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Buying to Rent- Catered vs. Self-catered

To cater or not to cater when renting out
Lovely alpine chalet, enjoy the alpine lifestyleBuying alpine property for holiday rental is both a dream come true and a daunting challenge. The promise of a wonderful lifestyle and excellent financial returns feature to some degree in the ambitions of most buyers. Caution, strategy and often a lot of work are required to make those dreams a reality, in this article we discuss one major rental question, to cater or not to cater?

There’s a mountain of important decisions to make that need to be carefully balanced and planned to make sure you have the best chances of succeeding. Whether you offer your property to rent on a catered or self catered basis is just one decision of many but it’s a factor that affects almost every other aspect of investing in alpine property.

Buyers are interested in lifestyle, revenue and the investment opportunities when considering buying a ski chalet or apartment & the mix of priorities is a very personal thing. We look at some of the pros and cons worth considering when deciding between offering catered or self catered holiday rental properties.

Financial

Alpine chalet financeThe decision to offer your alpine property on a catered or self catered basis may effect the initial outlay required but will also effect the likely return and the level of risk. Setting up & managing self catered accommodation is likely to be cheaper compared to catered. Although the extra service provided by catered chalets could result in higher profits. However there is more risk & potential for losses to be made in catered accommodation, for example being let down by your catering/food provider or food going to waste. More research is required to set up a successful catered chalet such as sourcing the best deals for food, balancing cost & quality. There’s also more financial pressure if you’ve moved to the Alps to provide catering, it may be your main source of income whereas owners of self catered chalets are likely to be more able to have another job because of the difference in commitment & time required. The self catered market is the domain of huge competition from property owners large & small, great profits are tricky as prices are driven down by the huge range on offer.

Lifestyle

Home ownersThe question of how your investment will alter your lifestyle is a big one. Offering self catered accommodation could mean that you don’t have to quit your day job & you could manage the property from the UK. This might be a good way to test the water if you have commitments in the UK & aren’t ready for the lifestyle overhaul of living & working abroad.

Chalet holiday companies present a tempting option with few risks, renting your property from you for the season on a guaranteed rate and then running the entire holiday operation themselves so as to make a profit. This often leaves the chalet free throughout the summer for those who love the summer life in the alps but can leave it very much off limits in the winter.
Small catered chalet businesses owned by individuals and families tend to carry out the catering services themselves or with the help of a small staff team, a move like this is a great adventure for most but doesn’t work out well for all.

A complete lifestyle change which is what draws many into the alpine property market but it also comes with challenges and difficulties that may not be what you had in mind when starting out.

The decision of what kind of property you buy & where you buy may be shaped by your ideal mountain lifestyle but if you’re looking to rent it out, there are commercial decisions to be made if it’s to be a success. If you do decide to live in the property as well you should think about whether the property is well laid out for this kind of venture. Will renovations need to be carried out so that you can still have a private section of the house or chalet, will you rent on a room only basis, will the lounge be open for use by your guests? Once you’re looking at a type of property & place, you need to consider your target market.

Target market

A couple enjoying a meal- catered or self cateredFirstly, consider the market available to your property to be, the target customer and what kind of money they might want to spend on renting an alpine holiday property and the kind of property that would appeal to them.

Do you want to offer low cost accommodation, mid-range or luxury? If you chose to go down the affordable accommodation route, self catered may be the best option but in some resorts in particular there’s a big demand for affordable catered holidays. Although self catered luxury chalets & apartments do exist they tend to be less common as people shopping for luxury accommodation tend to want their every need tended to. Some luxury self catered chalets overcome this by working with a fine dining service as an optional extra, a formula that can have advantages over the fully catered service.
With self catered accommodation you need to also consider the properties proximity to local amenities, make sure your guests can easily shop for food & drink. It doesn’t necessarily mean you need to be in the centre of a resort as there are often shuttle buses to take your guests to the slopes & many people don’t mind this so long as it’s reflected in the rental cost. If the property isn’t particularly close to the local supermarket you could offer a food delivery service, this could also help your business stand out from the crowd.
If you want to target the luxury market there’s more to take into consideration apart from the catering & the standard of the chalet itself. The ski area & resort will matter to all ski properties but in the luxury market in particular there are ‘hot-spots’ and places not known to the majority of the market. The excellent marketing of luxury retreats in secluded mountain villages is a challenge but can be very successful & profitable as such properties are often cheaper than those in the centres of luxury like Courchevel 1850.

Property management

As eluded to earlier self catered chalets and apartments are easier to manage. You buy the property, pay for someone to clean it & hand over the keys to new guests & take their cash. In comparison to run a catered chalet you either need to live in or near the chalet or employ another company to cater for you. Paying an external company would make things a whole lot easier & less hassle for you but there are lots of reasons to do the catering for yourself. The obvious one being that you’ll have access to a potentially bigger profit margin, also you’ll have more control of your business’ image as you’ll be the face of it. Many catered property owners chose to provide their own catering as they enjoy the lifestyle of constantly meeting new people or use it as means to and end so they can experience alpine life.

Marketing

There’s a lot of competition for self catered ski apartments and chalets as more and more people are looking for cheap holidays. Creating a good business reputation and relationships with your guests will be harder with self catered rentals as there’s less face to face interaction, fewer services provided and so less chance to impress. If you chose the self catered route think about how you could make your service stand out from the rest & how you’d attract customers. In catered accommodation it’s easier to provide a personal service and impress your guests with your attention to detail, friendly personality and excellent cooking skills. Developing a good relationship with your guests is easier which could lead to return visits or recommendations to their friends and family. Marketing a catered chalet is still essential and especially at the beginning to introduce yourselves to the market. Sites like ChaletFinder offer online accommodation search to holiday makers and a source of enquiries and bookings for advertisers.

The choice between catered and self catered accommodation is complex and completely dependent on your own personal preferences of lifestyle, finance and the kind of business you want to run. Overall self catered is easier and presents less risk but you stand to make more money in catered accommodation.
If you’re struggling to make the decision the best way to go forward would be to draw up a detailed business plan, considering all the steps required to set up each type of accommodation. There are a number of forums and websites out there offering advice and guidance from experts and people who have been through these tough decision making times. For example, www.laymyhat.com is a community of holiday rental owners, The Summit Alpine Property section covers matters of interest and many chalet estate agents are happy to advise buyers on their options.

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