18th October 2018
Hotel Investments vs Airbnb Hosting
Which Auckland Property Venture is the Best Option?
With the short-term accommodation industry performing so well in New Zealand, it’s the optimum time to take advantage of the return that’s on offer. Those looking to invest in property have several options available to them. These mediums of property investment provide a way to potentially see a large income from our growing tourism industry. However, depending on which route you choose to go down, you are likely to see different results.
The avenues of property investment that are impacted by tourism and increased population include both traditional and contemporary options. The traditional means of investing include purchasing a home for the purpose of a long-term tenancy or buying a hotel room and letting it out to the hotel company. Other more recently available options include the use of platforms like Airbnb or Bookabach.co.nz to utilise peer-to-peer exchanges with web accessibility.
New Forms of Property Investment Provide Flexibility
Airbnb investments are the thriving trend of property owners renting out their lodgings in the short-term to users of the platform. Due to the rise of popularity of the website, this channel of property investment has allowed many New Zealanders to earn an income on their own accord. For this reason, it’s common in 2018 for people to pass up on decisions investors may have made in the past (like long-term tenancies and hotel investments) in favour of a new way of doing things.
People choose Airbnb hosting for a number of reasons. Its appeal has seen the number of New Zealand guest using the website grow to about 1.4 million in 2017. With hotel nightly-rates often surpassing what some travellers can afford on their trips, a shortage during peak times and a desire for an authentic local experience, guest nights are at record numbers. As more and more people start using the platform, host numbers have shot up too. Demand for rooms, entire homes and apartments has allowed property owners to start earning substantial revenue as hosts, with many seeing a greater return than they have with any property investment before.
An Alternative Hands-Free Investment
While hotel investments can often be seen as the ideal hands-off investment, the return from these types of property purchases can be vastly subdued by fees. The income one receives from hotels is reduced by rates, taxes, high management costs and other overheads. Having expensive middlemen between you and your investment will definitely cut into a large chunk of potential earnings.
Hosting on Airbnb isn’t without overheads either. Taxes, amenity provision and, if you choose to go with it, management assistance, will come at a price. Fortunately, what it costs to run an Airbnb is significantly cheaper than what you are charged on a hotel investment. The ability to set your own rates and adjust whenever you like also comes with the chance to absorb excess costs.
A major reason that many people prefer to remain with traditional routes of property investment is because of the perceived reduced effort and labour-hours that hiring a property manager or going with hotel companies allows. A common misconception is that an Airbnb will be too difficult or too time-consuming to manage on your own. In most cases, this shouldn’t be an area of concern. Airbnb is created for people to use. It’s a user-friendly interface that helps you out along the way. The bonus of its popularity is also in the availability of Airbnb management companies. These businesses will assist in managing your property and facilitate achieving the best results and the best earnings from your investment. They are also much less expensive than traditional property managers or the charges you may get from hotels, in most situations.
The Benefits of Airbnb Over a Hotel Investment
A recent report on an Auckland hotel investment yield showcased the potential revenue from this venture. The study of the Spencer on Byron hotel room analysed the income from the property taking into account fees and other influencing factors. It was clear from the report that property investment showed a positive outlook for the future. In combination with forecasts for the tourism and short-term accommodation industries, confidence can be held in potential gain.
Airbnb hosting makes it possible to get into short-term accommodation investing while avoiding the limitations placed on those that choose to go with hotels and long-term tenancies. While it comes with its own unique challenges, the substantial number of Auckland and New Zealand hosts are drawn to Airbnb for a number of reasons. Hosts generally choose Airbnb over the traditional routes due to these key factors:
- Airbnb is extremely flexible. With this platform, you are able to choose exactly when you would like to host and when you would like to use the property. You can also set your own rates, meaning that when big events are happening or low season is calling for discounted pricing, you can make this happen on your own terms.
- User experience is prioritised by Airbnb making it easy to use and responsive to your needs. The platform does a great job of protecting hosts and is known to be reliable and safe. Airbnb also offers a fantastic Host Guarantee to safeguard your investment in the worst-case scenarios.
- Airbnb isn’t a fixed decision, if it doesn’t work for you, you can always go the traditional long-term tenancy route without any resistance. This isn’t really possible with hotel investments as you will generally be contractually obligated to stick to an agreement for a fixed-term (the same with long-term tenancies).
- There are a bunch of ways to get into Airbnb hosting. You could own a home, an apartment of any kind or even sublet a property in special circumstances where your landlord agrees to it. There typically isn’t a specific type of property that is favoured on Airbnb as with such a wide audience, you can make your asset appeal to your strongest demographic. This is an area that hotels fall short on as there are limited options available and it restricts the type of person you can attract.
While every short-term accommodation focused property investment is likely to succeed with the current industry growth, it’s wise to assess your needs and desires from your venture. Taking advantage of what’s newly available in this sector can help you reach your goals faster and easier than ever before. Having control over your investment is hugely beneficial to confidence and satisfaction, and Airbnb allows it. This approach to property investment can be a highly profitable move in upcoming years.