments
Payment Card Industry (PCI) compliance, which allows you to take debit or credit card payments, can be costly, time-consuming and arduous to set up.
As well as taking any deposit payments upfront, chasing guests for late payments isn’t exactly an enjoyable task. This is where a managing agency can really help. They’ll handle this for you, remove the stress and admin, and have the right systems and technology already in place to ensure that all balances are collected in full – and in a compliant way.
They will also deal with cancellations and re-letting your property to ensure you aren’t out of pocket.
If you can’t visit your holiday rental regularly, using a management agency can provide some comfort when it comes to having to leave it unattended.
The extra support for bookings and marketing that an agency can provide means that your property is more likely to be occupied throughout the year, meaning that it’s less likely to be ransacked by burglars looking for an empty holiday home to steal from. They can also inspect it in winter for signs of damage or burst pipes.
Useful industry connections
Agents often have a black book of reliable tradesmen, housekeepers and providers of other professional services at hand, whereas you may be taking a chance on someone to do a job each time you hire someone to help.
A good holiday cottage letting agent should also ensure you are kept updated with regards to current legislation relating to holiday rentals. Rules and regulation related to the holiday home industry can move quickly and create confusion in some situations. A good holiday letting agency will be on top of events such as the gas boiler needing a service, PAT testing and health and safety/fire risk assessments as part of the service.
But, like doing it yourself, handing your holiday let over to a management agency comes with some drawbacks too:
No guarantee of bookings
Just like DIY management, there is no guarantee of income through bookings if you use a managing agent.
Less rental income
You’ll have to pay between 15% and 30% of the income you earn from bookings to your agency for services rendered. This is standard, so this will take a big chunk out of your rental earnings.
Also, some agencies work on a model of obtaining ‘maximum lettings at minimum rates’. This fills your booking calendar – but not your pocket – as more guests doesn’t necessarily mean more profit.
To look at it another way, if the agency let your holiday home at a higher (i.e. more realistic) rate you could achieve the same revenue over fewer weeks – meaning you’d likely save on cleaning, energy, commission and wear and tear costs too.
You may have little or no control over which bookings are taken. Agencies only earn income if properties are rented out, so they may be less discerning with guests than an owner would be.
Also, depending on your contract you may not be able to market the property how you’d like, or use the property yourself when you want to.
The choice is a difficult one, so it can be worth getting further advice from agencies and owners who have tried both approaches before you make a final decision on how best to manage your holiday let.
Often, it’s easier to start off by trying to get your own bookings and using an agency (to learn how they do things), rather than going completely alone from the outset. Once established, experienced, and more confident in what you’re doing, you could seek to go it alone.
For many, it is a case of:
Agency = less hassle, less profit
DIY = more hassle, more profit
However, an agency may create more bookings/profit than your efforts.
Do you have any advice for holiday rental owners? Please add them in the comments…