In the world of low-cost airfare and online platforms, traditional real estate agencies are adapting themselves to the tourism sector and the shifting realities of an environment influenced every day by global movements and new societal challenges. With 75.6 million foreign tourists in 2016, and tourism being one of the indisputable drivers of the Spanish economy, every day more real estate agents are seeing renting to this market as an interesting option. And this despite the restrictions that have arisen in cities like Barcelona, where the municipal government has put its foot down when it comes to renting without a license through platforms like Airbnb.
With rents rising up to 1.3% over last year, how can traditional real estate agents benefit from these new realities? These neighbourhood businesses’ livelihoods seem to have been put in jeopardy by people renting directly to the end consumer through Internet transactions for their short breaks. How should they face the management of a public very different from their traditional one, which would customarily have a rental contract that would last several years? As experts in the management of tourism apartments in Barcelona, at Lodging Management we can offer responses to some of these key questions. Over the years we’ve come to consider these traditional real estate agencies to be our best partners in the development of businesses that are successful and sustainable in the long term. This is an area filled with opportunity, despite its apparent opacity.
Direct contact with a network of owners
Real estate agents have a large network of owners with whom they are in contact, but they often have not updated their list in line with the new opportunities in holiday rentals. Thanks to their work as middlemen in sales and rental transactions, these businesses are in direct contact with large numbers of owners, and they can – and should – analyse their contacts to determine which apartments are available for holiday rentals (they comply with all the requirements and have a tourism license) and which are not. Traditionally uninvolved in this sector, many real estate and property management agencies who fail to perform this optimization are no longer necessarily the most lucrative option for owners or investors who know the extraordinary revenues the tourism sector can bring in in certain Spanish cities.
Though it seems odd, there are many reasons that the owner of a flat with a tourism license may have failed to rent it through online vacation rental platforms (lack of time for its management, low revenues, bad experiences…) and real estate agencies have the opportunity to identify these individuals and tailor their services to their needs. Many of these owners have been clients in the past, though in the majority of cases this close relationship has not been properly maintained and many agencies don’t know if the interests of the owner have changed.
Partnerships with management agencies
Despite having access to these large groups of business and individual investors, traditional real estate agencies have in general avoided the holiday sector, even knowing that there are properties with tourism licenses that aren’t being exploited. The most common reason is the complications associated with the management of tourism apartments – check-in and check-out, housekeeping, maintenance, etc. – or the technical complications of remaining present in all the online portals and being capable of optimizing prices according to the market. All these difficulties can dissuade a small agency from taking on these tasks themselves.
The promotion and management of tourism apartments bring with them tasks that are very different from those commonly carried out by real estate agencies. Managing holiday flats means dominating the online platforms in order to carry out a good pricing optimization scheme, and in terms of day-to-day tasks, it requires being available at non-conventional hours (the great majority of visitors arrive and leave cities during the weekend), multiplying the housekeeping and maintenance tasks exponentially. These peculiarities require that, in order to be profitable, these companies count on a network of specialized professionals who are available for these odd hours. These complications also mean that if a traditional agency has a limited number of vacation properties, they probably think it’s not worth the effort to take on work that is so intense and different from their normal administrative tasks.
This is why more and more businesses are beginning to bring a partner on board who can carry out these tasks and simply charge the agency a commission. A company like Lodging Management, specialized in management and guest relations, has its own resources for the tasks of promoting and maintaining tourism rentals.
Real estate alternatives to vacation rentals
When a city, as is the case with Barcelona, is capable of bringing together holiday travellers as well as students and business tourism, it’s common that the market demands not only apartments with tourism licenses, but also has a growing market for rentals that are for flexible time periods or month-to-month. This is a real estate product that is still not especially common in Spain but that has proved lucrative in other important cities around the world.
Due to the presence of multinationals and business schools, cities like Madrid and Barcelona receive a growing number of requests every year from people looking for a house or an apartment that can be rented month-to-month. Here we refer specifically to long-term or seasonal rentals and not multi-year rentals. In these contracts, the person letting is prepared to pay somewhat more than for a traditional rental – which in Madrid or Barcelona usually means between 11 and 12 Euros/sqm – in exchange for the flexibility of being able to renew the contract monthly without the obligation of permanence or notice.
Additionally, because they are usually people who have been stationed in the city for a limited time period, they are looking for apartments that are completely fitted and to which they need to bring nothing. Depending on the type of product offered, some real estate agencies specialized in month-to-month rentals offer apartments that include towels, kitchenware and sometimes weekly housekeeping and laundry services.
International markets
In the above examples, we are talking about a kind of real estate client that is very different from the local renter who looks for a reasonably priced product with guaranteed use for the longest possible period of time. The client for these new real estate products – tourism rentals by the day and month-to-month rentals – are not only used to using online apartment search platforms very different from the normal ones (webpages, specialized forums, or relocation or school intermediaries), but they also have needs that are very different. In the case of long-term rentals, they also need to have higher salaries than the national average. These peculiarities, which are in many cases actually benefits, turn into handicaps for many local agencies because of their international nature: certain cultural and language complications can taint their ability to communicate with and manage the account.
In the case of rentals by day to tourists and also in month-to-month or longer-term stays, the most lucrative rental markets in large cities are often international renters, so the focus has been trained on figuring out their needs and responding to them. As we said, cultural and linguistic barriers can dissuade a small real estate agency from establishing or fomenting contact with this public with great purchasing power, just as some real estate agencies, often family-run, refuse to complicate their day-to-day with tasks far removed from their normal ones. But there is a way for them to get in on the action. Many small real estate agents and mom-and-pop companies have found a solution in the establishment of collaboration agreements with agencies that are specifically focused on and specialized in the management of foreign clients.
At companies like Lodging Management, we are used to the international market and we are capable of providing a wide variety of services to suit the needs of these foreign clients, whether tourists, students, or expats. Thanks to that ability, we can make sure that our partners, traditional real estate agencies, don’t miss out on this opportunity to access one of the most lucrative real estate markets of the moment.
