Owner Q&A – a Conversation with Dale Smith
Monday 19th August, 2019 by Host & Stay
In today’s blog post, we’re speaking to Dale Smith to find out about his holiday letting journey and how it all started.
Since graduating from The University of San Diego in the US, Dale’s career has blossomed. With a background in finance and marketing, Dale started work within the automative industry but property was always in his life. His dad started the property journey in 2004 with BTLs but stopped shortly after the financial crash in 2008/2009. A few years later, Dale and his dad decided to pool their capital and to re-invest in property. Fast forward six years and their property portfolio is booming!
SO, HOW DID YOU GET INVOLVED IN HOLIDAY LETTING?
Having already been involved in property for some time, serviced accommodation / holiday lets seemed an obvious evolution dictated by our location. Burnsyde Beach House was our flagship project and the one that opened up the serviced accommodation / holiday let business for us. It became our first “toe in the water” serviced accommodation / holiday let investment but since then, the business has flourished.
WHAT TYPE OF RESEARCH DID YOU UNDERTAKE ON THE FIRST UNIT?
Over the last few years, there has been a shift to more people holidaying in the UK and we’ve all heard the phrase ‘staycation’. Statistics published in July 2018 showed that the North Yorkshire coast was the most visited tourist spot in the UK in the first half of 2017.
Our first serviced accommodation / holiday let, Burnsyde Beach House was always going to be a good project in terms of serviced accommodation / holiday let due to its location and the finish we’ve produced, and the reviews/feedback we’ve had suggest that its seen as a unique holiday let.
The North Yorkshire coastline has historically been built on tourism and towns like Saltburn, where we are based, were very popular holiday destinations. The local holiday let stock is very average, so to differentiate ourselves from the competition we wanted to aim for the top end of the market and believed that we could charge a premium nightly rate.
With our first serviced accommodation / holiday let project, we wanted to go for a style that we personally liked and one that was guided by the positive feedback we had received. Initially, this was from an open day for local people and local businesses. We also got inspiring design ideas from other furnished properties and ultimately, we went with a balance of something modern that would appeal to a wide audience together with some traditional features to reflect the local area.
As a general rule of thumb for serviced accommodations / holiday lets in our area, I would say that 50-55% occupancy and above would make it worthwhile over single lets. We were confident that we could achieve this – as it turned out, in year one we achieved 87% occupancy and last year we hit 92% occupancy.
DID YOU STUMBLE ACROSS ANY PROBLEMS WITH YOUR FIRST SERVICED ACCOMMODATION / HOLIDAY LET UNIT?
The property had failed several surveys due to damp and was outdated because it hadn’t been looked after or lived in. It needed a significant amount of work and traditional lenders were not interested.
Although it had been marketed at £225,000, we managed to secure it for £180,000 using a bridging loan. The refurbishment cost around £60,000 with an end valuation of £325,000, which allowed us to refinance all of our capital outlay.
We learnt a lot on the first project but brought it in on time and now have a great relationship with the bridging company. We have an in-house team who do the works and my dad brings in other trades as required. The interior design is undertaken by my mum and my partner Rachel, who has a good eye for design.
Funding has been the biggest challenge due to the limited number of lenders in the holiday let market. It’s tougher to get lending and it’s a lengthy process. Cumberland Building Society will consider holiday lets as it’s a key product for them. Some lenders who do holiday lets will only look at certain postcodes or certain regions.
WHAT ATTRACTED YOU TO HOLIDAY SERVICED ACCOMMODATION, RATHER THAN OTHER FORMS OF SERVICED ACCOMMODATION?
With holiday serviced accommodations, we are marketing for guests who want to stay somewhere nice and are likely to pay a premium for the right product. Because of the type of client we are dealing with, I’m pretty confident that we can charge a higher rate and achieve higher occupancy.
In comparison, for the city centre serviced accommodation model, people want to stay somewhere nice but are unlikely to pay a premium as the accommodation is primarily for sleeping purposes. In the corporate market, there’s often a lot of downward pressure on pricing because it’s highly competitive, so you constantly have to drive more volume.
In our business, most of our properties are priced at £125-£150/night and once you’re over £100/night, it becomes much easier to drive profitability.
Our model has been driven by location but for anyone considering serviced accommodation, I believe that the holiday letting market provides more opportunity for better revenue and a better margin, as people are willing to spend more money on holidays.
WHAT HAS INSPIRED YOU ON YOUR HOLIDAY LET JOURNEY?
I’ve taken inspiration from the team at Progressive and also people like Simon Zutshi and Mike Stenhouse. In my sales and marketing roles, I’ve worked with a number of high achievers and great leaders so I have learned a lot from them over the years.
I’ll continue to learn from the resources available, e.g. YPN or property podcasts. I’ve also taken a lot from an American podcast from Andy Frisella, The MFCEO, who believes you get what you put in. He is no-nonsense and controversial in the language he uses but his content is fantastic.
Want to find out more about Dale’s journey and how he could work with you? Email dale@investicity.co.uk