Strategies to maximise PBSA assets during/post Covid-19
The economic impact of the coronavirus has been felt across all sectors in the UK. It has thrown millions of businesses and households into hardship, and the UK's quarterly GDP decline is expected to range from 7.5% to 24.0%. In addition, unemployment is predicted to reach unprecedented levels; the number of people claiming unemployment benefits has jumped by 1.6 million to 2.8 million since March.
Purpose-built student accommodation (PBSA) operators and universities are also facing challenging times. The current crisis has caused a:
Decrease in first-year student applications;
Increase in student deferral rates;
The decrease in tuition paid.
According to a London Economics study, PBSA operators can expect approximately 231,895 first-year students to no longer enroll in UK higher education for the 2020-21 academic year. Of this number, approximately 16% is an estimated decline in domestic enrolments and a 47% drop in international first-year applications.
Also, every university’s and operator’s income stream may be severely jeopardized as it is still unclear when–and under what form–studies will resume. Optimistically, even if face-to-face or widespread online sessions are possible in September 2020, 14% of domestic students are expected to defer their decision to undertake a higher education qualification whilst the number for international student deferrals goes up to 47%.
On top, combining the impact of the economic downturn, the expected decline in first-year applications and deferral rate, numbers show that there will be 13% less paid in tuition fees. The total decline in tuition fee income is expected to be £2.33 billion, while in 2018-19 it stood at approximately £11.14 billion.
Undoubtedly, PBSA operators have been facing higher than usual vacancies this year, but every crisis bears opportunities. The current climate presents a chance for operators to explore new strategies for generating additional revenue such as transforming into “mixed-use” schemes or adopting a short-term rental technology solution.
PBSA as “mixed-use” schemes
Naturally, some operators of purpose-built student accommodation are dealing better than others with the financial woes caused by the pandemic. Many, however, are exploring new strategies to increase their revenues and occupancy.
A trend around “mixed-use” schemes–PBSA schemes with permission for non-student usage–is a strategy that seems alluring and a natural step for many operators. Experts say that if PBSA operators add young professionals to their traditional target audience (students), they can make optimal use of their empty units during the coronavirus and increase their net operating income.
Short-term rentals have long proven to yield additional income, but many PBSA operators remain reluctant, afraid things can turn into an operational nightmare for them.
In our experience, some of the concerns operators most often express about short-term rentals are:
The current processes, systems and procedures are not set up to accommodate clients on a short-term basis;
It is hard to turn around units for short-term use;
It’s hard to manage the distribution of short-lets across various channels;
Short-lets can be a distraction to in-house operations.
Of course, these are all legitimate concerns, but if a PBSA operator partners with the right proptech solution provider, it can tap into a different pool of potential clients, save cost, and maximize the use of its empty assets during the pandemic.
With the help of technology, the right partner can address and help accommodation providers navigate through all challenges by:
Providing a 360-degree short-term rental service; Complete tech solution for advertising, revenue management and communication with short-stay guests;
Handling the entire preparation of units for short-term use; Hotel-standard housekeeping service, fresh linen, interior design and staging, professional photograph;
Not disturbing existing operations; generate additional revenue from 1-week/ 3-month stays with no additional effort from your operations team;
Manage multiple booking channels; single point of distribution for deploying price strategy and communication across all channels;
We have seen a short-term rental strategy increase occupancy and quadruple revenue. A great benefit of adopting a bespoke technology solution is that if you are concerned that short-term rentals will disturb your existing operational setup, you can outsource the entire service.