Non-hotel tourism: a new real estate development opportunity

A moment of confrontation between operators in the sector that will increasingly become an important point of reference.
Among the speakers also Francesco Zorgno CEO of CleanBnB who during his speech took stock of tourism in Italy in the last period and in particular on the trend of short-term rentals.

Non-hotel tourism: the new opportunity for growth and development of the territory

In real estate today there is a continuous movement, new initiatives are born and real market niches are emerging.

But how can you deal with a moment of great change?

The intervention of Francesco Zorgno CEO of CleanBNB

Francesco Zogno founder of CleanBnB, company that deals with the management of properties in the sector of short-term rentals and short-term leases, with a territorial diffusion in over 60 locations in Italy, brings his testimony and explains how the real estate sector has profoundly changed between 2019 and today, not only in the management of the apartments, but in general of the entire non-hotel sector.

The starting point was to quickly see some numbers of this sector and then think about the many opportunities that professionals in the real estate sector have before them.

During his speech the CEO of CleanBnB has first of all took stock of the situation of the real estate assets of second homes in Italy: those currently not dedicated to traditional leasing are around 6 million units, while those leased with traditional long-term contracts are around 8 million.

But the most relevant data concerns the approximately 6 and a half million second homes that are vacant for various reasons: because they are used occasionally by the owner, or because they are located in places that are not interesting for traditional renting, or for a series of other reasons that keep them empty. and therefore unproductive.

This great sea of ​​empty and unproductive properties is the basin where short-term rentals go to fish.

The short-term lease works essentially on the property that is empty, rarely works on the property that has a long-term lease.

It is not so simple, in fact, to terminate a long-term lease contract, to replace it with a short-term contract and because normally those who have chosen to rent a property on a long-term basis remain firm on this choice.

The short is instead an alternative that intervenes on the void, but this type of rental currently weighs very little on the approximately 6 million vacant properties: various estimates report that only 5/600.000 properties are found on online platforms, therefore 10% of the total number of empty properties.

The vast majority of these 5/600.000 properties are managed directly by the owner, while about 200.000 units are managed on behalf of third parties by professionals in the sector.

Of these 200.000 housing units, a large part is charged to a multitude of VAT numbers, which each manages two, three, four, while the Italian managers, including CleanBnB, which manage more than 1000 each, are at most three.

We therefore speak of a very fragmented world, of an extremely small phenomenon in the Italian real estate panorama.

From here it is already clear that there is an important opportunity, highlighted even more by the data provided by the statistics published above all on Airbnbrelating to the demand for short-term rental properties.

Non-hotel tourism: trend in the demand for properties

The demand for short-term rental properties in Italy during 2022 essentially followed that of 2019, i.e. the pre-pandemic era.

This means that within the world of tourism, which is still lagging behind as a whole compared to the pre-covid era, the non-hotel sector, especially holiday homes and apartments, has already recovered.

2022 is substantially the same in terms of trend compared to 2019, even if the peak of the summer period is missing where Asian tourists were not present in Italy.

But this figure is interesting because it means that at least as a question we have returned to the normal pre-covid numbers.
The offer of real estate has also changed drastically, there are fewer homes available: in 2022 it is significantly lower than in 2019, there are fewer properties online and above all they are different.

The pandemic has taken out of the world of Airbnb and Booking a flood of properties either because they weren't suitable for short-term rentals, or because they were only open online for two to three weeks a year with very low profitability.

In parallel, covid has led many tourists accustomed to hotels, first by necessity then by choice, to prefer the apartment instead of the hotel, but with the same need for standards, therefore the expectation of the guest has increased.

The question is more selective, the guest wants superior level apartments and services.

And so many properties have left, some have entered, but there is still much more demand than supply.

Looking too the average daily rates, it is noted that from 2021 to 2022 there was a clear increase, because of the demand is surely superior to the offer and the guests, accustomed to the hotel world and who are now staying in an apartment, have certain needs and if these are met they are willing to pay more.

Hotels have had a period of crisis and those who go ahead are fortunately always full, it was an excellent 2022 for hoteliers, but there are guests who do not find hospitality in hotels for their needs and luckily there are apartments, where all those who would otherwise go elsewhere converge.

2023 is also exactly replicating this trend, so it's been three years now, it's no longer a post-covid flare-up it's a consolidated trend.

The opportunity of the apartment in therefore opens up short rent which however is not an alternative to long rent, whoever goes short is someone who has needs of a different nature, is an owner who does not want to commit the property for 4-8 years.

Short-term rentals are put on the market for more or less a year and this is perhaps one of the strengths of short-term rentals: they don't commit the property over the long term.

An owner can decide to use the property, he can dedicate it to relatives, he may want to sell it, he can wait for better long-term rental values ​​and in the meantime he puts it on short-term.

The short rent defuses the risk of arrears of the guest in the long run and this is therefore another big plus for the owner.

Another particularly powerful factor is that the owner can occasionally use his apartment.

There are many vacation homes blocked because the owners use them one week a year, but by going on short-term rentals all the other weeks can be made available to tourists.

Non-hotel tourism: what are the earning opportunities?

As we have seen, the opportunity for higher earnings compared to long-term rentals is not mentioned.

It is true that the income from a short-term rental is higher, even double compared to the long one, but the expenses are higher: bill costs, condominium expenses, manager's cost, it's all borne by the owner.

So it is not said that you earn more, but it is certainly better than keeping it empty.

So where is the big opportunity?

First of all in Italy short-term rent is a great way to free that small part of the property which are in the portfolio of the agents and which cannot be placed.

Short-term rentals are great ways to take home brokerage contracts, promising the owner that sooner or later the property will be sold, but in the meantime it becomes a source of income and this serves to defuse the problem of long waiting times in which the supply and demand of the sale do not meet and the property does not remain empty.

Another opportunity is real estate investing aimed at short-term rentals, a trend that emerged in Italy in 2022 and which continues in 2023, at all latitudes.

Many subjects today buy properties to make them incomemaybe not forever, but in the meantime they put it on a short-term lease and then later decide to sell it, give it to their children or go and live there.

CleanBnB, like other managers, receives requests to find properties in Rome, Milan, Catania with these characteristics, but the manager cannot help in this because his job is different, this is the real estate agent's job .

Or there are also those who have found the property and ask to try it, before buying it, guess how much it will earn, it can be done but this should not determine the sale.

The opportunity is different, it has been said that in Italy there are about 650.000 properties that already have a history of profitability, so for CleanBnB these are the properties that are worth much more, due to the fact that they have an already known trading history.

As managers if you have to suggest to a client to buy a property that is certainly profitable, he will offer one of those that he has already been managing for a year or two, because he knows for each month how much he earns on a property associated with a history of short-term rental profitability.

So it is a property that is worth much more because it is already managed, has already started and above all because it has numbers. In 2022 there were many transactions that reasoned precisely on this as a speed and as a value on completely different numbers.

Here is the point perfect meeting point between the world of short-term rentals and sales: the value of the properties, the guarantee for the customer of a service given by professionals in which everyone does his job and above all the possibility of taking home more efficient and faster buying and selling operations.

This trend, which was only hinted at in 2022, will become decisive in 2023 and in the windows of real estate agencies we will have properties without profitability and properties with profitability, the great problem of short-term profitability has been solved.