Once you’ve bought a holiday home, what happens next? Private holiday rentals rise as more holiday home owners depend on rental

returns to cover costs

A growing number of Brits already own, or are thinking about buying property abroad. But what happens once they have bought their dream holiday home?

How do they rent enough weeks to help cover costs? Where is the private holiday home rentals market today?

More Brits seek to cover the cost of holiday homes with self-management

• Up to 400,000 overseas properties are currently owned by the British; an increase of 9% per annum over the past decade*

• The number of properties listed on Holiday-Rentals.co.uk has increased by over 220% since January 2004. This represents average growth of over 45% year-on-year

• The proportion of people renting out their holiday homes to help cover costs is rising faster than the total number of properties owned

• Investment in property abroad is no longer the preserve of the ‘rich’. It has been fuelled by; greater UK housing equity, cheap borrowing, the rise of low-cost airlines, and lifestyle aspirations (a place in the sun, somewhere to retire to, a secure investment)

• Rental potential has become a major consideration. The ability to rent the property out to help cover costs is often implicit in the decision to purchase. For 43% of owners, rental potential of the property was the single biggest financial consideration when buying.*

• Holiday-Rentals.co.uk estimates that 25% of holiday home owners are currently renting their properties out on the internet

• 30% of the UK population intend to buy or would like to buy a holiday home in the future**

• The ongoing increase in overseas property ownership will fuel growth of the private holiday rentals market and an increase in the selection of properties available to travellers

2nd home ownership is no longer the preserve of the rich“

”Rental income is of key concern for British holiday home owners“

”*Savills Research/Holiday-Rentals.co.uk, March 2007

**Mintel, March 2007: Self catering holidays UK

Private holiday rentals boom as over 60% of Brits choose to self-cater

• Self catering holidays accounted for 60% of all overseas holidays in 2006. In 2007, they will represent over 62%*

• Self-catering holidays abroad grew by 22% over the last five years to 27.6 million; a faster rate than overseas holidays in general. By 2011 the self-catering market will have exceeded 34.3 million breaks*

• 27% of people taking a self-catering break booked directly with the owner. A further 13% stayed in their own, or a friend or relative’s holiday home. So in 2006, 11 million holidays were taken in private holiday homes (40% of 27.6m)*

• In recent years Holiday-Rentals.co.uk has seen a 50% increase in traffic year-on-year. In January 2007 alone, the site received around 1.1 million visits

Staying in a holiday home rental ticks the boxes for holidaymakers top priorities :

FREEDOM SELF-EXPRESSION AUTHENTICITY

… It is also extremely COST-EFFECTIVE, offering 10 to 40% savings on travel agent prices

• The growth of self-catering holidays is linked to the independent/DIY/low-cost trend and the growing need amongst travellers for authenticity, local interaction and gastronomical experiences*

– 45% of respondents enjoy the interaction when buying local produce and a further 35% felt that self-catering gives them ‘a real feel for the area’ in which they’re staying

• Flexibility is also one of the key reasons people choose self-catering: Almost three quarters of respondents cite the choice of eating in or out as self-catering’s major draw*

• The top reasons for choosing a holiday home rental are; for the privacy, self-catering facilities and the flexibility they provide, according to a recent survey of 1,250 visitors to Holiday-Rentals.co.uk

• Consumers also expect increasingly ‘customised’ services; Dealing directly with a private owner offers just this

PRIVATE HOLIDAY RENTALS BETWEEN INDIVIDUALS ARE PART OF THE ‘C2C’ REVOLUTION*Mintel, March 2007. Self catering holidays UK report

Holiday-Rentals.co.uk distribution of properties

Europe: 91% of total properties (20,255)

4%3%

27%

2%11%

9%

1%

31%

1%1%

1%1% 2%

5%

1%

Bulgaria

Canary Islands

Croatia

Cyprus

England

France

Greece

Ireland

Italy

Portugal

Scotland

Spain

Switzerland

Turkey

Other

North America: 5.2% of total properties (1,156)

4%3%

89%

1% 3%Canada

California

Florida

New York

Other

Caribbean: 1.5% of total properties (324)

8%2%

3%

49%

6%

1%

4%

9%

2%

3%

7%2% 4% Antigua & Barbuda

Aruba

Bahamas

Barbados

Dominican Republic

Grenada

Jamaica

St Lucia

St Maarten

St Vincent & Grenadines

Trinidad & Tobago

Turks & Caicos

Other

Other continents: 2.3% of total properties (510)

33%

9%

13%

13%

14%

18%

Africa

Australia & South Pacific

Central & South America

India & Indian Ocean

Middle East (Dubai)

South East Asia

Holiday-Rentals.co.uk advertises properties to suit every taste and budget, from around £150 to over £10,000 per week. The site currently lists over 22,000 properties in 80 countries, ranging from cottages to country houses; budget apartments to luxury villas; in the city or the country; by the beach or in the snow.

Owners want the control and financial benefits of looking after their own rentalsRenting direct by owner on the internet allows people to do this

• Owners can ‘vet’ guests. For most people, this is their ‘dream’ holiday home, perhaps even the place they want to retire. They don’t want any Tom, Dick or Harry staying there!

• An annual subscription is most cost effective. Advertising online and self-managing rentals is ten times cheaper than using a property manager because owners save the 20 - 30% they would otherwise pay as commission

• The internet has made it easier. Owners can easily update calendars and manage enquiries by email

• The internet is the best place to attract renters. Travel is one of the main services purchased online. 17 million people expect to book some part of their main 2007 holiday online*

• Owners get an online presence on a high-volume site with great search engine visibility. Holiday-Rentals.co.uk receives on average 750,000 visits each month

• With Holiday-Rentals.co.uk, owners benefit from our ongoing investment in technology and marketing and our efforts to promote private holiday home rentals

• The internet enables owners to market their property to a GLOBAL audience. With Holiday-Rentals.co.uk, owners can publish their advert on multiple sites, from one account. We have 10 European sites, plus 4 leading US websites, including HomeAway.com

Why rent direct on the internet?

*Continental Research, 2007 Holiday Online Planning Report

Renting online is easy and provides cost-effective global advertising

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Keep a ‘business’ head when buying to rent

• The average rental season in Europe is between 16 to 20 weeks (and elsewhere it most likely to be between 20 to 25 weeks – for example in the USA and Caribbean)

• Over half of Holiday-Rentals.co.uk customers successfully fill at least 17 weeks per year , while 86% fill at least 10 weeks per year

• People should beware of being led by their heart, rather than their head if they are depending on a minimum number of rental returns to help cover costs

• It is essential to conduct thorough research and a business approach is imperative. Buyers should ensure they understand all the laws relevant to purchasing and owning property in the country, its economic performance and political climate

• When considering rental income, questions to ask include; Is it an established or emerging destination? Is the location ‘practical’? How long is the holiday season? Who are your potential renters? What does the destination offer travellers? What is the competition?

• Be clear on the minimum number of weeks you hope to rent out and whether the destination will enable you to meet this target

• Ensure the place you wish to buy allows short term rentals!

• Beware of developers’ ‘guaranteed’ rental returns. Often the percentage returns quoted are before service charges and fees. If the guaranteed rental returns are for a limited period, this may be financed by an inflated selling price!

• When considering using a property manager, make sure you allow for their commission and fees when calculating your returns. This could cost up to 30% of your revenue

• If you have decided you want to self-manage your rentals, make sure you have the time!

£££

£££To ensure rental returns buy with your head not your heart“

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Tips for attracting travellers and maximising rental returns

• Ensure you have a presence on the Internet. Beware of listings with ‘free’ sites, the traffic won’t be there• Respond promptly to enquiries. Make the most of SMS text alert services and set up ‘auto-replies’ for emails• Keep track of everything in writing. Follow up any telephone calls with an email• Include great pictures. Have exterior shots of the property, outside facilities and view, plus photos of every room if

possible. If you can’t include them all in your advert, at least have them to send. It is also a good idea to have some inspirational pictures of the surrounding area. ‘Set the scene’ too; set tables and use fresh flowers

• Keep your calendar and rates up to date. Include details of your deposit / cancellation / refund / payment policy and what is included in the rates. To reassure potential renters, it is advisable to have a rental contract. Holiday-Rentals.co.uk has a sample contract for owners

– Accept credit cards (for example, using PayPal)– Accept pets, but charge for them

• Be flexible regarding duration of stay and check-in/check-out times. Research shows this is one of the main reasons people choose a holiday rental. Stick to weeklong minimum stays in peak periods if you wish, but be flexible at other times to attract the increasing number of people going on short breaks and taking advantage of flight deals.

• Include a detailed description of the property and facilities. Is it child-friendly, do you provide hairdryers, books, toys, games etc..?• Include a detailed description of the surrounding area. ‘Sell’ your local area to potential guests. Write about cultural and historic sites,

activities, excursions, local markets and beauty spots. What is available within walking / driving distance?– Remember authenticity is a key USP of private rentals! Detail ‘hidden gems’ and locals’ favourites so guests can ‘live like a local’– Play on the ‘foodie’ elements that are so important to self-caterers. Provide details of local restaurants, markets, where to buy specialities, any

food delivery services, and foodie or wine tours or excursions

• Provide travel information. How will people get to your property? What transport is available locally? How far are you from the airport?• Attract renters off-season with discounted rates and special offers (3 nights for the price of 1)• Keep them coming back. Offer discounts (or the previous years’ rate) for returning guests or those who have referred a friend• Provide basic necessities, such as linen, towels, toilet roll, cleaning products, hairdryers and power converters• Include a welcome pack of basics and local goodies, either included in the price, or for an extra charge• Provide comments from past guests. Be willing to provide references from and contact details for past guests • Tout your ‘green’ credentials! If you’re a short-hop from the UK, tout your ‘green’ holiday credentials!• Word of mouth is powerful, so treat customers well. A recent survey of Holiday-Rentals.co.uk site visitors revealed friends and family are

the second top source of holiday inspiration, after the internet• Have someone available locally, or via mobile in case of problems and publicise this in your advert• Pools are essential, so include details of your own, or nearby facilities. Holiday-Rentals.co.uk surveys and industry reports have shown

swimming pools to be one of the key considerations on self-catering holidays

About Holiday-Rentals.co.uk

• 1996: Holiday-Rentals.co.uk is founded. The site takes off and continues to grow – fast!• February 2005: Brian Sharples and Carl Shepherd recognise a huge opportunity in the holiday

rentals market and create HomeAway, Inc. in Austin, Texas– HomeAway receives $32m in funding from Austin Ventures and Redpoint Ventures and $9m from WVR

management– HomeAway acquires CyberRentals.com, GreatRentals.com, TripHomes.com, A1Vacations.com and Holiday-

Rentals.co.uk

• December 2005: HomeAway acquires leading German site, FeWo-direkt.de• May 2006: HomeAway receives $7m in funding from Austin Ventures, Redpoint Ventures and

management• June 2006: HomeAway.com is launched, listing properties from CyberRentals, GreatRentals,

A1Vacations, TripHomes, FeWo-direkt.de and Holiday-Rentals.co.uk• September 2006: USATODAY.com selects HomeAway.com to power its holiday rental classifieds• November 2006: HomeAway receives $160m in equity and debt financing to fund expansion

initiatives• January 2007: HomeAway acquires leading French site, Abritel.fr• March 2007: Holiday-Rentals.co.uk launches 8 European sites • April 2007: Holiday-Rentals.co.uk lists over 22,000 properties

Today, the HomeAway network of industry-leading private holiday rentals sites provides the largest and most complete selection of holiday home rentals in the world, advertising over 170,000 properties across 100 countries. In 2007, over 100 million travellers will visit HomeAway sites.

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