Owning a holiday rental in Barcelona sounds great. It is indeed a good investment. Did you know, however, there are some hidden costs to owning one? Yes, doing a good job at revenue management is a big part of the success of your holiday rental. What hidden costs are there for you to take into account? Let’s dive into this matter.
8 Hidden Costs of Owning a Holiday Rental
This doesn’t seem like a hidden cost, because you will probably know that you have to pay taxes. However, do you know how much do you exactly have to pay? There are several taxes in Spain. These depend on if you are a resident or non-resident. Both have to pay community fees and IBI. Residents pay a personal income tax called the IRPF. There is also a personal income tax for Non-residents which is called the IRNR and they will have to pay an additional wealth tax.
If you want to have enough exposure for your holiday rental you probably want to work with OTA’s (Online Travel Agencies). There are several out there; Airbnb, Booking.com, HomeAway are some of them but there are many others. All of them have their advantages. If you can’t decide which one to choose, read our blog explaining the difference between them here.
Whichever booking platform you go for, there will always be some sort of commission. It is a good idea to have some sort of strategy. In this way, you know which one works best and fits your needs.
Whether you work with an OTA or decide on focussing on a direct booking strategy, both will have marketing costs attached to it.
Both strategies would mean you have to put your holiday rental in the best light possible. Having good pictures, a good description and professional listing will improve the chances of getting bookings. If you aren’t a professional photographer or copywriter, it’s harder to compete with other apartments. So you might want to hire somebody for that.
If you want to focus on direct bookings there are many costs associated with this. Creating and hosting your website, advertising, keeping up with social media accounts, these all cost money!
4. Cleaning and laundry
Cleaning and laundry is something that you have to do after every stay. The cost of it really depends. Are you doing it all yourself? Then you have to think about the supplies you need to do the cleaning and laundry and how much time you spend doing it. What would that cost you?
If you don’t have time to do it all yourself, you can work with a company that provides cleaning and laundry for you. When you do this, not only think about the fee you pay for their service. You are probably also spending time managing them and overseeing the work they do. Count that time into the amount it will cost you.
On many booking platforms, you can add an additional cleaning cost. It is an industry-standard. People wouldn’t find it weird when they see this additional fee for them. So make use out of it. Don’t add the cleaning fee on your nightly rate. This will make your holiday rental more expensive at first glance.
When doing revenue management, you can also consider if it makes sense to do all these costs for a one night stay. If the costs are too high, consider setting a minimum stay of 2 or 3 nights.
Customer experience is one of the most important parts of building a successful holiday rental business. Packing your apartment with the needed essentials is thus a must. Some amenities, like appliances, are a one time cost. If you want to optimise the lifespan of these, spending a bit more can be a good idea.
Other amenities will be a continued cost. Supplying every guest with the needed toilet paper, washing liquid or soap for instance. These are small costs, but you have to take them into account. Having these in the apartment will give them a better experience. Make sure you have everything to give your guests the best experience possible with our Essential Inventory Checklist.
Having guests stay in your holiday rental is always a bit of a risk, accidents can happen. But even if everything goes fine, there are some unexpected costs. It is a good idea to have some emergency money for when there is unexpected damage to the holiday rental or even a boiler breakage. But things don’t have to be that bad. There are things like changing a lightbulb once in a while that will add up over time.
Also, consider that the decoration of your apartment needs some love. You will have to buy new beddings, pillows and towels once in a while and your rental also needs a lick of paint every few years.
Again, you will probably know that you will need insurance for your holiday rental. Do you know which insurances you need? Every apartment has its own needs and every insurance company has their rates. It is hard to tell you what the costs are going to be. Just spend enough time researching on it, while thinking of your revenue strategy.
8. Time = money
Doing all the management by yourself takes up a lot of time. This is time you can’t spend on other jobs. So the saying time = money applies to be a property manager for holiday rentals. Even if it is not a direct cost, it can be a good idea to think about how valuable the time you are spending on a holiday rental is.
If this would take to much of your much needed time, consider working with a property management company. They will take care of most of the above in exchange for a commission. So when spending time thinking of how you can get the most out of your apartment, this commission might not be as bad as you think.