Linda Fox looks into a new opportunity for travel agents to make money from the overseas property boom
At the turn of the year a new opportunity for agents who dynamically package presented itself in the shape of Home from Home.
The accommodation rental service introduced by On Holiday Group enables agents to offer their customers high-quality, privately owned properties in popular destinations such as mainland Spain, Portugal and Cyprus.
The idea behind it is for agents to take advantage of the trend for second homes overseas seen over the past few years.
On Holiday Group chief executive Steve Endacott said: “There has been a massive boom in people buying property overseas.”
According to Endacott, these predominantly two-bedroom apartments in complexes, were bought for two reasons: the dream of being able to rent them out or the hope their value would increase once they were completed.
However, for owners, the rental market is time-consuming and requires someone to manage the process. As Endacott points out, there are few rental locations for these properties.
“We’re taking that product into the mainstream and allowing agents to package it up. It’s successful because it is two-bedroom, high quality and competitively priced because owners have bought it for their own personal use and rental is a bonus.”
Getting access
Agents can access the holiday accommodation in two ways – via an XML feed to their own websites or by going to holidaybrokers.co.uk. Prices are provided as net rates so agents can mark up as appropriate. Since its launch, the largest volume of sales – about 65% – are coming via the XML feeds with the remainder from the website.
So far it is the call centre and internet retailers that have embraced the concept, with high-street agents lagging behind.
Endacott believes it’s an education process to get high street agents to realise the untapped potential the rental accommodation offers for a wide variety of customers, from families to golf groups.
The competitive rates as well as the ability to decide their own mark- up on the accommodation should encourage agents to get involved. Endacott added that the Home from Home service still had good rates available for the summer holidays.
Lead prices are all between £9 and £15 per person per night for four to five-star accommodation on a self-catering basis.
The only potential downside is that the rental apartments are not in mainstream beach destinations and that may put many people off. They are outside towns, often on the edge of golf courses. It is hoped that they will attract people who want higher quality, as the name suggests – a home from home
On Holiday Group has tapped into the apartment inventory through a deal with specialist MRI Overseas Property. Endacott believes his company has now tied up the property rental market because of the volumes available within the partnership.
He said: “MRI is primarily an estate agency that sells other people’s product and it is offering this rental service for its clients.”
The hassle has been removed from rental for both owners and agents so that it becomes like any other accommodation they sell.
Endacott said: “It is four and five-star accommodation and it’s no more rocket science than selling normal accommodation.”
The next step is to bring on additional properties through deals with similar suppliers, although not of the same scale as MRI.
New opportunities
Many initiatives enabling agents to get involved in overseas property have fallen by the wayside, predominantly because they have been about selling the properties as opposed to renting them.
However, some, such as Thomson’s tie-up with Parador, have stood the test of time and new kid on the block, Red Carpet Properties, believes the market offers opportunity for agents.
Red Carpet Properties was set up by Altrincham Travel Centre husband-and-wife team Russ and Denise Hodgson and Alison Roberts, formerly of Locations Travel.
Roberts, who is property sales adviser, believes similar initiatives have not worked because they have not received enough support such as a website and marketing material.
“In the past when customers said they were thinking of buying a property abroad, agents had nothing to offer them. Now they have a company run by people they know with a good reputation.”
Instead of offering rentals, Red Carpet Properties acts as a referral service for customers interested in buying a property.
Roberts said while there is concern over the strength of the euro, people who were planning to buy a property have not changed their minds.
“They are either retired so it had been their intention for some time, or there are still people inheriting money or people in second marriages who want another home overseas.”
She also said developers in some countries are counteracting the effect of the strong euro by providing incentives to property buyers such as 25% discounts in Spain, while in Cyprus the VAT has been removed on sale prices.
Turkey, Spain and Cyprus were Red Carpet’s launch destinations while, more recently, it has added Florida, Portugal and Hungary.
“There are low-cost flights to Hungary and, although it is now in the EU it is not using the euro yet. It’s a beautiful destination with highly competitive prices. There are still good investment opportunities in some countries.”
Roberts claims the service has been well received by agents, especially those seeking ways to boost their bottom line. If a sale is made, Red Carpet pays agents 4% of the price of the property, so even if they only sell one it still makes a substantial difference.
The company also supports agents with sales and marketing materials and helps them organise promotions within their own local communities as well as property inspections.