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Welsh Holiday Letting Companies In Trouble...


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Just eyed the booking stats from one of the largest Welsh holiday letting agencies. Down around 10% on this time last year (and last year was way down on the year before...). They are in trouble.

Do you know this or have you assumed it.

I would have thought that the capital cost base of a regional holiday letting company was so small that the number of lettings that they made each year was pretty much immaterial to their trading position. It might affect the salary of the principal, but that's all

tim

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10% down this year, probably the same the year before... I'm not entirely sure, but I sensed one of them was feeling incredibly under pressure - I suspect he's making a loss at this moment in time, but have not idea how long he can sustain that for.

I wonder if he did the prudent thing and kept some retained profits in the business, from the revenue made during the boom years? Or was it the popular business model of 'buy' (rent from the bank really) with debt, and expand with more debt, getting more highly leveraged at each step.

As far as the national anthems concerned; being an heathen with republican leanings the dirge that passes for the English anthem leaves me cold. But being a well dragged up boy, I'm just too polite to be as boorish as to boo someone's national anthem.

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Considering the improvement between 09 and 10 in most industries, if they managed to decline there must be a serious problem with the business structure.

Pretty obvious what it is I think? Welsh / UK property is far too expensive. The amount of rent needed to make a return is far too high because the properties are overvalued by 50%+. If the property was not lso expensive they could drop the rental charge and the business would probably work.

As it is the market will force this solution anyway, the Welsh letting company will probably go bust, someone else will buy the properties for 50%+ less and drop the rental prices to a level where the business would work.

UK holidays are ludicrously expensive because UK property is ludicrously expensive. The market will force a correction. Simple.

Yes - cos here we accept the rip-off merchants demanding per person rates - not per room like USA/Asia/most of Europe!

It pushes the price of a UK holiday up massively - even if you are single eg business person in a double room they charge you Xtra.

If people rang up and demanded (cheaper) per room rates or no booking - things would soon change in a recession as the rip-offs start to compete for business.

A reasonable room in a provincial French hotel for two costs less than a poxy boarding house room for a single!

Edited by erranta
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A reasonable room in a provincial French hotel for two costs less than a poxy boarding house room for a single!

Heh a good room in Asia costs less than a poxy room in a UK. Its quite funny how in HK, Tokyo and Seoul you can get a fully loaded room (ensuite,WIFI, TV, aircon, fridge, disposible tooth brush and single use soaps etc) for less than you can in the UK. I found it mildly amusing in HK with extortionate land prices I could get such a (small) room for $80HK while in the UK the equivilent would be at least £40, and thats if I book ahead! While I can walk into any of the HK places.

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Just eyed the booking stats from one of the largest Welsh holiday letting agencies. Down around 10% on this time last year (and last year was way down on the year before...). They are in trouble.

The gaggle of businessmen I was meeting said the situation was bad across the UK and Ireland - way down. A couple had an interest in French gite letting firms and said business had never been so good on the other side of the channel.

when you can get a quiet holiday apartment by a pool in Spain, Portugal, a Med Island etc for less than £15 a night it hardly makes sens to pay £40+ a night for a UK holiday cottage the same size

or maybe they're not individually worth £200,000 a pop and therefore they need to lower the rental prices? But the numpty owners refuse because they are worth more, and then they get no bookings...

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Considering the improvement between 09 and 10 in most industries, if they managed to decline there must be a serious problem with the business structure.

Pretty obvious what it is I think? Welsh / UK property is far too expensive. The amount of rent needed to make a return is far too high because the properties are overvalued by 50%+. If the property was not lso expensive they could drop the rental charge and the business would probably work.

As it is the market will force this solution anyway, the Welsh letting company will probably go bust, someone else will buy the properties for 50%+ less and drop the rental prices to a level where the business would work.

UK holidays are ludicrously expensive because UK property is ludicrously expensive. The market will force a correction. Simple.

you said it first, yep

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or maybe they're not individually worth £200,000 a pop and therefore they need to lower the rental prices? But the numpty owners refuse because they are worth more, and then they get no bookings...

A great many people can't lower their prices because they have massive debts on such things and must cover such costs...

Oddly enough quite a few people I know actually have lowered their prices such that they make a loss, not great but having some customers mean they are minimising their losses in making something rather than nothing.

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A great many people can't lower their prices because they have massive debts on such things and must cover such costs...

Oddly enough quite a few people I know actually have lowered their prices such that they make a loss, not great but having some customers mean they are minimising their losses in making something rather than nothing.

....a business will fail if the customers you want to attract are unable to pay the price you require to make the business viable.... over recent years customers could pay the price only because they used the easy available credit to pay that price.....now some loss is better than all lost.......the rest is history ;)

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....a business will fail if the customers you want to attract are unable to pay the price you require to make the business viable.... over recent years customers could pay the price only because they used the easy available credit to pay that price.....now some loss is better than all lost.......the rest is history ;)

Its sometimes more complicated than this.

Businesses have made cut backs, including staff, in order to cope up until now.

Any increase in trade will soon need more staff and I think it is unlikely that businnesses, especially in the sevice industry, will take the plunge and take on more staff at present. Not all, especially small businesses, recruit seasonally. It is more a case of everybody in the business rolling their sleeves up and doing more. Service levels may suffer but business at the moment is patchy so does not justify increased staff. Some staff lose benefit if they work more than 16 hours and I know of a bakery which has closed because of this. Simply unable to have staff extend hours and lacking confidence to put more money into business.

We are keeping prices high for this reason. It limits demand but maintains profitability and we can cope as we are at present.

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Its sometimes more complicated than this.

Businesses have made cut backs, including staff, in order to cope up until now.

Any increase in trade will soon need more staff and I think it is unlikely that businnesses, especially in the sevice industry, will take the plunge and take on more staff at present. Not all, especially small businesses, recruit seasonally. It is more a case of everybody in the business rolling their sleeves up and doing more. Service levels may suffer but business at the moment is patchy so does not justify increased staff. Some staff lose benefit if they work more than 16 hours and I know of a bakery which has closed because of this. Simply unable to have staff extend hours and lacking confidence to put more money into business.

We are keeping prices high for this reason. It limits demand but maintains profitability and we can cope as we are at present.

....If prices were not so high, debt not so high, living costs not so high....we would all not have to do so many hours, work so hard, give more time to our families, better quality of life, better balance of life.....more doing less hours, putting more effort into less hours, sharing jobs...happier staff give better results.

...there are more people than jobs to go around....so why not share the available jobs going? ;)

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....If prices were not so high, debt not so high, living costs not so high....we would all not have to do so many hours, work so hard, give more time to our families, better quality of life, better balance of life.....more doing less hours, putting more effort into less hours, sharing jobs...happier staff give better results.

...there are more people than jobs to go around....so why not share the available jobs going? ;)

well, the whole idea of loweringinterest rates was to get more spending in the economy.

instead, bankers used it to increase the amount lent, maxed out all the time...the effect is that disposable never increased, but borrowing did.

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well, the whole idea of loweringinterest rates was to get more spending in the economy.

instead, bankers used it to increase the amount lent, maxed out all the time...the effect is that disposable never increased, but borrowing did.

...people can only live up to their means or the availability of debt and price of debt available......increase the price/access of either then not only will it be unaffordable but unattainable.......until things change. ;)

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...people can only live up to their means or the availability of debt and price of debt available......increase the price/access of either then not only will it be unaffordable but unattainable.......until things change. ;)

US have certainly hit the "wall"....we must have but have so many helps for borrowers that they dont realise it yet.

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when you can get a quiet holiday apartment by a pool in Spain, Portugal, a Med Island etc for less than £15 a night it hardly makes sens to pay £40+ a night for a UK holiday cottage the same size

or maybe they're not individually worth £200,000 a pop and therefore they need to lower the rental prices? But the numpty owners refuse because they are worth more, and then they get no bookings...

Don't you need to add in the extras for a true comparison?

Which could include such flight, baggage fee, booking fee, transfer fee, insurance, car hire, etc

I last went to Europe in 2007 when it was £1 = €1.50 and thought France was expensive then.

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I dont believe it's anything to do with the weather, Welsh anthem, English/Welsh divide. Parts of Wales are wonderful for short breaks and family holidays. Incredibly accessable from huge parts of the UK. I cant believe theres any shortage of people wanting to holiday in Wales this summer. I certainly cant believe those people are heading to France, which feels very expensive these days.

No, I believe the reason bookings are down is the sheer volume of "holiday lets". My parents live in West Wales, I have many friends whose parents live down there. I can tell you this. Every single person I know in west Wales with space or land has gone down the Holiday Let buisness in the last 5 years. Some on huge, expensive, balls deep ventures offering beautifully finnished cottages on small working farms. To shacks chucked up in the yard for the Yurt/basic lifestyle experience. I dont know ANYBODY with the space that didnt get on the bandwagon. There must be as many holiday lets down there now as residentials.

The people who got in early have done well. The people who threw their life savings into the nest of cottages that would bring them 1k each per week for the rest of their lives may have a bit of a shock.

Just my opinion, No facts or figures to back it up.

Nope, more people are heading to France, despite the Euro, etc. - think the BBQ Summer effect is being felt.

And, people are taking fewer holidays. And they are going for the cheapest option when the do go on holiday (camping's doing well!).

And more people are taking no holidays due to changes in personal circumstances, etc.

And, let's not forget, the main overseas market for Welsh holidays is... IRELAND!

Sure, there are a few more holiday lets around, but this agency is a big player with a loyal customer base.

Edited by gruffydd
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Do you know this or have you assumed it.

I would have thought that the capital cost base of a regional holiday letting company was so small that the number of lettings that they made each year was pretty much immaterial to their trading position. It might affect the salary of the principal, but that's all

tim

I know it.

Major spend is on advertising - spend has been ramped up, eroding financial position further still, but bookings are still way down.

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A great many people can't lower their prices because they have massive debts on such things and must cover such costs...

Oddly enough quite a few people I know actually have lowered their prices such that they make a loss, not great but having some customers mean they are minimising their losses in making something rather than nothing.

And this is the big issue - they are often mortgaged up to the hilt with their holiday home. Average occupancy in Wales last year was only a bit above 50%, and many started experiencing major probs.

Edited by gruffydd
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Considering the improvement between 09 and 10 in most industries, if they managed to decline there must be a serious problem with the business structure.

Pretty obvious what it is I think? Welsh / UK property is far too expensive. The amount of rent needed to make a return is far too high because the properties are overvalued by 50%+. If the property was not lso expensive they could drop the rental charge and the business would probably work.

As it is the market will force this solution anyway, the Welsh letting company will probably go bust, someone else will buy the properties for 50%+ less and drop the rental prices to a level where the business would work.

UK holidays are ludicrously expensive because UK property is ludicrously expensive. The market will force a correction. Simple.

Hit the nail on the head there!

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I go to Wales every summer and I am already factoring in the extra fuel costs with the petrol rises over the last year (plus what's coming over the next few months). This may be enough to put some people off this year.

As for booing national anthems, that's the sure fire way to motivate the opposition to beat you. I see it as a compliment when we get booed.

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Nope, more people are heading to France, despite the Euro, etc. - think the BBQ Summer effect is being felt.

And, people are taking fewer holidays. And they are going for the cheapest option when the do go on holiday (camping's doing well!).

And more people are taking no holidays due to changes in personal circumstances, etc.

Why though? Why would they go to France instead. Camping in France is stupidly expensive, If you want nice places anyway. Fuel costs to get their. The atlantic is cold most of the year. It makes little sense. I can see why people would take less holidays, just struggle to understand why people are going camping in France instead of holiday cottage in Wales. Oversupply has to be a factor, felt doubely when people stop coming.

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