What is “Hotelling” and how to set it up effectively

If you own a Purpose-Built Student Accommodation business (PBSA) one of your main cashflow nightmares is empty units over the summer. To stop you breaking into a cold sweat this year we want to talk to you about the PBSA summer revenue option of “Hotelling.” 

In this article, you will find out more about this concept and how to make sure it’s the right fit for you. And we’ll even throw in our favourite tech stack ideas, so you can introduce a seamless offer! 

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What is Hotelling and can it increase PBSA summer revenue? 

The term “Hotelling” refers to an income model that offers your PBSA units as hotel rooms across a short period. It offers flexible accommodation options to both students and non-students, where they can choose to stay for a few nights, a week, or an entire month. 

Hotelling is particularly popular in areas where visiting students join summer schools, participate in exchange programs, or visit for short-term internships. It’s also great for tourism. Especially in areas that host key events, or have a high summer tourist footfall. 

We know the short term rental industry is growing, in fact, according to a Visit Britain 2023 report (Feb ‘23)  “the data suggests strong recovery in the UK short term rentals sector, with demand for nights in short term rental properties exceeding 2019 levels throughout 2022 and into early 2023, and growing at a faster rate than supply. Hotel occupancy rates at the England level remain stable in early 2023 vs. 2019, suggesting a shift in the total accommodation market towards short term rentals.” 

The demand among customers is such that occupancy rates are around 50-60% in high season and 40+% in low season, with prices at around 40-50% higher than they were in 2019. On average these customers are looking to book at least 7-16 nights. 

These figures make the short-term rentals an interesting option for PBSA and just think, you have everything they need already in situ!

What to consider when offering Hotelling 

Before you get carried away there will naturally be a few things to consider. We’ve created a handy list of questions to help you get started. 

• Is there sufficient market demand in your portfolio locations? Some good market research should help you here. 
• What can you charge for the facilities you offer? The short-term market may command a higher price, especially if you are offering rooms by the night. Our top tip is to remember your market when considering this. The difference in demographics will inform your pricing strategy. 
• Which are your most suitable rooms for Hotelling? Your target market will dictate what type of room you are most likely to sell and how much you can charge.  
• Do you need to add amenities? The obvious thought is not to add anything if you don’t need to, but your market research will tell you how far off the luxury end you are. This may or may not be an issue but is certainly one that will reflect in your RRP. 
• Can you use your existing system for short-term lets, or do you need to setup additional software? We’ll talk more about this later, but it’s a huge consideration and one that will affect staff workflow and customer satisfaction. 
• Can you use your existing team to work on this PBSA leasing option? There’s lots to consider here from office staff to cleaning and maintenance. Extending their hours will naturally increase expense, so consider looking into an outsourced supplier package. 
• How does shorter-term lets affect your current property security and safety? With many more people visiting and staying at your PBSA building do you need to adjust HSE and general security. For examples, will you only let out specific floors, so your existing residents aren’t inconvenienced? 
• What are the legal and regulatory compliance guidelines for short term lets? The UK Government is consulting on more regulation for short-term lets and we think this is an area to watch. But knowing your requirements will be key. 
• How do you market your short-term lets? Marketing will be different from your standard term-time marketing, so it’s worth watching how other short-term let suppliers are hooking this new customer base. It’s also worth considering how you promote it among your existing student database. Afterall if they have enjoyed their stay, they are more likely to recommend it!

Making sure Hotelling is right for you 

Ultimately you need to get more out of your Hotelling model than you give, whether it’s profit, or time. In other words, once you’ve investigated the considerations you really need to sit down and talk it out with your stakeholders and team. 

Before you get there your research will help you prepare a potential pitch deck, which is a terrific way to viably evaluate your initial thoughts. 

To help you do that, in our concluding section we want to talk you through tech.

Our tech stack recommendations for smooth Hotelling operations 

Adding a new income stream to your PBSA summer revenue must be smooth – no one needs the headache of a high maintenance leasing option. 

Here is our favourite tech stack for Hotelling made easy.

1. Create your financial foundation with Xero

We’ve been a Gold Champion Xero Partner for a few years now, so it’s no surprise that we recommend basing your financial system on Xero software. But honestly, here’s why it’s great. 

Unlike most alternatives Xero’s financial data reporting is the most robust we’ve come across, making tax filing or cash flow reporting easy to do. And the integration options feel endless. You just plug in the apps that tailor your fiscal management to your unique business. 

It also allows for scale, meaning you can add in new revenue streams, like Hotelling quickly and easily. 

Bookkeeping giving you a headache? Contact Lee today and find out how we can manage that for you.

2. Manage your lets easily with Lavanda

If you aren’t already using Lavanda then we strongly suggest you give it a look. There’s a lot it can do for you. 

What we think works well is that you can use Lavanda to handle all your letting options, both term-time and summer. Meaning your staff just have to learn one software solution.  You can also let Lavanda manage the entire summer let process for you including pricing - now that is convenient! 

Using one software also allows you to continue consistent reporting on unit capacity and profitability.

3. Create a resident engagement app with HeyHub

Why? With digitised access to onsite teams and fully featured e-commerce and retail payments for additional services, you will be able to directly communicate and upsell to your customers, both short and long stay. Something else to consider in your income stream.

4. Use Inventory Hive for property inspections

The fast pace of Hotelling means you’ll want to manage your unit inspections without interrupting guest check-in. Inventory Hive lets you do this. All you need to do is upload your checklist, install the app on your inspector’s smart device and each room can be documented quickly and effectively. 

Need some help migrating your software, or installing new apps? Contact Eddie today.