London: City Relay Solutions director Erskine Berry provides his thoughts on the impact of Covid-19 on the short let industry, the challenges that property management companies are dealing with, and how operators can lead the recovery of the sector.
In this ever changing new world, the only thing that has been consistent across our industry has been the speed at which the spread of Covid-19 has impacted us.
Businesses that have been successfully built up for over ten years have been brought to a standstill in a matter of weeks. Only two weeks ago, the ExCeL Centre was host to the Short Stay Show and now it is a 4,000-bed field hospital.
The secondary factor to the impact has been the timing. Many businesses were just coming out of the winter months expecting the windfall of summer booking revenue when the virus hit and removed the opportunity that the high season brings.
Not only the scale but also the rate at which businesses have had to adapt has been intense. Colleagues have been using terms such as ‘firefighting’ and ‘survival’ as they have had to lay off close team members and make essential cost savings. One partner who had built his business from scratch, with £7 million turnover and over 400 units in central London, described it to me as “worse than a disaster” as he struggled to cope with the shock. Indeed, the industry is experiencing a 90 per cent drop in daily services.
As we take stock, the challenges ahead are substantial and they vary between the different types of companies. Rent-to-rent operators have felt immediately exposed as they have landlords to pay. Residential property operators have had to manage their large staff costs. Cleaning and maintenance companies have lost large contracts. However in these uncertain times, it is possible to make significant cost savings. City Relay Solutions was launched to provide that service to the industry last year and as such our clients are able to make savings of up to £30k p.a. by outsourcing operations to us during this testing time.
We are seeing many operators now looking to the future and modelling for three scenarios – best case: full recovery in three to six months, mid case: full recovery in 12 months, and worst case: full recovery by summer 2021. The questions will remain as to what will full market recovery look like.
Will leisure guests want to travel to metropolitan areas to the same degree? Will business travellers choose to travel so frequently when they have been forced to adapt to video conferencing? How much of the short-term rental stock will have been transferred to the long-term rental market? And how quickly will many of the zero hour contract workers return to provide the essential services this industry relies on?
So enough of the uncertainty and doom and gloom. Over the past four years, I have seen some impressive characteristics of our industry that I believe will drive it forward. The first is resilience. Any operator in short lets has always had to contend with a huge range of challenges, from regulation and compliance to the operational complexity of delivering a five-star service to guests and hosts 365 days a year. This is a demanding and relentless business and those who have made it this far have done so for a reason.
The second is the entrepreneurial spirit of the founders and their teams. Some started out washing the linens in their own kitchen while others worked their way up from doing check-ins to managing portfolios of over 1000 units. This spirit will be instrumental in re-establishing our businesses when the market recovers and identifying the new opportunities it brings.
Finally, there is the strength we will find in collaborating to survive this time. We have been a competitive industry as we all fight to establish ourselves in relatively unchartered territory. Increasingly though, we are specialising in a range of different areas such as software, distribution and operations. Most importantly, we are seeing competitors become clients and partners. The STAA has led a fantastic scheme to provide beds for the front line workers in the NHS, supported by many businesses. This is what I see as the exciting prospect for us all as we dig deep and work together to see it through to the next chapter.
City Relay Solutions a property management operations business, based in London, which serves businesses across the capital to provide everything from check-ins and cleaning to maintenance and guest support. For more information, visit the company’s website here.