Cape Town Self Catering Management Advice To A Prospective Homeowner

The owner in Marina Da Gama Muizenberg bought a lovely three bedroom self catering home. She want’s to maximise her income and want us to help her in managing and marketing here home. Here is my plan to her:
Let’s say we are conservative and aim to bring in R180 000 net to you during the first year – after commission but before running costs.
What needs to come of this would be cleaning, linen, garden, call outs, meet and greets (only if needed) and on going maintenance. Have a look at the above spreadsheet for the estimated costs at 4 guests groups per month. Your estimated net income after costs would be R130 000 per year at 31% occupancy or only 113 days booked for the year.
I believe 31% is very conservative and that we could be possibly get 50%. (I am not trying to create an expectation for the wrong reasons). I did a survey under local homeowners who market their own accommodation full-time for sometime now.
Some of them meet 75% occupancy right through the year. 50% of the respondents get occupancy of 15 and more days during winter. If they can then I have good reason to believe that 31% is conservative.
If you change the spreadsheet’s availability from 31% to 50% the net income can be more than R200 000 per year. And the aim would be even higher during follow-up years.
Have a look at the costs indicated on the spreadsheet.
Self Catering Key BoxJust to clarify: Meet and greet is a real pain; guests can be delayed for hours while you have to patiently wait to give them a key. This is absurd. And it just add to costs. Hotels can do it. But many self catering establishments cannot. And many owners use coded key boxes (as above or simple lockable boxes) or fancy mobile phone integrated keyless door locks.
You’ll notice that we have not included meet and greet costs. This is an expensive cost and with the coded keypad locks, on the front gate and another key box with a key to enter the home, this cost can be eliminated. Guests will get access to both codes for the locks, but the garden and pool maintenance guys will only get access to the gate lock code.
Just imagine the extra cost if we had to open for the maintenance guys and meets and greets.
Please note:
Many assumptions where made:
  1. We don’t know at what rate your places will start turning over. Initially, we need to play around with the rates to see where what works. We also need short stays in order to get reviews (two day stays). As we build up a track record we can increase the minimum stays from two days to more (one 14 day over Dec/Jan is not negotiable). See more on setting rates here, here for AirBnB and discussing the rates calculator I have shared above.
  2. We have worked on 4 stays per month. There may be more or less.
  3. We don’t know what the costs for the garden and pool man would be but we have given reasonable estimates.
  4. WiFi is not an assumption but we need a 3G modem like this. And a R29 a month (no contract) 250 mb per month from Afrihost. And give each guest 250mb per visit. Extra they buy. (You don’t want have empty beds because you you don’t have internet).
  5. Any special meets or greets needed for special cases will be at R350 per incident.
  6. We add commission on top the daily rates of between 15% and 20%. This depends on where we advertise as some paid websites take commission and we adapt accordingly.
  7. You can book dates out for yourself and friends but we must keep the integrity of the calendar in all cases. The one who books your house out through us has the first right.

After reading this do you agree or where can we do an even better job?

 

Regards

 

Johan Horak


October 21, 2014

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