PBSA Rate setting: How to plan for the next academic year

PBSA companies start setting their rates for the next student academic year in June. If you aren’t quite ready yet, this PBSA rate setting blog is for you!

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PBSA Rate setting: How to plan for the next academic year

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PBSA companies start setting their rates for the next student academic year in June. If you aren’t quite ready yet, today’s blog about PBSA rate setting is for you! 

We’ll take a quick look at the market, the key things you need to consider and how to start your revenue management process. 

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Let’s dive in.


What’s happening in the PBSA rate setting landscape 

The PBSA market is constantly changing, and in recent years there has been a general trend for rising prices and demand, but there’s also a cost of living crisis which affects our students.

What does all this mean for you?

The PBSA market is set to increase to a value of £4.5 billion by 2025, according to Stripe Property Group, interviewed in a recent Property Notify article. This comes at a time when the Pandemic forced many smaller landlords to close their rooms, shortening supply and increasing rental rates through tougher competition for student spots.

University and college expansion still continues, and PBSA landlords are being pushed by the government to build in key investment zones.

The problem is that we’ve also seen unprecedented rises in inflation and energy prices, which have hindered building projects and made some students rethink living away from home. The result of this means more students are now looking for fixed-rate packages with PBSAs with options for various amenities as a way to solve their living-at-home problem.

Locational growth is also a changing landscape. Now we are seeing larger, growing student populations with the biggest financial gains, whereas locations with large stock portfolios have seen a more modest growth pattern.

All in all, it feels like we have a lot to consider in how we set rates and where we look for increases.


Things you need to consider for PBSA rate setting 

Most high-end PBSA operators set an all-inclusive model with higher-finished buildings and facilities as standard. In this area it’s likely that most will work on a 3-5% uplift in the previous year's rents. 

Given what’s happening in the market, we believe you should also consider: 


  • Increases based on the location of your property (properties) - how much demand is required for each location over another. 
  • The size and quality of your accommodation versus the competition 
  • Your target audience and the colleges/universities you cover in catchment areas - including the average cost and length of courses, plus overseas enrolment opportunities. 
  • The amenities and services you can offer 
  • The cost of operating your property 
  • And the changes to terms and length of service you need to make.


All of this can significantly affect your uplift increase for each room type, building and portfolio average.


Our top tips for better PBSA profit calculations 

To make sure that profit is your real focus this year we have some financial tips to help you really dig in deep into making your stock work smarter.


Tip #1: Reconfigure your price mix  

Consider changing all studio rooms to 51 or 52-week contracts in locations where summer rentals are not lucrative. These tend to be more expensive units, so locking them at a higher rate would increase your total revenue.


Tip #2: Make more of your summer opportunities 

If you have stock in locations where the summer drives prime traffic, then reduce contracts to allow for short lease or hotelling. 

Edinburgh is a great example of this, where the fringe festival lasts for three weeks every August. In 2022 roughly 2.2 million tickets were sold, and the biggest festival complaint was the price and number of accommodation options. What if you could cash in on this with competitive summer hotelling?


Tip #3: Change the grading system for each room 

Clients are often sold on higher end stock if they perceive it to have a higher value proposition.  

Use something like a bronze, silver and gold grading system to segment your rooms in a way that highlights value over price. At the same time raise retail prices to signal where the value is, alongside marketing the benefits of those your more expensive units.


Tip #4: Hone your release strategy 

Scarcity is a great tool to help sales, so consider what stock you will release and when to ramp up sales across the unit and pricing levels. 

Make sure to dig into your records to check for the velocity of booking patterns. If you are selling out too early, it could mean you are setting prices too low. If you are selling more at a discounted rate, then maybe it is time to reconsider pricing or your markdown strategy.


Tip #5: Limit rebookers early 

20% to 30% is the normal range for rebooking and students often get a preferential rate, so make sure you target rebookings early and cap your limit for availability.


Tip #6: Do you need overseas agents 

Agent commissions can soon add up, especially if you are operating in a location where intakes see a higher rate of international students. Take a look at your referral and velocity in direct unit sales – are you paying for commissions unnecessarily?


Tip #7: Factor in void calculations 

Do you factor in void calculations for empty rooms and no shows to your pricing? A good rule of thumb for voids is 5%. 

This void amount should be factored into your existing total revenue target figure.


Tip #8: Don’t forget to factor in your card transaction costs

If you take credit card payments for online bookings of shorter stays, the transaction fees must be taken into consideration when figuring out your profit. Typically, these charges are 2-3%, which can't be charged to the customer but should be incorporated into the room rate. 


Tip #9: Check that your nomination agreements aren’t hindering your profit growth 

When you sign with a university you guarantee your rooms to their students at the current market price. While this is great for the comfort of future income it may leave your revenue growth opportunity short. 

Make sure when you set those agreements that you consider negotiations carefully. 


How to plan your PBSA rate setting for next year 

When all your considerations are hammered out, it’s time to sit down to your rent setting plan. After all, you need investors to sign off on your new pricing structure before you can set it in motion across your booking software, website and partner sites.

Here are our steps to ensure you have a water-tight rate setting proposal.


  1. Dig into your year-on-year rental growth compared to costs for the last 5 years. This will help you establish your increase pattern and how much profit this has brought. 
  2. Complete your competitive and location research. Look for patterns in pricing models and success stories to help you provide proof for your recommendations. 
  3. Develop your pricing strategy and packages. How can you add more value than the competition and yet make more profit? Always make sure to add flexibility for market changes. 
  4. Create a budget and financial forecast to show what your proposed rate increases bring in profits and how this affects cash flow. 
  5. Retouch your current marketing plan. Show how you plan to increase awareness and conversions to fill capacity. 
  6. Prepare your slide deck for the investor sign-off meeting.


Remember, if you are a Cloudfox bookkeeping customer, we can help you get these figures together.


If you aren’t a customer yet, then give us a call… we don’t like seeing anyone in the dark when it comes to PBSA rate setting! 

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