UK: Newly-appointed head of UK at Fulhaus, Diana Sanni, joined the ShortTermRentalz podcast to discuss the company’s expansion into the UK, how short-term rental operators will need to review their full portfolio performance in light of the Covid-19 pandemic, and how firms operating under master leases, will need to be more holistic and do more market research into cities they work in.
How is your business being affected by Covid-19?
As we have 4 offices globally (Montreal, New York, Lisbon, London) the different offices have felt the effects slightly differently as we are in different stages of the Covid-19 epidemic.
Operationally we have hit pause on some of our live projects due to lockdown measures. Any furniture interior design projects that we were in the process of installing have been paused and pushed back, so there is a definite impact on the installation side. However, on the interior design side, it is very much business as usual. I have had a busy week with calls to Montreal and New York and our international furniture partners to discuss the interior design portion of their short term rental projects. We work with property developers that have almost complete buildings that need finishing and need furnishing, irrespective of COVID. So there is a lot of planning for us too.
Why has Fulhaus decided to expand its operations into the UK at this moment in time and what do you envisage for the next 12 months?
The UK expansion has been in the pipeline since the end of 2019, so the UK office was very much in the Fulhaus global expansion plan. The next 12 months for us are extremely exciting still, which is strange to say in the industry we are in (travel, hospitality, STR) as the impact of Covid-19 will be felt for months to come. We have been able to take a step back and review all of our processes and our strategies for the short term, medium-term and long term.
Short term we are dealing with it the best we can. Negotiating with our furniture suppliers and our clients and supporting both where we can. Moving to the medium term, what will happen in our respective markets in the coming 6 months? I personally envision the European travel markets rebounding quicker than the North American markets, especially the US. It’s all about understanding where we sit in all of our different markets that we operate in. What kind of change can we be making now to push us forward, even if in the short term it does not make much of a difference?
How do you think short-term rental operators will need to review their full portfolio performance in light of the pandemic? Will they be moving more into mid-term rentals?
All the clients I have spoken to and all the industry conversations we are having and webinars we are participating in (such as Cushman and Wakefield, STR Europe, and Rentals United), the message seems to be consistent across the board.
- Domestic demand to drive the market over 6-12months.
- Short term rental operators are moving to a midterm rental (1 week to 6 months) and long term rental (6 months plus) strategy.
- We have a good understanding of which markets will rebound 1st, as in specific cities in each country. This is good as they are cities we already operate in and have past projects in.
We also cannot avoid the fact there will be consolidation in the market and M&A,
what that market will definitely change over the next 12 months.
To what extent will companies operating under master leases, need to be
more holistic and do more market research in cities they will be working in?
As you know I was part of the Corporate Business Development team at OYO UK when they started their UK expansion, which was super exciting. I have seen a VC backed growth business from the frontline.
A lot of money is raised for fast market growth, entering markets at rocket speed (whether in the master lease or buying buildings) globally. I think going forward that will change. In my personal opinion, that business model needs to change in the short and long term. I think businesses need to think more holistically and have a clear road to profit.
We are already seeing this in the market and the rocket speed growth is no longer a business model that is sustainable. A more holistic approach, more market research is necessary to understand the market an operator is about to enter. What is your USP, where will you sit in the market, how will you penetrate the market? In the past, a new operator would pay above the market rate for a master lease or a new building. Going forward operators need to think more holistically and dive deeper into their market research and how each market fits into the overall business strategy.