Only steps away from the Victorian seaside town of Saltburn and with stunning views over the North Yorkshire coast, Burnsyde Beach House’s surroundings couldn’t be better for a holiday home.
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When Dale Smith picked up the property during his first foray into serviced accommodation (SA), he could be said to have struck gold.
However, it hasn’t all been plain sailing. When he acquired the cottage, it was riddled with damp. At one point the back wall even started falling down.
Since then, the cottage has blossomed into an unparalleled success and propelled him to shift focus from single-lets to serviced accommodation.
Acquiring the cottage
Dale purchased the property for £180,000 in November 2016 on a bridging loan, aware that it required extensive work. ‘It was our first toe dipped in the water with regards to SA holiday lets,’ says Dale.
‘We believed there was good potential to add value.’
‘The property needed to be stripped back to the brick in every room in the house. We also had to remove and re-position the non-compliant staircase that led to the loft room.’
The renovation
The extensive works totalled £45,000. ‘The property was stripped back to brick on all walls so that it could be tanked, re-insulated and boarded, then plastered throughout,’ says Dale.
‘A full electrical rewiring was completed along with a new heating system and an upgraded boiler.’
The loft room was stripped and re-insulated with celotex foam boards. It was converted into a double bedroom with an en suite.
‘The existing narrow staircase was removed from one of the ground floor bedrooms and a new staircase was re-positioned in the living room,’ adds Dale.
The door and glass windows between the sun room and kitchen were removed and replaced with an archway to open up the views of Saltburn Beach.
Externally, the property was painted white and the original brick features highlighted in stone grey. ‘The roof has was re-pointed and repainted to really bring the property back to life,’ says Dale.
‘The garden was fully landscaped and a patio area has been formed, where stunning views can be taken in during summer evenings.’
The interior furnishings, which came to £12,000, have an airy beach feel. Crisp white walls rise above sandy wooden floor panels. Furnishings are simple and neutral coloured. When colour is used, it could blend easily into the natural surroundings.
Following its renovation, the cottage is now valued at £325,000.
Costs
Purchase Price: £180,000
Cost of Works: c.£45,000
Furnishing Costs: c.£12,000
Revaluation: £325,000
Monthly Expenses:
| Mortgage | £1,265 |
| Gas & Electric | £125 |
| Water | £35 |
| Business Rates (Exempt) | £0 |
| TV License | £12 |
| Sky & Internet | £52 |
| Advertising | £150 |
| Insurance | £63 |
| Consumables | £150 |
| Cleaning & Change Over Labour | £568 |
| Total Expenses | £2,420 |
2018 forecasted turnover: £52,980
2018 forecasted operating profit: £27,713
Occupancy
Dale completed the works in four months and the first guest stayed 9th March 2017. The cottage has an enviable 85% occupancy rate throughout the year. All the more impressive considering there is a minimum two night stay on the property.
‘We are actually fully booked for September and October but have several one night gaps which is why the occupancy rate is below 100%,’ says Dale. ‘This does however allow us to schedule deep cleans and maintenance work.’
So far the most profitable month was June 2018 which earned Dale and his team £6,101 across 28 nights, an average of just over £203 per night.
2018 occupancy rates (including pre-booked occupancy for months ahead):
January: 87%
February: 89%
March: 74%
April: 90%
May: 97%
June: 93%
July: 97%
August: 97%
September: 90%
October: 87%
November: 50%
December: 39%
Managing serviced accommodation
Dale emphasises the importance of systems and processes in managing the multiple demands of a serviced accommodation business. ‘A Serviced Accommodation business has many moving parts. Well integrated systems and processes that allow you to scale up are certainly key.’
Dale manages cleaning and maintenance for the cottage in-house. For anyone using a third party for these services, he emphasises the need for reliability and quality control.
‘Look for a way that you can measure them and ensure they are delivering a quality service at good value. They could be the difference between a good and bad review.’
He also stresses the need to drive direct bookings through marketing and advertising to avoid the expense of OTAs.‘We have now built up a significant database of several thousand customers and potential customers, as well as across social media.’
‘We can run campaigns and promote late availability offers direct to our database and following.’
Even his choice of channel manager, InnStyle, was based upon its capacity to drive bookings. ‘The InnStyle system has a very good front end user interface that can be easily integrated into our website,’ Dale explains.
‘We have a big focus on driving direct bookings to increase margin over time. We feel that a slick and easy user journey is key to converting more direct bookings.’
Future plans
Since Burnsyde Beach kindled his interest in serviced accommodation, Dale’s portfolio has grown exponentially. He now has 10 holiday lets that he owns or manages for clients.
He is currently busy planning his next project, a mixed use freehold property that will be split into 10 leasehold units at a GDV of £1 million.
Ultimately, he says everything in serviced accommodation rests on location. ‘Location is key, and location will determine the style of SA that you can operate.’
‘We focus on delivering a high quality product at a good value. Ultimately, this drives great reviews, referrals and repeat bookings, the key to the longevity of all businesses.’
To take a closer look at Burnsyde Beach House visit burnsydebeachhouse.com
Connect with Dale: dale@investicity.co.uk
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