According to Savills, over 40,000 build to rent (BTR) homes are now complete in the UK, with London and Manchester leading the way. Including those under construction and in planning, that number rises to 150,000, up 15% on 2018. (1)
Although way off the c. 870,000 hotel rooms in the UK (2), the exponential growth of the BTR sector and increasing requirement of operators to put the customer experience at the heart of schemes in order to be successful is resulting in parallels being drawn with the hotel sector.
Having spent 25 years working for some of the largest global hotel operators, I can see that there is a robust argument to be made that the hotel industry has worked diligently to perfect the customer experience model and many lessons can come from this for BTR.
Happy guests are key to healthy revenue. This is why customer experience and satisfaction are highly correlated with loyalty and why the successful BTR operators are setting a high bar by taking a similar approach to the hotel sector.
The early years of the BTR sector saw some investors and operators focus on schemes with seemingly ever richer amenity offerings; it remains to be seen how appropriate and well-used some of those facilities will be.
Today, operators are differentiating themselves through service delivery and have recognised that quality of customer service is the major factor that gives rise to loyalty. The best in class are able to demonstrate that they know what their customers really want, have been willing to adopt new technology and to invest in teams that deliver an outstanding customer experience and engagement, all elements that have been par for the course in the hotel industry for decades.
At Moorfield, we are determined to position our More. BTR brand as the market leader in curating schemes where people want to live, that are absolutely fit for purpose, exceed expectations and are serviced by a team that cares and makes them feel like they are truly looked after (“Superenting” as we call it). Only investing in the physical aspect is simply no longer good enough.
So it is clear that to keep and grow market share, operators need to look beyond just the space they are creating. While it is vital to provide excellent services and amenities, you also can’t survive without the brand awareness and associated loyalty. Building and maintaining a strong brand identity was perhaps the single biggest challenge for hotel operators and is currently a challenge faced by many BTR operators.
Additionally, as with many other parts of the real estate sector, effectively harnessing data and using available technology is absolutely essential to drive profitability.
Dynamic pricing structures are becoming more mainstream, these allow operators to set flexible prices for their inventory depending on the prevailing market sentiment, by taking into consideration the length of tenancy, the time of the year and underlying demand.
Alongside this, the use of revenue management systems providing real-time lease transaction data will optimize product availability and pricing to maximize revenue growth, ensuring schemes’ long-term viability.
During the nascent years of the BTR sector, the challenge for stakeholders was understanding how to make it a viable, long-term, institutionally acceptable residential model. Customer experience, defined brand operating standards and dynamic price matching were new concepts for the residential rental market.
As the new decade begins, the landscape looks completely different. The demographic drivers behind the BTR real estate fundamentals remain the same but successful operators must learn from other customer facing services and to utilise data analytics to drive profitability. Spend on the customer experience and retention is rocketing and only the BTR brands that evoke the right memories and associations will thrive long term.
(1) Savills BPF report
(2) Statista Research Department