Holiday homes represent a big industry category in the UAE and one of the key future growth drivers. It is also a reason why landlords and those signing up as short-stay tenants are aware of their rights and the steps they need to take to get the best deals.
The message is – if an offer looks and sounds as if it’s too good to be true, it definitely is. We have been warning potential clients who did not sign with us in the past - because of higher returns being guaranteed by cheques - to be careful since the numbers do not add up. When you have a property being offered at 30 per cent higher rate and backed by cheques, there has to be something wrong.
The holiday home business works best on a revenue share, where both partners make money from higher rental income. Owners should put clauses in their contracts that a holiday home management company cannot rent the property out for more than 90 days to the same client.
Ideally, they should not have an average stay of more than five- to seven nights per booking. This is what landlords should expect from a professional holiday home management company, and not a real estate firm who engages guests for months at a time. These companies don’t have the technology or the expertise on how to vet a guest.
Property owners need to look out for the following when engaging a holiday home management company:
- Meet the team and promoters. Are they from the hospitality industry? Do they understand customer service?
- Do they work on a fair revenue share? Remember if they are charging you too low, then you know how well your property is going to be taken care of and how well the guests are as well. Can a business really service on 15 per cent margins with all the associated costs?
- Do they have marketing channels apart from the traditional online travel agents?
- Ensure that their properties are not listed on the typical property rental platforms.
- Are they a holiday home management company or an offshoot of a real estate division or agency. This is a major red flag.
- What accounting system along with tech processes do they you? Do they follow ‘Trust’ accounting, which ensures your money is safe.
- The revelation about a scam involving a holiday home management company has more to do with the way the properties were leased. The properties had been taken on long-term rentals and then subleased. Had the eventual tenants followed the rules in terms of ensuring Ejari registration, the problem could have easily been avoided. As always, if all processes are followed, such issue would have never taken shape.
It is to be remembered that real estate firms do not understand the holiday home play. They are just working off the demand with no real science behind their business. Holliday homes charging a low service fee will literally get for what you pay for - in terms of the kind of guest you receive, the upkeep of your property and the return you can earn.
The industry needs to come with an association and have memberships where employees are certified and trained. The association should vet the companies to ensure they pass the tests and do not raise any red flags.