The attractive income has inspired many investors in Vietnam to invest in buy-to-let, or take a long-term lease to rent the property back.
Offering new alternatives to travelers, there is no doubt that Airbnb and homestay has taken some market share from traditional hotels, JLL reported.
According to Grant Thornton's Hotel Survey 2017 report, Airbnb has growth quite significantly over the past few years, now supplying over 16,000 units for the Vietnam's market. Homestays properties are usually located in big cities with high tourism demand like Ho Chi Minh City, Hanoi, Da Lat, Nha Trang, Sa Pa…
This model offers much larger spaces through offerings that include entire villas, houses, apartments and bungalows, which can accommodate a larger number of guests than hotel rooms. It can be said that Airbnb is creating an additional hospitality market by offering new alternatives to travelers and attracting a new generation of guests, particularly millennials, who represent an increasing portion of travelers that are constantly seeking new experiences.
However, findings from JLL shows that hotels have been less affected by online home-sharing platforms than expected. Especially in Vietnam, where hotel supply is not yet sufficient to cater for the growing number of tourists at peak seasons.
Although the platform is not posing a serious threat, traditional hotels should not underestimate Airbnb's potential. Millennials are more comfortable with sharing, evidently by the incredible growth of Grab and Airbnb in Vietnam. The sharing economy trend presents the market with new opportunities to invest, no matter how much capital or asset investors possess.
Airbnb is also expanding rapidly worldwide. Airbnb's latest acquisition includes Hotel Tonight, a platform known for its last minute hotel booking experience. Prior to this, it has invested in OYO, a hotel startup based in India that will allow Airbnb to enhance travel experiences and scale through technological applications. This demonstrate the company's ambition to better its service and take market share from competitors who refuse to adapt to the changing market. The growth of this alternative model has served as a catalyst for hotels to continue to innovate and improve their product offering to stay relevant.
This type of short-term rental model starts out as a platform for people to rent out their unused space, anytime they want. Home-owners with spare rooms in their house can rack in considerable additional leisure income, even if they only rent out their property every weekend or so.
The attractive income has inspired many investors in Vietnam to invest in buy-to-let, or take a long-term lease to rent the property back. Many has found that the total they make a month were not able to cover their mortgage or interest.
Many homestay investors considers "local touch" + "competitive price" the golden formula for success.
Before deciding to invest your capital and become a host, there are a few things to get right.
Location is key
If you are focusing on short-term rental services, pick a property near touristy areas or the airports. How the property connect to nearby traffic and facilities is also a major concern, i.e. convenience stores or food courts.
Management cannot be overlooked
Managing several listing at a time can be tiring, especially if the investor is doing this on the side of their main job. Oversight in management can lead to serious security problems, property and reputation damage. Hiring experienced staff is probably the best solutions for management issues, but quality human resource can rake up operation cost, which can easily eat away profits.
Don't forget the experience
Before listing, think about what your home can offer guests compared to traditional hotels at the same price. Many homestay investors considers "local touch" + "competitive price" the golden formula for success. The majority of guests who choose homestays over hotels tend to expect a certain flavor of the local area in their rented property, anything from having Ca phe sua da drip filter in the kitchen to non la-shaped lamps can differentiate your property from competitors.
Finally, investors must be aware of the business registration procedures necessary for this model to ensure sustainable and smooth business operation.
When there is more and more residential supply, it is more difficult to rent out apartments with long-term contracts. Short-term rental model can be a solution for this problem.
