2015 booking progress

[charles cawley]

It's early but in the first 4 days, bookings taken are looking good. Moderate Christmas and the New Year weather has helped and, so far, the overvalued UK pound has not damaged demand in our area.

Hoseasons' Brands advertising does not seem so prevalent on the TV (yet) but many wannabe gatekeepers are keeping up the pressure with obvious massive capitalization, splurging on advertising.

We managed to cut Google Adwords spend by 13% and plan to do the same this year. Goodwill, slow burn Twitter results and increasingly competent searching from guests looking for places to stay are growing in significance.

After over two full years blighted by shocking weather and a longer period of extended loss of confidence in the UK, this is good news. The legacy agencies may well have suffered quite badly through all this.

I know some go-it-alone operators have also struggled with the balance of advantage moving away from them on search engine organic search results and listing sites producing varying results but also weakening faced with the onslaught of the latest wannabe gatekeepers distorting the advertising market.

For all this, so far, general market prospects for 2015 look significantly better than for 2014.

[Speyside Steve]

a longer period of extended loss of confidence in the UK

Just wondering what you mean by your comment, Charles!

Does this still include Scotland? We had our best year ever in 2014 and advances for 2015 are looking good. The Highlands have a very loyal fan base (UK and overseas) and we have not seen any signs of loss of confidence.

[kg1]

We have definitely had a better start in 2015 than last year. I think the mild weather has helped. Hope it continues.

[charles cawley]

Steve: thrilled weather reporters seemed delighted with the floods last year, as if a large part of southern and western England were tipped into the Irish Sea and the Atlantic.

The damage to confidence was radical and lasted well after the rains stopped. Perhaps many went North as well as abroad.

Recent weather reports featuring Amercianisms such as 'weather bombs' have not helped. Confidence is fragile enough in the English cottage market.

[ianthy]

Steve: thrilled weather reporters seemed delighted with the floods last year, as if a large part of southern and western England were tipped into the Irish Sea and the Atlantic.

The damage to confidence was radical and lasted well after the rains stopped. Perhaps many went North as well as abroad.

Recent weather reports featuring Amercianisms such as 'weather bombs' have not helped. Confidence is fragile enough in the English cottage market.

Hi Charles

What is your view as we are now entering March. I know your view is UK specific but seems to reflect what we see in Europe too. With the Euro weakening we are hoping for a better year - fingers crossed.

Thks

Sandra

[charles cawley]

Our agency saw close to a 100% improvement on the value of bookings taken for future months and the month itself in February. January was slightly better than a moderate last year. Taking these figures by themselves a massive return to things as they used to be is on the way.

The sleep 2s, 4s and particularly the 6s are showing signs of recovery. Larger cottages weathered the storms better.

I was shocked by February's figures. The increase was radical and we cut our Adwords spend by 17% at the same time. It is possible, if major economic shocks happen, that long haul business will benefit cottages closer to home. Confidence is all, so there's an equal possibility that those forced off long haul will, simply, not take a third or fourth holiday in a year.

It is astonishing how many people take more than two holidays, considering the vast numbers who take no holidays at all.

Amateurs are entering the market in numbers but they will have to compete against time served often high quality operators. They will either fail or learn the hard way that there's no substitute for quality and good management. It is no business for amateurs. Patterns are not the same as they used to be and confidence is fragile, despite the current surge in booking values.

In early April, we will be starting the annual round of rate setting. As each cottage has its own rates and they are determined with our advice, but with the owners having the final say, this is a trying and lengthy process. My gut feeling is to advise rises between 3% and 5%.

The danger is getting too close to the demand cliff edge. People tend to forget the cliff can move, so a well judged rate getting top returns can turn into an excessive rate if the market and confidence takes a hit. The art is to set rates a few steps back from the edge, to give you time to adjust if the market starts getting tougher. Get too clever, and in a few weeks, a profitable rate can throttle demand without you doing anything in the meantime.

However, where confidence grows and grows, we encourage owners to revise rates upwards mid rate year. This is where flexibility pays. But it does make much more work for us. The market appears to have radically improved but confidence is fragile. Things could tumble as fast as demand has recovered.

(Although we appear to be in a deflationary World for the time being, should inflation return to 20% plus, as it was once in the UK, I have no idea how we will manage things in such an environment).

[rosebud]

Your comments re rate rises are useful to me - thank you Charles- as I am planning an increase for next year- but wasn't sure how big the increase should be.

I have been letting for nearly 4 years now without any increase - apart from 4% in July & Aug this year.

As all weeks from early April to mid October this year - apart from 2 - have been booked more than 2 months in advance I feel a rate rise is in order - especially for spring & summer. This is my best year ever!!

[charles cawley]

Rosebud. Most of the cottage sector has been through your experience. Rates may appear to have risen a little but habitual and often substantial discounting is widespread. Advertised rates a few weeks in advance are often little more than 'guide prices'. When setting rates do not rely on those advertised locally because they are often do not reflect reality.

Some 'helpful' owners will suggest that pricing too low will put people off with the strange argument that a low price implies poor quality... despite photos etc:. This is, sometimes, a device to encourage overpricing to hobble competition as they privately discount. Of course there are many really helpful genuine owners, as this site proves but there are more than a few of the other sort.

You started just as the market began to get difficult. The rains of 2012/3 lasting about 16 months were very damaging. Then, we had a half decent summer in 2013 followed by the floods in 2013/4.

Some climate change people seemed to revel in what they saw as permanent changes to the weather heralding endless floods. Things were not helped by the weather forecasters and their 'weather bombs'. It appeared to be fashionable to run down all prospects of half decent weather to the point of suggesting anyone who thought it could return was 'a climate change denier'.

Even the long running BBC Archers show got it magnificently wrong with no floods when there were floods and, recently, floods when there were none. I think many people in the media have little idea what damage their ill-informed speculation about the weather causes to the rural economy. They really are in a different world.

[ianthy]

Charles - thanks for the indepth commentary. It’s similar here in Italy – last year was not good we blamed the world cup but I think there was also a big impact from Europe recession finally hitting home. Impacting bigger rental properties that typically need 2 groups/families to commit to booking.

I am interested in your comments ref the timing of rate reviews increases in April, but when you do you actually increase your prices?

Thanks again.

[charles cawley]

For new cottages we advise, and most owners go along with the plan, to go in low and ratchet rates up to meet demand. This can take up to a year. Meanwhile reputation and the all important feedback grows. Feedback is as important as the photographs. The technique may cost as much as 20% in lost rental but it ensures immediate income and swift feedback development so increasing rates to market level without a reduction in occupancy in good time.

If you go in too high, it can take months before reasonable occupancy and any income appears which is a costly mistake. The method has become particularly effective with the arrival of feedback but always had some currency. It is a mistake to try to start off at market rate.

So, for new cottages, rates can change three times in a year. Sometimes they continue to change as and when depending on how their reputation builds.

Most cottages tend to follow the rule set by the large agencies which fits booking patterns. Rates tend to be set for the next year sometime between April and the end of June in the previous year. Advance booking for the next year tends to kick off sometime mid June / Early July. New rates tend to start in early January after the Christmas / New Year break.

Flexibility is the name of the game. As a small agency we can use the rate ratchet system for new cottages giving owners a real advantage over using larger less flexible banding system legacy agencies. Setting rates is a bit of an art. The Internet and the way people buy including feedback has caused major changes. They are, so far, giving a bit of edge back to smaller agencies and perhaps, a little, to go-it-alone operators.

This can't be bad.

[bessie]

I agree setting rates for me is a nightmare ,prices vary so much as do the properties plus not really in a holiday hotspot yet.Hopefully the tour de Yorkshire will at least give our part of Yorkshire a bit of a highlight.
I just wonder if more owners are changing from AST let's to holiday let's.

[charles cawley]

In our area it has been the other way around. But several owners have been burnt by the experience.

AST rentals for sleep 2 tend to be £650 plus a month grossing annually to £7800 minimum. In many cases they are £700 pcm plus giving an annual figure of £8400.

Council tax, heat and light are paid by tenants leaving maintenance for the landlord. Many underestimate the cost of sorting out an AST with a tenant changeover. It is possible a future government may change planning regs to permit automatic AST use for holiday cottages.

As most of ours have already converted and the rest have sound reasons not to do so, this would not be too damaging. But it could cripple some agency operations. The general pressure seems to be away from holday letting towards AST.

[bessie]

Rates

[arkvilla]

This has been my best year ever - I have just 8 weeks left now for 2015 (although 6 weeks are booked for our use)

It's taken 10 years to get to this point and we have worked really hard but it is now finally showing resukts for our hard work

[charles cawley]

Responding to what appears to be a recovery in the Cottage rental market we have just published a blog:

http://www.holidayletsforsale.com/articles/

The recovery is fragile but there's a good chance that general rents will rise above the rate of inflation for the first time in 3 or 4 years.

This assumes that the Euro will not implode or some other major economic event / appalling weather intervenes.