Why Comparing Serviced Accommodation to Assured Shorthold Tenancy is Like Apples and Oranges: A Landlord's Tale

When it comes to property management, the conversation about how to handle different types of accommodation can become quite intense. Many landlords often find short term management companies comparing serviced accommodation to assured shorthold tenancy (AST). However, this comparison tends to oversimplify their differences. Treating these two models as similar can lead to serious misunderstandings and missed opportunities. In this article, we will explore why hiring a management company with hospitality experience is crucial for serviced accommodation and how it differs significantly from traditional property management.

Understanding the Basics: Serviced Accommodation vs. AST

To start, let’s clarify the fundamentals. Serviced accommodation refers to short-stay rentals that are fully furnished and come with amenities such as Wi-Fi, utilities, and housekeeping. This model closely mirrors the hospitality industry, focusing on guest satisfaction and experience.

In stark contrast, assured shorthold tenancies are long-term leases that typically last six to twelve months. These leases cater to tenants seeking stable, long-term housing. The emphasis here is on legal obligations and tenant rights rather than enhancing guest experiences. For example, the average rent for a two-bedroom apartment in London can be approximately £2,000 per month, while a serviced apartment in the same area may charge around £150 to £250 per night, illustrating the potential for higher revenue per night in serviced accommodation.

The Need for Hospitality Experience

One key reason landlords should not confuse serviced accommodation with ASTs is the distinct skill set required in hospitality management. Managing serviced accommodation is not just about paperwork; it is a people focused customer facing business, creating a welcoming experience for guests.

Hospitality experts know how to craft an inviting atmosphere, ensuring each stay feels special. For instance, they may use attractive décor and offer personalised touches like local snacks or tailored recommendations for nearby attractions. This approach significantly enhances the guest experience. In comparison, property managers focusing on ASTs may excel at handling bids and lease agreements but often lack the nuanced skills needed to create memorable stays.

Revenue Potential: Short-Term vs. Long-Term Gains

The difference in revenue potential between serviced accommodation and assured shorthold tenancies is remarkable. Serviced accommodations often command higher rates. A well-managed property can generate upwards of £50,000 annually from serviced lettings, while a traditional AST might only bring in £24,000 in the same period, highlighting the appeal of short-term rentals.

However, higher revenue comes with higher turnover rates. This means that while landlords can earn more money, they must also dedicate more time to managing bookings and guest needs. Expertise in market trends, pricing strategies, and guest communication becomes crucial for maintaining a successful serviced accommodation business.

Marketing Strategies: Engaging Guests vs. Attracting Tenants

Marketing approaches differ significantly between serviced accommodations and ASTs. For serviced stays, the landlord must think like a hotelier. This includes creating engaging listings on websites like Airbnb or Booking.com. Statistics show that listings with high-quality photos and vivid descriptions can increase booking rates by over 40%.

Conversely, marketing for ASTs is primarily about advertising availability and straightforward pricing, typically lacking that personal touch. While effective marketing is essential in both cases, the goal is to create an emotional connection with potential guests in serviced accommodation while maintaining a basic business strategy for long-term tenants.

Creating a stunning home from home experience takes years of expertise

Managing Guest Expectations: The Hospitality Mindset

In serviced accommodation, managing guest expectations is critical. Guests expect amenities, such as complimentary toiletries, or even concierge services. They also anticipate quick responses to inquiries. For instance, guests may rate their experience based on their interactions with staff, which can influence reviews and repeat business.

By contrast, tenants under an assured shorthold tenancy expect a sense of stability without the extra hospitality services. While excellent customer service matters in both scenarios, the strategies for fulfilling these expectations are vastly different.

Legal Frameworks: Understanding Regulations

Another crucial distinction between serviced accommodation and ASTs lies in the legal frameworks governing each. Regulations for serviced accommodations vary widely by location. Issues like short-term rental laws, safety protocols, and tax implications—including business rates versus council tax—are often more complex than those associated with ASTs.

For instance, landlords in London may face stringent regulations around short-term rentals, including requiring planning permission to operate. Staying compliant is essential to avoid penalties, and property managers familiar only with ASTs may lack the knowledge to navigate these regulations effectively. An expert in hospitality can provide the necessary guidance to maintain compliance within this challenging landscape.

The Significance of Exceptional Customer Service

Finally, one of the most vital components of serviced accommodation is exceptional customer service. Guests prioritize their experiences, and high-quality service can lead to positive reviews and repeat bookings. For example, a property that boasts a response time of under 30 minutes to guest queries may see a 20% increase in positive feedback.

In contrast, customer service expectations in ASTs are generally much lower. Tenants expect a straightforward living experience without the nuances of hospitality. Therefore, while effective communication is essential in both contexts, the expectations and engagement levels differ significantly.

Final Thoughts

In summary, comparing serviced accommodation to assured shorthold tenancy truly is like comparing apples and oranges. Both serve specific purposes in the property market, but they cater to vastly different needs and require distinct mindsets and skill sets. At StopOverz, we have 25 years experience in large PLC PubCo's and small destination restaurants and hotels which we know gives us the edge compared to our competition.

If you are a landlord considering the serviced accommodation route, it's crucial to adopt a hospitality perspective. Understanding guest experiences compared to tenant rights, focusing on exceptional customer service, and keeping up with relevant regulations are all vital factors for success.

In an ever-evolving market where guest expectations continue to rise, partnering with a knowledgeable hospitality expert can make all the difference. Embrace the unique opportunities that serviced accommodation can provide and elevate your property management approach.

You need a strong management company with a strong hospitality retail background, you need StopOverz

A "Guest Obsessed" mentality is vital for sucsessful management.