10 Dec Getting short stay right and where it can fail – Mike Johnson
If you are looking for an edge or way to get a better return, this week I catch up with MadeComfy’s Mike Johnson as he gives us an insight into the most popular locations for short stay, the potential returns and how to get it right.
Kevin: Well, for many investors always looking for an edge, a way to get a better return, no doubt more and more investors are turning towards the short-term rental market. It’s been with us for quite some time. It used to be called holiday rentals, and it carried with it the perception that it is a very costly option. That could be changing with the popularity of AirBnB and MadeComfy, which is a specialist company helping investors make the most of their short-term rentals. And joining me to discuss that, Chief Sales Officer for MadeComfy, Mike Johnson. Mike, thank you very much for your time.
Mike: Thanks for inviting me on, Kevin.
Kevin: It’s been a wonderful growth curve, hasn’t it. I mean, you would have noticed that in your business. Where are most of these people coming from? Is it overseas, or is there a lot of domestic travel?
Mike: Yeah, we’re seeing huge growth in this area. The main driver of the demand is visitors. Now we’ve seen a lot more visitors in Australia in the last six years. We’re seeing international visitors go from six to nine million, and we’re seeing that continue year-on-year with about the same growth rate. So that’s the first part. But we’re also seeing the habits of travel change. So, as people are working more across multiple cities, we’re seeing interstate visitors between Melbourne, Brisbane, and Sydney as an example, go up as well.
Mike: So the combination of those two means we’ve got a lot more visitors in our cities. Now the traditional accommodation availability hasn’t gone up to meet that, so hotel rooms and traditional where to stay has not met that. So what we see then is an opportunity in the marketplace. Which means you can host your property and get guests to stay, and they need a good place to stay.
Kevin: Okay, well I want to talk to you about the types of property, and also what facilities should be included. What are the hotspots? And let’s focus firstly on the cap cities of Brisbane, Sydney, and Melbourne. I’ve heard you say that properties with water and city views are very popular. That rules out a lot of regional Australia, but certainly lines up well for the cap cities.
Mike: Yeah, absolutely. Now look, people are looking for interesting, comfortable, well-equipped, and a wow-factor in the properties they stay in. So there’s no hard and fast rules, completely. A lot of properties can have a little bit of interesting difference, and we’re always looking out for those. But yeah, as you mentioned, we do see, for example Brisbane. If you’ve got a view over the river, you’ve got some water views there, that can be an advantage. Sydney, definitely, you’ve got the hot spots in terms of location, transport links, and harbour views. And when you combine all those together, that’s the really hot area.
Mike: Melbourne, because of the reasons I mentioned, we see a lot of interstate business to Melbourne. A lot of business travellers. The high-end properties, well-furnished, well presented properties are doing really well. And we see a lot of demand for places like that across Melbourne.
Kevin: Is there any distinction, or much of a distinction between houses and units, or are they both as popular as each one?
Mike: So the sweet spot is really in terms of numbers of visitors. The highest volume of bookings comes from groups between two and four adults. And you’d probably use common terms to say the most common group is a couple, of two people. You have one person, like a business traveller, but up to four people or small family. That’s the highest volume. So really, we see high demand for one and two-bed apartments wherever we are. One and two-bedroom houses do similar. One of the key drivers we’re seeing in the market in the change is we’re also seeing people wanting to book further out of the cities.
Mike: The Australian Bureau statistics actually came out this year. So they actually ask visitors, international and interstate, what’s the reason for their visit. And they’re finding that as well as tourism and holidays, business is on the rise. And also staying with family and friends. So when they’re looking to stay with family and friends, obviously they want to be near them. And often they’re living further out, and not in the CBD. So therefore, they’re looking for accommodation that suits that. So they’re looking to stay near where their family lives.
Kevin: Does climate have much to do with popularity? In other words, Queensland as an example, you think if climate was any indicator, then the place would be booked out all the time.
Mike: Sure. Yeah, look, Queensland has a history, actually, a good history of holiday properties. You mentioned in your intro, I think that actually that’s been going on for 100 years or more. I think the new platforms of AirBnB, booking.com, etc. have made this much more accessible to people. And really we’re not reinventing that part of it. So yes, where you’ve got holiday locations, warm climate, obviously there’s properties there that do on a holiday, on a short-term rental basis, very well. But actually, the key thing is the data across the year.
Mike: So one of the things MadeComfy does is we collect data across all the platforms we use, keep it internally in our database, and we’re able to put together a proposal for a potential owner of a property of what are the supply and demand. i.e. the nightly rate, the potential occupancy, and therefore the returns of that property across the year.
Mike: So you mentioned it exactly right. So somewhere like Bondi or Manly, obviously does very well, and has a lot of demand, but also a lot of supply through the summer months. But also, other areas. So we’re seeing little places, like outside Bondi for example, Randwick is a place that people had not really thought of in terms of staying, but is equidistant to the University, the Hospital, and the race course, as well as being close to the coast.
Mike: So there, when you look at the data, you see actually, there’s quite a lot of demand all year round. So that’s the key. So when you’re looking for it, you can ask a real estate, kind of short-term rental management company like MadeComfy to say, “What does your data say about who’s coming, where they’re staying, and what they’re paying?”
Kevin: Okay, if you’d like to get a bit more information, website is MadeComfy.com.au. My guest has been Mike Johnson. Mike is the Chief Sales Officer for MadeComfy. Thanks for your time, Mike.
Mike: Thanks a lot, Kevin.