If you own a rental property, you’ve probably wondered whether you could make more money by operating it as an Airbnb or serviced accommodation rather than renting it to a long-term tenant.
It’s a question we hear regularly at N And N Stays.
And while serviced accommodation can generate considerably more gross revenue than a traditional rental property, that doesn’t automatically mean it’s the right option for every landlord.
There are additional costs, more active management and – perhaps most importantly – the property needs to be in an area where people actually want short-term accommodation.
So, which makes more money?
Let’s look at the differences.
1. How Does a Long-Term Let Make Money?
The traditional rental model is relatively straightforward.
A tenant agrees to rent your property and pays an agreed monthly amount. Depending on the tenancy and arrangements, the tenant will typically be responsible for household bills such as gas, electricity and broadband.
For landlords, one of the biggest attractions is predictability.
If your property rents for £1,400 per month, for example, you have a fairly good idea of the property’s gross rental income each month while it is occupied.
There are still costs such as mortgage payments, insurance, maintenance, compliance and potentially letting or management fees, but the income itself is relatively consistent.
2. How Does Serviced Accommodation Make Money?
Serviced accommodation works differently.
Instead of renting the property to one tenant for an extended period, guests book the property for individual stays.
These could be:
– Weekend visitors
– Families
– Business travellers
– Contractors
– People relocating
– Guests working temporarily in the area
– Insurance or temporary accommodation stays
– Longer corporate bookings
Instead of charging a monthly rent, the property normally has a nightly rate.
For example, a property achieving an average of £150 per night at 70% occupancy would generate approximately:
£150 × 21 occupied nights = £3,150 gross revenue per month.
That’s considerably more than a £1,400 monthly rent.
But there’s an important catch.
£3,150 of serviced accommodation revenue isn’t equivalent to £3,150 of long-term rental income.
There are additional operating costs to consider.
3. Serviced Accommodation Has Higher Running Costs
With a traditional tenancy, many of the everyday household costs are usually paid by the tenant.
With serviced accommodation, the owner/operator will generally need to account for costs such as:
– Gas and electricity
– Water
– Broadband
– Council tax or business rates, where applicable
– Insurance
– Cleaning and linen
– Booking platform commissions
– Maintenance
– Consumables
– Management
This is why we don’t recommend comparing the headline revenue from an Airbnb with the monthly rent from a traditional tenancy.
The important figure is what’s left after the costs.
4. Occupancy Makes a Huge Difference
A traditional rental property might remain occupied continuously for a long period.
Serviced accommodation isn’t guaranteed to be occupied every night.
That’s where understanding the local market becomes extremely important.
A property generating £180 per night sounds fantastic – but not if it’s only occupied for eight nights each month.
Conversely, dropping the price simply to achieve 100% occupancy isn’t necessarily the answer either.
Successful serviced accommodation requires a balance between nightly rate and occupancy.
At N And N Stays, we use dynamic pricing rather than simply setting one nightly price and leaving it unchanged throughout the year.
Rates can move according to demand, seasonality, local events, booking lead time and other market conditions.
5. Location Can Decide Which Model Wins
This is probably the most important point in the entire comparison.
Not every property makes good serviced accommodation.
A property needs a reason for guests to stay there.
That demand could come from tourism, but it doesn’t have to.
In many locations, demand can also come from:
– Major employers
– Construction and infrastructure projects
– Hospitals
– Universities
– Business parks
– Corporate travel
– Relocations
– Events
We manage serviced accommodation across areas including Bristol, Bath, Cardiff, Newport, Swansea and Swindon, and the type of guest can vary considerably between locations.
A successful strategy needs to understand who is travelling to the area and why.
6. Airbnb Isn’t the Whole Serviced Accommodation Market
Another common misconception is that serviced accommodation means putting a property on Airbnb.
Airbnb can be an excellent source of bookings, but it’s only one channel.
Properties can also receive bookings through other online travel platforms, direct-booking websites, businesses, contractors and corporate clients.
At N And N Stays, we believe having multiple sources of bookings is important rather than relying entirely on one platform.
Direct bookings can become particularly valuable as a serviced accommodation business becomes established.
7. Serviced Accommodation Gives Owners More Flexibility
There is another advantage that isn’t purely financial.
With a traditional tenancy, the property is somebody’s home and the landlord’s ability to use or change the property is naturally restricted by the tenancy and relevant legislation.
Serviced accommodation operates differently.
That can give owners more flexibility over how the property is used and when it is available.
For some property owners, that flexibility can be almost as important as the potential additional income.
8. But Serviced Accommodation Is More Work
This is where many new hosts underestimate what’s involved.
Running one property might sound simple.
Then the messages start.
A guest can’t find the key.
Someone wants an early check-in.
The cleaner reports damage.
The Wi-Fi isn’t working.
A booking gets cancelled.
Another guest wants to extend.
The boiler stops working on a Sunday.
Meanwhile, someone needs to manage pricing, calendars, reviews, cleaners, maintenance and multiple booking platforms.
Serviced accommodation can generate excellent revenue, but it isn’t passive income when you’re managing it yourself.
This is one of the main reasons owners choose to use a professional serviced accommodation management company.
9. So Which One Makes More Money?
There’s no universal winner.
Long-term letting can provide predictable monthly income with comparatively less day-to-day involvement.
Serviced accommodation can offer significantly higher gross revenue and potentially higher returns, but it comes with higher operating costs and requires considerably more management.
The answer depends on:
– The property
– Location
– Local demand
– Potential nightly rate
– Expected occupancy
– Operating costs
– Financing
– The owner’s objectives
The only sensible way to compare them is to run the numbers for the individual property.
10. Should You Turn Your Rental Property Into Serviced Accommodation?
Before spending money on furniture, linen and setting up an Airbnb listing, find out whether the numbers actually work.
We’d rather tell an owner that their property is better suited to a traditional tenancy than take on a property that we don’t believe has sufficient serviced accommodation demand.
But when the location, property and demand are right, serviced accommodation can offer property owners an attractive alternative to the traditional rental market.
Could Your Property Work as Serviced Accommodation?
If you own a property in Bristol, Bath, Cardiff, Newport, Swansea, Swindon or the surrounding areas, N And N Stays can assess its serviced accommodation potential.
We’ll look at the property, local competition, likely guest demand and potential performance before discussing whether we believe serviced accommodation is a suitable option.
Already running an Airbnb or serviced accommodation?
We can also look at how your existing property is performing and discuss how professional management could make it more hands-off.
Find Out What Your Property Could Achieve
Contact N And N Stays for a free, no-obligation property assessment.
Call us on 01225 595686
WhatsApp us: 07869 362439
Email: info@nandnstays.co.uk