The Tourists are back – Here’s how to cash In

Now the travel bans of the pandemic have been lifted, Cape Town’s pulling power as one of the world’s favourite travel destinations is once again filling up flights into the Mother City. Indeed such is the rapid growth in demand that top airlines are scrambling for landing rights at Cape Town International.

Of course this is great news for the economy of the city, the Western Cape and South Africa as a whole, and comes as welcome relief to a hospitality industry that has been battered by two years of pandemic-related restrictions. But what does this boom offer buy-to-let property owners in Cape Town?

Before answering that question, we need to look at a major change in the kind of travel experience that has become increasingly popular. In our view, two potent, long-term shifts in travel trends are combining to offer unprecedented potential returns to owners of well-located and well-serviced apartments in the Mother City.

The first is the Airbnb revolution, the ‘Uber’ of the hospitality industry, which has given millions of travellers the confidence to look outside the hotel and guest-house categories, and the means to book their own self-catering accommodation in foreign cities.

Allied to this is the remote working trend that has given rise to a world-wide tribe of digital nomads who travel from one desirable destination to another while continuing to work through digital communication platforms. Typically, these mostly young people – either on their own or as couples – will spend several months in one place at a time, getting to know a city in a much more in-depth way than the typical tourist.

These two trends have fuelled the demand for affordable but high-quality, well-serviced, self-catering accommodation outside the formal hospitality industry, and present Cape Town property owners with the opportunity to generate a significantly higher return on their investments than through a long-term lease.

However, it is important to take into account quite a number of factors before jumping in and listing your buy-to-let apartment on Airbnb or some of the other booking platforms that are now available.

Firstly of course, you need to consider what we could call the fundamentals of your property: is it located in an area that is going to be popular with travellers? Is it close to transport networks and to sought-after recreational amenities and tourist draw cards? We’re talking about sought-after restaurants, markets, shops, galleries, theatres, studios or natural attractions like Table Mountain or one of our popular beaches. Suburbs like Sea Point, De Waterkant, the V&A Waterfront or Woodstock are ideal as they offer a critical mass of such attractions in a walkable vicinity.

Secondly, is the apartment in a building that offers a range of suitable leisure and lifestyle amenities on the premises or close by? Does it have a gym, a swimming pool and a sun deck with a view? Does it have great security, a laundry, comfortable common areas for co-working and recreation? A restaurant or bar with a pool table? And, most importantly, for our digital nomads’ needs, does it offer fast, reliable, affordable and easy-to-access Wi-Fi?

Then you need to consider the intrinsics of the apartment itself: its layout, interior design, living and sleeping areas need to be spacious and appealing. Which brings us to the serious question of furnishing your apartment. This cost needs to be carefully quantified before you jump into the short-stay market, and must include absolutely everything your guest will require during his or her stay, from beds and sofas, a big-screen TV and a work-desk if possible, down to every last item of cutlery and linen.

And once everything has been bought and installed, there are the other two major questions: the marketing and servicing of your apartment. To tackle these areas yourself is going to require a considerable investment in time, firstly a steep learning curve to set up and master the basics of your online platform or platforms, whether they are Airbnb, Booking.com or one of the other options. Because simply listing your property may not bring you a flow enquiries and bookings. There is a lot of competition in the market today, and each of the platforms has its own algorithms that control which properties make it to the top of each search enquiry.

You are going to need great photographs, preferably taken by a professional experienced in interior photography, plus reasonable copywriting and digital marketing skills to get listed near the top of the search results pages. And then there’s the question of pricing: to be competitive, you need to stay in touch with an ever-changing price dynamic as different owners jostle to keep their occupancy rates up.

Naturally, getting bookings is just one part of the challenge. The physical servicing and maintenance of the property is the other aspect that demands time, care and attention. Change-overs have to be done meticulously, often at irregular intervals, which involves cleaning, and the supply of clean linen, towels and all the basic consumables such as soap and toilet paper. Check-in and welcome processes need to be considered, because your guests may be arriving at inconvenient times of the day or night. Not to mention check-out, which may also be inconveniently timed.

And the pressure to ensure that all of these things are handled professionally is high: if there are any little glitches or slip-ups, just one bad review from an ill-tempered guest can seriously affect your capacity to attract future guests.

With all of the demands involved in effectively running your own little hospitality operation, it’s not surprising that many short-term hosts opt for a professional service provider to take care of some or all of the onerous tasks involved. The only drawback here is that sometimes the charges levied are so exorbitant they seriously erode the profitability of the whole exercise.

This is one of the main reasons that Signatura has established Perch, a short-stay management company dedicated to helping our clients make an optimal return on their short-stay investment property without any of the hassles or headaches of doing it yourself.

Perch can take care of every single aspect of the operation, from furnishing to photography, from marketing to maintenance, and is able to offer this one-stop, turnkey service at dramatically lower fees by passing on the economies of scale you can leverage when you manage the majority of apartments in a particular building. This, for instance, can significantly reduce the costs of the laundry and the cleaning, as well as ensuring professionally run check-in and welcome services.

It’s a solution that is seriously disrupting the short-stay management market in Cape Town and tilting the equation back in favour of the owner.

If you already own a property that you think might be suitable for short-stay rather than long-term rental, please talk to Perch for a free professional assessment and profitability forecast. And if you’re thinking of making a buy-to-let investment in Cape Town or one of the smaller coastal towns that are also highly popular with tourists, Perch will also be happy to help you calculate your potential return on investment before you sign that offer to purchase. To access this free service, please click here.