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How to avoid fear and take action: Create Vacation Rental Property Managers Can Create A crisis plan, cut costs, adapt to longer stays, and negotiate with homeowners

adel honti
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During our free online conference “Local Property Managers vs Global Coronavirus Epidemic“, 14 speakers shared their experience of getting vacation rental management companies through this unprecedented crisis. You can watch the free replays of the video here: https://www.rentalscaleup.com/conference-property-managers-against-corona/ .

Adel Honti manages 30 short-term rentals in Budapest, Hungary.  As a paragliding world cup winner, she is trained in facing fear, evaluating consequences, and taking fast actions. She will share with you how she came up with her plan to enable her business to survive through low revenues in the coming months. Watch her explain why she’s embracing longer stays while keeping them under 90 days, how she cut costs to stay lean, and how she’s convinced her homeowners to follow her new property management tactics. Bonus: Adel will offer free 30 -minute consultations to some of the conference attendees.

  • Adel wears two hats as a paragliding athlete and a property manager. She sees a lot of overlap between her two focus areas, like always trying to maximize performance and minimize risk.
  • Navigating today’s uncertain circumstances in her property management business isn’t that different from encountering some turbulence when she’s gliding through the air. She has learned that panicking is the worst thing to do in these situations; instead, calming down and figuring out a solution is the best way to solve a problem.
  • Adel’s professional background is in law (she worked as an international tax lawyer previously), but about 10 years ago, she started a tour operator business with some friends in Budapest and invested all of her profits into real estate.
  • She started listing properties on Airbnb with the help of her siblings, who worked for big hotel chains, and her parents, who also invested in some properties.
  • They enjoy some friendly competition within the family, always trying to see who’s property is performing better. They have approximately 30 properties in their portfolio right now, which includes several that have other owners.
  • Adel is currently trying to diversify her business and book not only short-term stays but also mid-term reservations (up to 90 days) until tourism bounces back. She is confident that tourism will return to an average level soon, just as we saw after 9/11 and past epidemics since people have a short memory for threats and fear.
  • She gathered a lot of data and proposed two solutions for the property owners that she works with: either change business models entirely and try to sign long-term leases or focus on the mid-term market now while remaining available for future short-term stays when the tourism market is back. If an owner secures a 1-year contract now, for example, then they will effectively sacrifice any shorter reservations they could book in the fall or winter or whenever people are traveling again.
    • Adel predicts that urban markets will recover after rural markets.
    • Another reason to focus on the mid-term stay segment is that there is so much inventory available for long-term rentals that the prices are meager right now.
  • In Hungary, the laws allow for rentals with a maximum of 90 days without needing a lease.
  • In addition to Airbnb, Adel is listing properties on sites that cater to the mid- to long-term segments, like Flatsy and some local websites in Hungary.
    • Airbnb has reduced the service fee (the one that guests pay) for long-term stays from around 15% to closer to 10%.
    • It’s essential to speak with other property managers in your local area to find out which localized sites you should list your properties on, in addition to the big players like Airbnb.
  • Hotels can legally stay open in Hungary, but many have chosen to close since there is very little demand.
  • Many restaurants are still open for delivery only, even Michelin-starred restaurants, which shows how important it is to be adaptable and able to make quick decisions.
    • By remaining open, the restaurants can keep their staff employed. Staff is your best asset, as Adel says.
  • Adel’s property management outsources their cleaning services, but she has an agreement with the owner of the cleaning company that says she will only pay if she receives 4- and 5-star reviews. This arrangement has helped her ensure quality at her properties.
    • Plus, by outsourcing the cleaning aspect of her business, she can channel her energy into other aspects of property management. Her goal is to be the best property manager, not the best housekeeping manager.
  • Staff salaries are her most significant expense, but in these tough times, she said she would cut costs in all other areas before reducing her staff’s salaries. So far, she hasn’t had to reduce wages at all. Another big expense is software, which includes automated messaging tools and dynamic pricing tools, and she has been reducing those costs. The government has also reduced the amount of tax that businesses need to pay, which has helped her overall financial situation.
  • Adel made an emergency financial plan that calculated her income and expenses based on a reduction of income. This way, she can predict how her business will perform in the long term if she experiences a drop in revenue. She has reduced her costs to be 40% of what they were previously, which allows her business to stay steady even with a dramatic reduction in income.
    • She also keeps an emergency fund that will cover all of her operational expenses for 3 months, even with no income.
  • She implemented this strategy in her personal life, too, taking inventory of her personal spending and selling things around the house that she didn’t need.
  • Regarding taxes, Adel says she plans for the worst and is happy if things are better than expected. She is saving money that she estimates she will owe in tax for this year, but there is a chance that the government will reduce or erase tax burdens for businesses due to the coronavirus situation.
    • Once you know the worst-case scenario and accept it, then you can find solutions to avoid that outcome.
  • During this downtime, she’s focusing on fixing issues at her properties and adding amenities so her properties can be in great condition when tourism returns.
  • In addition to property management, Adel does some general business consulting, drawing on her experience in digital marketing and strategy. She recommends keeping a positive mindset and overcoming fear.
  • She is also going to offer a new online Airbnb experience in which she shares strategies for building mental toughness and how to handle your emotions, tying these strategies to business.

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