Easy Guide to Starting an Serviced Accommodation Business in the UK
If you're looking for a profitable venture in the UK hospitality industry, starting a serviced accommodation business could be the answer. With the rise of platforms like Airbnb and the growing demand for unique and comfortable stay experiences, it's a lucrative opportunity worth exploring. In this comprehensive guide, we'll walk you through the essential steps of setting up and running a successful serviced accommodation business in the UK, we are going to cover things such as:
What is serviced accommodation ?
Examples of serviced accommodation in the UK.
Rules & Regulations around serviced accommodation.
Starting your serviced accommodation business.
What is rent to serviced accommodation ?
What Is Serviced Accommodation ?
Serviced accommodation, also known as short-term rental or vacation rental, refers to a type of temporary lodging that provides guests with more amenities and services than a traditional hotel. These accommodations are typically furnished apartments, condos, or homes that are rented out on a short-term basis, often through online platforms like Airbnb, Vrbo, or Booking.com.
The key characteristic of serviced accommodation is the level of service and amenities provided to guests. Unlike a hotel, where guests are limited to a basic room and limited services.
Serviced accommodations offer a more home-like experience with fully equipped:
kitchens,
living spaces,
laundry facilities,
Wi-Fi,
housekeeping services.
This allows guests to enjoy a more comfortable and personalised stay, often at a lower cost than a traditional hotel and for much longer periods of time due to the property being more realistic to stay at for longer periods.
The serviced accommodation industry has grown rapidly in recent years, both leisure and business, are seeking alternatives to traditional hotels that offer more space, privacy, and the ability to feel "at home" during their stay. This trend has created a lucrative opportunity for property owners and entrepreneurs to capitalise on the growing popularity of serviced accommodation and offer guests a truly memorable and tailored experience.
Serviced Accommodation Examples
Serviced accommodation can take many different forms, each with its own unique characteristics and target market. Some of the most common examples of serviced accommodation include:
Apartments: These are fully furnished, self-contained units that provide guests with a more spacious and residential-style living experience. Apartments often include a kitchen, living room, and separate bedrooms, making them ideal for families, groups, or extended stays, these properties are often central to big locations due to them being flats vs houses.
Example Apartment: Beautiful Central Apartment Royal Leamington Spa.
Houses: Entire houses, from cosy cottages to luxurious villas, can be rented out as serviced accommodation. These properties offer the most space and privacy, making them popular choices for larger groups, families, or those seeking a more immersive local experience, these often sacrifice location for extra amenities or the ability to cater to much larger groups.
Example House: Large House Close To Leeds - Ideal For Groups.
Boutique Accommodations: Unique and often historic properties, such as converted barns, townhouses, or even castles, can be transformed into serviced accommodations. These boutique-style offerings cater to guests seeking a one-of-a-kind and authentic experience and something you can not get from a hotel.
Example Unique Property: Escape to a Romantic and Magical Hobbit Retreat
How Does Serviced Accommodation Work ?
The serviced accommodation business model revolves around the efficient management and rental of properties to short-term guests. Here's a closer look at how it typically works:
Property Acquisition: The first step is to acquire a suitable property, whether it's an apartment, condo, house, or other type of accommodation. This can be done through purchasing a house or flat or a rent-to-serviced accommodation arrangement (which we'll cover in more detail later).
Before doing this you have to be able to understand how much your potential property could make, we have a simple online calculator to help you get started here.
Property Preparation: Once the property is secured, it needs to be prepared for short-term rentals. This includes furnishing the space, equipping it with necessary amenities (e.g., kitchen appliances, linens, Wi-Fi), and ensuring it meets all legal and safety requirements
Marketing and Listing: The property is then listed on various online platforms, such as Airbnb, Vrbo, or Booking.com, where guests can search for and book their accommodations. Effective marketing and pricing strategies are crucial to attract guests and maximise occupancy rates and revenue.
Guest Management: When a guest books a stay, the serviced accommodation provider is responsible for coordinating the check-in and check-out process, providing any necessary assistance or concierge services, and ensuring the property is cleaned and prepared for the next guest.
A simple software tool that many operators use to manage this is a channel manager, we recommend using Uplisting
Financial Management: Serviced accommodation providers must carefully manage their finances, including pricing, revenue tracking, tax compliance, and profitability analysis. Effective financial management is crucial for the long-term sustainability of the business, i would recommend speaking to an accountant specifically one who can help with TOMS, we recommend a good accountant to use.
How to Start a Serviced Accommodation Business
Starting a serviced accommodation business in the UK requires careful planning and execution. Here are the essential steps to get your venture off the ground:
Create a business plan
You need to write a business plan first, you can download a business plan here and we also have a blog guiding you through step by step on creating your business plan here.
Secure Financing
The financial resources needed to acquire and set up your serviced accommodation property. This may include:
Securing a loan - in the UK we have government backed funding for people wanting funds to start their own business, you can research this here.
Obtaining investment funding - This is most common in the serviced accommodation industry, best way to get this is post on online forums and groups on facebook about what you are doing, document your journey so people can follow you then once you are ready, people will be much more likely to want to invest with you, we have a free to use group here full of people in the serviced accommodation industry.
Leveraging a rent-to-serviced accommodation arrangement - This is where you rent a property ideal for serviced accommodation and rent the property from the owner for a fixed long term rent, this keeps your investment cost very low.
Find the Right Property
the right property is crucial for the success of your serviced accommodation business. Consider factors such as:
Location,
Size,
Layout,
Amenities that will appeal to your target guests.
We have a guide on how to do this on our site you can use here.
You can hire a serviced accommodation sourcer to find you a property for an agreed fee, Stayful provide this service you can find out here.
Appoint A Management Company (optional)
If you do not wish to deal with the day to day operations of your serviced accommodation business, you can hire a management company to assist you, they will take all of the responsibilities of guests away from you for a % of gross bookings, Stayful provide this service you can find out more here.
Prepare the Property
You've secured the property, it's time to prepare it for guests. This includes furnishing the space, installing necessary amenities, and ensuring it meets all safety and legal requirements. Invest in high-quality furnishings, linens, and decor to create an inviting and comfortable environment for your guests, sometimes you can even outsource this for a fee, we at Stayful provide Airbnb interior design and setup for people with limited time and experience but wanting to get started in serviced accommodation
Establish Operational Processes
Operational processes to manage your serviced accommodation business effectively. This includes setting up booking and payment systems, creating cleaning and maintenance schedules, and implementing guest communication protocols. Leverage technology and automation to streamline your operations and provide a seamless experience for your guests using software like:
Can greatly help with this
Market and Promote Your Offerings
Marketing and promotion are essential for attracting guests to your serviced accommodation. Create a strong online presence by listing your property on popular platforms like Airbnb, Vrbo, and Booking.com. Develop a visually appealing and informative website, and utilise social media and other digital marketing strategies to reach your target audience.
Provide Exceptional Guest Experience
An exceptional guest experience is key to building a successful serviced accommodation business. Prioritise guest satisfaction by offering personalised services, responding promptly to inquiries, and ensuring the property is well-maintained and clean. Encourage positive reviews and feedback to attract repeat bookings and referrals.
What Is Rent to Serviced Accommodation ?
Rent to serviced accommodation, also known as guaranteed rent or managed accommodation, is a unique business model that can be particularly beneficial for those looking to start a serviced accommodation venture in the UK. In this arrangement, a property owner or landlord partners with a serviced accommodation provider, who then takes on the responsibility of managing the property and renting it out on a short-term basis.
The key advantages of a rent to serviced accommodation arrangement include:
Guaranteed Income
serviced accommodation provider typically offers the property owner a fixed, guaranteed monthly rent, regardless of the property's occupancy rate or the amount of rent collected from guests. This provides the property owner with a stable and predictable income stream, which can be especially appealing for those who want to minimise the risks and hassles associated with managing a short-term rental property and if you are looking to rent a property like this, then you need to explain that is the benefit.
Operational Hassle
serviced accommodation provider takes care of all the operational aspects of running the property, including:
Marketing,
Guest management,
Cleaning,
Maintenance.
This allows the property owner to completely hands-off, because he is just collecting the monthly rent meanwhile he gets hassle free no void rent for a fixed period.
Arrangements
serviced accommodation agreements can be structured in various ways, with flexibility in the length of the contract, the guaranteed rent amount, and the revenue-sharing model (if applicable). This allows property owners to tailor the arrangement to their specific needs and risk tolerance.
For property owners, the rent to serviced accommodation model can be an attractive option, as it provides a steady income stream and eliminates the hassle of managing a short-term rental property. For serviced accommodation providers, this arrangement allows them to expand their portfolio and gain access to properties that may not have been available through traditional means.
If you wish to have your own serviced accommodation agreement you can download one here.
Serviced Accommodation Tax & VAT
When starting a serviced accommodation business in the UK, it's crucial to understand the tax and VAT (Value-Added Tax) implications. Proper compliance with these regulations can help you avoid potential penalties and ensure the long-term sustainability of your venture.
Tax
The income you generate from renting out your property is considered taxable. You'll need to report this income on your personal tax return or, if you've set up a limited company, the company's tax return. i would recommend setting up a limited company first before doing anything and speaking to an accountant, you will also need accounting software to track expenses, this part is very important, we recommend Xero.
VAT
As you are operating as a small hotel, HMRC have created a scheme called TOMS (Tour operators margin scheme) which essentially means that you pay VAT on the gross profit that you generate and not the revenue which is what VAT normally is applied to, this is massive for people in this industry as their is few expenses you can claim back from your VAT bill from HMRC, we would recommend speaking to an accountant about the details first.
Serviced Accommodation Regulations & 90 Day Rule
Operating a serviced accommodation business in the UK requires adherence to a range of regulations and legal requirements. One of the key considerations is the 90-day rule, which can have a significant impact on your business operations.
90-Day Rule
90-day rule, introduced by the UK government in 2015, limits the number of days a property can be rented out as a short-term or holiday rental in Greater London to 90 days per calendar year. This rule applies to all properties, regardless of whether they are primary or secondary residences.
The purpose of the 90-day rule is to strike a balance between the benefits of the short-term rental market and the potential impact on housing availability and affordability in high-demand areas like London. Exceeding the 90-day limit can result in fines and other penalties, so it's crucial for serviced accommodation providers to understand and comply with this regulation.
Regulations
addition to the 90-day rule, serviced accommodation businesses in the UK must adhere to a range of other regulations, including:
Fire safety: You will need to make sure your property is compliant to fire safety, this will include:
Fire doors.
Fire blankets.
Fire Safety procedure.
Smoke Alarms.
Licensing and registration requirements: Some local authorities may require serviced accommodation providers to obtain specific licenses or register their properties, you will need to contact your local authority for more information.
Landlord and tenant laws: Understand your obligations and rights as a landlord, particularly if you're renting out a property to someone operating on Airbnb, if you are renting for serviced accommodation, make sure you have the right contract and the landlord has permission to rent to you on a serviced accommodation basis.
Conclusion
Serviced accommodation is a fantastic industry and is very rewarding, we have covered in great detail more then enough to get you started on your journey, if you feel like you could do with more hands on assistance, get in touch with us directly for consultancy, management, sourcing or mentoring.