Q&A with Switch Hospitality Management’s MD

BTR News spoke with Switch Hospitality Management’s Managing Director about transferring its vast hotel sector experience to Build to Rent, and more.

John Angus, Managing Director, Switch Hospitality Management Ltd | BTR News
John Angus, Managing Director, Switch Hospitality Management Ltd.

BTR News spoke with John Angus, Managing Director at Switch Hospitality Management about transferring its vast hotel sector experience to the Build to Rent sector, opportunities and challenges in the industry, what we can expect from Switch this year, and what differentiates the company from other service management providers.

Switch Hospitality Management Ltd offers specialist management and consultancy services across a variety of asset classes, including hotels, serviced offices, mixed-use developments and Build to Rent accommodation.

How does Switch’s vast experience in the hotel sector transfer across to Build to Rent?

Switch has become well known in the hotel industry – particularly after our Park Regis site was voted by customers as the UK’s Best Hotel for the second year running. We didn’t achieve this accolade simply from knowing how to operate a hotel, but because our customers know that we always deliver the Switch ‘gold standard’ when they stay with us.

By investing the time in service quality with trained hospitality specialists, we understand the unique requirements of hotel guests – whether they are visiting us for a weekend city break, for a longer business stay or attending a conference – we aim to make every experience special.

This approach transcends sectors, and when it comes to Build to Rent, Switch brings a unique approach to building management.

For example, when residents pay a service charge, they expect to receive exactly that – a service which is dedicated to their requirements. So, when they walk into a building lobby, we know they would much rather be met by a friendly receptionist who can support their individual needs, than perhaps a building security guard who will inevitably have wider responsibilities, just like the moment anyone walks into a hotel, they anticipate a warm welcome from the front desk.

What we have recognised from our hotel insights, is that many companies want to diversify from the traditional sourcing of corporate accommodation, in favour of adopting more flexible policies, however, corporate travellers tend to shy away from online travel agents and the likes of AirBnB, due to a perception that they don’t respond as effectively to corporate needs.

This is where Switch Management can help. With an established booking system and global distribution channels in place, we connect corporate guests to a choice of serviced Build to Rent apartments, which offer the hotel-level amenities they need. Not only that, but all services are offered by the in-house team of trained Switch experts; we never use sub-contractors, so clients know that they will always receive our highest and dedicated level of customer service.

What do you think are the current opportunities within Build to Rent?

This is a really exciting time for Build to Rent. With the number of completed developments having tripled in the last five years, and properties showing average annual growth of 3.4% (according to the ONS), it is a sector with huge opportunity.

Whilst many management companies will focus on short-term leasing to young professionals, who are looking for an elevated experience and a sense of community, we have recognised that there is also untapped potential within the corporate market. There is significant demand within this demographic, which we believe can maximise a development’s potential, provide an additional source of income and profit, and offer a credible solution for void management.

Take central Birmingham as an example: 450,000 corporate room bookings are made in hotels each year, with an estimated annual spend of £8m. The average monthly rental fee from this type of stay tallies up to approximately £2,250, whilst the average monthly rental or a Build to Rent outside of London is £1,150. Despite 60% of corporate companies preferring to stay in a serviced apartment, they end up paying higher hotel fees, as they don’t believe they have any other more suitable option.

Currently, the average occupancy rate for Build to Rent developments stands at 85-90%, but the portfolio that Switch manages is currently running at 97%. For smaller properties that rely on a high turnover of short-term rents, this difference can be significant. By leveraging the corporate market as a second revenue stream, landlords could achieve 15% additional occupancy.

And the challenges?

I think the main challenge is largely around a lack of understanding of what benefits can be offered by collaborating with management operators outside of the sector, and the opportunities to be more strategic in the feasibility stage. In my experience, the most successful hotels will always have multiple revenue streams, and this can also be replicated within Build to Rent.

For example, after working with a client to review the short-term letting opportunities from their scheme of 500 apartments we proposed two options. The first was to remove eight floors of apartments, losing £750,000 of annual profit, and replace these with c.200 hotel bedrooms, which would instead generate £2,000,000 of annual profit. The second option was to allocate c.20% of the 500 apartments as short stay only, which Switch would fill based on demand within the area, resulting in Year 1 annual profit growing 20% from the original feasibility.

We believe that there is more to Build to Rent than simply building a development and handing it over to a management company. By taking a proactive approach at the pre-planning stage, and leveraging additional opportunities outside of the sector, landlords can maximise the long-term potential and fundability of their buildings, whilst also providing the future facility and service requirements that end-users will demand.

What can the Build to Rent sector expect from Switch this year?

This year will see work commence on our co-living project with The Infinite Partnership in Southampton, where we plan to blend the long and short stay business, ultimately working towards a double P&L model.

We are principally focussed on enhanced investor returns, through multiple revenue streams and strong Commercial Management.  All underpinned by providing hotel level services to our existing guests.

Switch is in discussion with developers and investors, from Plymouth to Liverpool, for Build to Rent and PRS schemes. Our pre-planning reviews and feasibility projects have doubled in the last 6 months, and the group expects significant growth throughout 2023.

What sets Switch apart from other service management providers?

First and foremost, we have an award-winning team of more than 350 experts specialising across every aspect of hospitality – from design consultation and marketing support to revenue management and tenant communications, through to asset security and concierge services – who approach every business that we work with as their own.

Our breadth of experience means we are committed to adding value in multiple disciplines, helping our partners to adopt an agile management strategy. This has proven integral when responding to evolving market conditions across sectors, as evidenced in recent years.

When Switch manages the operations of a development, we can also provide a short-term lettings service from our centralised reservations team, as we are recognised and part of the request for pricing (RFP) process with established relationships with over 350 companies across the UK. Currently, with the largest and most experienced commercial team in the sector, Switch has the systems in place to bring the corporate audience to Build to Rent developments.

With this, we offer a unique proposition, leveraging our expertise in hospitality management to provide clients with the best service and the most innovative solutions for their business challenges.

Learn more about Switch’s Build to Rent and Hotel services by downloading the brochure.