17 Jul Management of rental buildings: the new challenges

Society changes. Its needs and expectations, too. Managing property and rental buildings in Barcelona has traditionally been a patrimonial business often controlled by family offices. Issues surrounding old rental contracts or the duration of new ones have been on these companies’ radar for ever, but these days they also have to look at new forms of monetization and management that are more modern and adapted to new realities and new consumers. In this context, and especially in big cities, management of entire buildings is looking more and more towards holiday rentals, a real boom in a country like Spain with no less than 75 million foreign tourists in 2016. It’s obvious that the economic gains are greater with holiday rentals (tourists pay much more, proportionally, for a few days than for a few months), but, by contrast, managing them requires dedication, work, and more time that these companies often have.

Not all patrimonial businesses that own entire buildings are prepared to meet these new challenges. On the one hand, there are legal barriers in some municipalities where the local government has tried to regulate holiday rentals by freezing the conferral of tourism licenses. It’s impossible to turn a building towards these ends if the application process wasn’t carried out before the imposition of the new regulations. On the other hand, the management of tourism apartments requires dedication and specialized services that a company or family office isn’t necessarily prepared for: check-in/check-out, housekeeping, periodic maintenance… In this context, as previously mentioned, many owners without tourism licenses reorientate themselves towards short-term rentals. Here we are talking about months rather than days, but these rentals are still a far cry from the traditional rentals with multi-year contracts. They opt to provide temporary residents with services and amenities that can sometimes even rival those offered by hotels.

In fact, this can be a very viable option for companies that own buildings in Barcelona, a city with caps on holiday rentals but that also receives large numbers of people who stay for limited periods of time between 1 and 8 months. Month-to-month rentals, therefore, have become an efficient way to monetize full buildings, orientating them towards these temporary residents like expats, students or freelancers. Many of these people are also international citizens with high purchasing power, interested in living in a city for a short period of time and in finding accommodation that offers more services without requiring a yearly contract.

Whether because the whole building has a tourism license or because it doesn’t but the owners would like to pursue this option of renting to foreign consumers for short periods of time, producing more revenue and flexibility, companies that manage these rental buildings (or the owners themselves) can offer these premium services by forming strategic partnerships with companies like Lodging Management specialized in the management of tourism and short-term rentals. These companies offer services that can include the refurbishment of the full building; the management and attraction of customers through online portals or contact with companies that relocate expats; housekeeping and check-in; and, of course, the maintenance and care of the buildings themselves, leaving the family office or the patrimonial company free to tend to the rest of their business.

In order to better understand the benefits of establishing a strategic alliance of this type, it’s important to understand the high level of specialization and the dedication required when you offer rentals with added services. Only a specialized company is capable of applying its know-how and standing in the sector to exploit economies of scale that allow them to offer services that are normally quite expensive, like the refurbishment of apartments or the purchase of furniture.

• Integrated services for the management of tourism apartments: from the publication of ads on all the relevant online platforms to payments, reservation and dynamic pricing management, customer service, check-in and check-out, and ratings management (making sure that the customers’ stays end with a good review of your property)
• Reorientation towards month-to-month rentals: if the building or buildings owned don’t contain sufficient residents, don’t bring in sufficient cash through long-term rentals, or have problems because of them (inflexibility, long contracts, non-payment), companies like Lodging Management can take over the logistics of capturing people from outside the city who are interested in a short-term stay. They can also make sure that the building is prepared and ready for a rapid influx and outflux of clients. In the majority of cases, this means being in contact with agencies that place foreign executives and also being able to converse with clients in a variety of languages.
• Low-cost refurbishing of buildings, homestaging and maintenance: it may be that the company that owns the building is incapable of making the investment of getting all the apartments client-ready and offering the level of comfort that a premium holiday tourist or international resident living in the city for a short period would want. Signing a management agreement with a company specialized in this business means that they can take care of the required renovations as well as the decoration and purchase of furniture and other items for the home required to give the renter the levels of comfort she needs. These companies can take care of everything because they already have agreements in place with architects, decorators, and construction and maintenance providers.
• Capturing of high-level international clients: related to the previous point, this means getting the attention of both holiday renters – if the building has a tourism license – and short-term or seasonal renters. In order to do it, the company maintains contact with specialized agents as well as teams that work on PR, SEO, design and photography geared towards reaching these clients.
• Services tailored to customers and 24-hour customer service: with these types of rentals, the relationship with the client doesn’t end when you give them the keys like it does in a traditional rental scheme. Whether it is a holiday rental or a rental for several months, this kind of rental can include regular housekeeping and ironing, concierge or advice services for the city, etcetera. This requires not only a profound understanding of the needs a temporary resident or a tourist might have in order to anticipate them, but also 24-hour availability for any issues that may arise.

There are certainly some very interesting and profitable avenues through which to run your building that can beat out the traditional long-term rental of your apartments. In addition to holiday rentals, for those companies that don’t have tourism licenses but own entire buildings in cities like Barcelona, one profitable option is to rent them out for short periods of time to international visitors that are looking for a different kind of rental, without giving up the comforts of a hotel. Companies like Lodging Management can refurbish and advertise them, and make sure that the renter’s stay is in a high-quality home and that their needs are covered. This is how these buildings can generate a constant stream of revenue, stay maintained, and be ever-ready to provide a flexible rental scheme. And with owners making more than with traditional rentals, what more could you ask for?