In an ever more mobile world, there is a growing need for medium- and short-term housing. Temporary accommodations are not limited to tourists. They can also cater to various other constituencies, such as newcomers, students, displaced policyholders, workers, and those undergoing life transitions. Here are the pros and cons of each clientele to help you decide which one to target.
Tourists
Tourists are a major part of the temporary rental market and certainly the portion that gets the most media coverage. Travellers typically rent accommodations for a few days or weeks, with many opting for a private room with a bathroom. However, fully furnished and equipped homes are becoming increasingly popular among travellers. Such accommodations not only tend to have lower rates than hotels but also offer amenities that can lead to cost savings and add convenience.
Pros
Potential for profit: Renting to tourists can be highly lucrative. Profit margins in the tourist accommodation sector can range from 7% to 20%, depending on the time of year. Peak tourist season typically runs from May to September. The strong demand can result in higher rates and a steady flow of bookings.
Cons
Noise and disruption: Tourists often travel in groups or with their families, leading to increased activity and noise. They’re on vacation and will likely be out and about exploring the area. Guests’ constant comings and goings can disrupt the tranquility of buildings and neighbourhoods.
Potential for damages: Some tourists rent accommodations with the intention of hosting parties. Beyond the nuisance this creates for neighbours, you’re more likely to incur costly repairs or replacements.
Higher turnover rate: One disadvantage of renting to tourists is that they typically stay for shorter periods than other temporary rental clienteles. This constant turnover involves more hassle and a greater time commitment for cleaning, maintenance, check-ins and checkouts, and communication.
Newcomers
Renting to newcomers, whether immigrants or people moving to a new city, is another major part of the temporary rental market.
Pros
Longer stays: Temporary housing provides newcomers with a place to stay while they search for long-term housing. It gives them time to explore different neighbourhoods, identify essential services, and make informed decisions about where to settle down. As a result, their stay can last several weeks or even months. This means fewer guest transitions, making your business easier to manage.
Less nuisance for neighbours: Newcomers are usually focused on getting settled and don’t do anything to bother their neighbours. They present a lower risk of frequent partying or excessive noise.
Cons
Potential for misunderstandings: While newcomers may generally be less inclined to engage in disruptive behaviour and are usually excellent guests, there is still a possibility of misunderstandings. Differences in cultural norms, expectations, or living habits, while they enrich society as a whole, may occasionally lead to some inconveniences to you or neighbours. Be sure to clearly express your expectations and maintain open lines of communication.
Students
Students, whether they hail from Canada or abroad, make up another substantial slice of the temporary rental market. In recent years, the number of international students in Canada has significantly increased, which points to a growing demand for student accommodations.
Pros
Guests with financial stability (international students): Foreign students in Canada must demonstrate that they have adequate financial means before arriving. This often assures landlords of their ability to meet rental obligations.
Longer stays, less turnover: Students typically occupy accommodations for the academic year, resulting in less turnover and management compared to shorter-term rentals.
Cons
Location limited clientele: If your property isn’t near an academic institution, attracting student tenants can be challenging. Larger accommodations, such as houses or multi-bedroom apartments, may be less desirable for students unless they’re seeking shared living arrangements.
Parties: One notable disadvantage of hosting student tenants is the increased noise and social activities associated with their youthful energy and active social lives. In other words, some students love to party and party hard. While young people can bring a vibrant, dynamic vibe to a neighbourhood, get-togethers can disturb other tenants or neighbours and do major damage to your property. Landlords should establish clear guidelines and expectations about noise levels and appropriate behaviour to maintain a peaceful living environment for all residents.
Displaced policyholders
Displaced policyholders—who are individuals or families affected by unfortunate events—such as a house fire, water damage, natural disasters, and mould—often require temporary housing while their property undergoes restoration. This presents an opportunity for landlords to provide a vital service to those in need.
Pros
Insurers pay the rent: One significant advantage of hosting displaced policyholders is that their relocation expenses are typically covered by insurance companies. This ensures that landlords will receive full payment the rental.
Longer stays: Because these stays often last several months, the management involved in this type of rental is less burdensome than for clienteles with shorter rental periods.
Giving a helping hand: Hosting displaced policyholders can be a rewarding experience, as they are typically respectful, grateful tenants who simply want to regain a sense of normalcy in their lives.
Cons
Almost inaccessible marketplace: Property owners cannot directly receive relocation contracts from insurance companies. However, you can list your unit on SiniSTAR’s rental platform, which connects small-scale landlords with insurance companies. Another big plus is that SiniSTAR handles the administrative paperwork for relocation contracts, among other aspects of rental logistics.
Travelling professionals
Professionals, including business travellers, trainees, or contract workers, often find themselves in need of temporary accommodations when they’re away from home for work.
Pros
Higher budgets, bigger profits: One significant advantage of hosting professionals is that, in some cases, their employer covers the accommodation expenses. This means that their housing budget may be higher compared to other clienteles. As a result, landlords can generate more revenue.
Cons
Shorter stays: Professionals on business trips or short-term assignments tend to have shorter stays. As already mentioned, this increases your logistical load.
Difficulty in attracting this clientele: Many business travellers prefer hotels near city centres or long-distance transportation hubs, such as airports or train stations. Consequently, attracting such guests can be challenging. However, if your unit has a central location and easy access to public transportation, you may still be able to appeal to business travellers seeking temporary accommodation.
Special setup required: Professionals often have specific requirements for their temporary housing, such as high-speed internet, reliable Wi-Fi, a scanner and printer, and an ergonomic workspace.
People going through life transitions
People undergoing life transitions, such as a separation or divorce, often find themselves in need of temporary housing as they navigate a challenging period. Temporary rentals can serve as a valuable option, providing them with a place to stay while they search for longer-term solutions.
Pros
Low disruption and turnover: Like displaced policyholders, individuals going through such transitions are looking to rebound and get back to their normal lives. They may require housing for the medium-term, which translates to fewer management responsibilities for you as a landlord.
Cons
Lower budgets: Keep in mind that people experiencing life transitions may have limited budgets. Separation or divorce can cause a significant financial burden. Therefore, your potential for income may be lower compared to other clienteles.
Hard to target: This demographic can be challenging to target because it often relies on more general channels, such as classified ads or mainstream rental platforms rather than specific temporary rental platforms.
Ultimately, finding the right clientele for your temporary rental business requires a balance between financial considerations, each group’s needs and your own affinities. You should also consider whether serving a combination of clienteles works for you. For example, you could rent to students during the academic calendar and fit tourists in during the summer break. Whichever way you go, by offering a comfortable, top-notch temporary housing experience, you can establish a strong reputation and attract a loyal customer base, ensuring the long-term success of your rental venture.