Is the timing right for a rate increase for corporate housing?
Posted on 27. Feb, 2010 by Kat Schneider Fotheringham in Blog, Business Travel, Uncategorized, corporate housing, executive accommodations, international business travel
Now that the holidays and the new year are well behind us, and we’re right in the middle of tax season, like everyone else, corporate housing providers are tempted to consider something many business owners and retailers have shoved to the back burner for some time–price, or in this case, rent and fee increases.
Let’s face it–we’re all in this business to make money. But in tough economic times, sometimes that entrepreneurial drive has to take a back seat.
Here are some things to consider before taking the plunge:
As difficult as it may be to fathom, the rental prices you are charging should have nothing to do with your costs. You should always charge fair market value for your units. Period. Trying to recoup all of your costs in this economy is not going to be a winning strategy.
To determine what “fair market value” means in your area of the country or globe, evaluate based on these factors:
-How much are other furnished rentals going for in your area? It is possible that yours is undervalued, and that could be a reason to elevate your current prices.
-What extras do you offer your renters? If you offer more luxurious extras than competing property owners, then your rates should include those services.
-How much do the extended stay hotels in your area charge? Because they are often chain-operated and based on a real-time business model, the rates for extended stay hotels are adjusted frequently and more accurately reflect shifts in the marketplace.
Of course, once the market recovers, there is no reason why you shouldn’t consider incremental adjustments–upwards–in rental fees. The best takeaway for rental property and corporate housing owners in this–your property is your business and your product. If the market improves and the value of what you’re offering increases (including your improvements to the property, updates to the interior and amenities, etc.) organically over time, then you should consider and make the increases that are fair based on your market area and demand to the rent and leasing fees you charge.
After all, much as you love it, this is a business–your business–and the effort, time and capital you expend should and will be rewarded. The right timing and effort will make all the difference in the world.
