This article is reproduced from micro-channel public number: burning FINANCE (ID: rancaijing) , author: Susie, editor: Wei Jia, head of FIG. source: vision China
People who were mad by the epidemic conquered various scenic spots during a small long holiday. But has the homestay industry been suffering for three months?
The answer may not be as optimistic as expected.
At the end of March this year, after being exposed to 40% of layoffs, Tujia was reported that its self-operated business would cease operations on April 26, 2020, and business in 20 cities would be directly suspended. In May, Airbnb issued an internal letter, saying that due to the impact of the new coronary pneumonia epidemic, it will lay off 25% of the world’s employees and about 1,900 employees. It is expected that Airbnb’s revenue in 2020 will be less than half of last year.
Just as everyone is eagerly looking forward to the “May Day” peak season, Woodbird B & B released data that although the May Day orders increased by more than 3 times from the previous month, the overall order volume was only 1/3 of the same period last year.
During the epidemic prevention and control period, the management of the floating population has tightened, and the orders for the homestay industry have plummeted. Many merchants report that the order volume was almost zero throughout February and March. Once again, the merchants still have to bear the pressure of rent and manpower, and have to post hundreds of thousands of dollars.
Decrease in order volume and drop in occupancy rate have exacerbated many profit problems that are difficult for homestays to solve. Broken-arm survival, low-cost pre-sales, short-term and long-term rentals have become a way for many homestay platforms to save money and protect themselves.
I don’t know when the homestay industry will recover. How long can I support it before then? This problem became the sword of Damocles hanging over the heads of all homestays.
The retaliatory tourism has not come, and the homestay industry collectively expects a bottoming out after falling to the bottom. Ranjin and five bed and breakfast people talked about their stories.
“The Chinese New Year has been refunding money, and is ready to make losses throughout the year”
Meng Song Life (Chengdu) person in charge Zheng Boyu
Opening time: 2017
I am responsible for more than 30 homestays in Chengdu, each room costs about 80,000 to 90,000 yuan, according to the operating conditions of previous years, the cost can be recovered in about 18 months, I did not want to encounter the epidemic in the first month of the new year .
My partner and I are both from Hubei. The original plan was for my colleagues to go home for the New Year’s Eve and then change my class to let me go home for the Lantern Festival. As a result, my colleague went back the next day, Wuhan was closed, and I was trapped in the Shoudian store in Chengdu, unable to go home.
The shop closed on January 26, and the epidemic killed a surprise. At that time, the latest reservation was scheduled for August this year. As a result, we were processing refunds throughout the Chinese New Year, and there were several disputes in the middle. The gap that the epidemic ripped was difficult to repair this year.
In order to actively cooperate with the government’s request, we closed our business for two full months, and the order directly lost more than 400,000 yuan. During the period, we disbanded the cleaning team, and the cleaning and management of the room was done by myself and my friends in Chengdu. At the same time, we have lost all foreign tourists, and they can usually account for 40% of the total tourists.
After starting business in April, we tried to increase sales through low-price promotions and pre-sales, reducing the price to 65% of the same period last year. The introduction of preferential housing vouchers, reinstatement, and other products have a slight effect, but the gap is still very large compared to the same period last year. After all, at this time of the year, rooms for the Golden Week began to be booked.
It is gratifying that my estimated occupancy rate during May 1st was only 60%. In fact, the occupancy rate for No. 1-3 reached 90%, probably because May 1st was used for three days in previous years. In five days, the occupancy rate of No. 4-5 fell back to 50%. Fortunately, the government began to cut taxes in March, and the tax rate was reduced from the original 3% to 1%. The employees responsible for social security companies were also granted a reduction and exemption, which will continue until the end of this year.
What we did from the beginning was a hotel-style service homestay. The location was all in high-end commercial apartments. Whether it is rent, water, electricity or operating costs, it is much higher than the homestay in a residential area. Our competitors are not only ordinary city homestays, but also hotel apartments and even surrounding star hotels, the competition will be more intense.
In order to reduce the burden, we also transferred some rooms with high pre-operational costs or contracted at the highest rent, and at the same time made a loan to the bank to optimize our cash flow.
It is actually skillful to change hands at this stage. The homestay industry is reshuffling, and now many people who are willing to bargain are joining. However, if you want to transfer a good price and the room style is changeable, you can try to open a set and transfer it to some individual landlords who still have economic conditions, so the transfer fee will be relatively higher.
At the same time, we are still talking to private property owners and properties about rent reduction and exemption. Because of the epidemic, many colleagues have fallen on the rent. Not all landlords can understand it at first, but after communication, we finally reached an agreement that we shared the rent loss during the epidemic.
In the past few years, this industry was indeed relatively easy to make money. When Airbnb had only English names, I made the second bedroom at home and made Airbnb. The income was good. I slowly found that I rented a set of people in the community. Live, rent two sets of people live, resolutely resigned to full-time.
At that time, the decoration was very simple, rent an apartment with a good view, and buy some decorations such as murals on Taobao, and install a projector, which will basically explode. The net profit per room per month ranges from 2500 yuan to 3500 yuan. Now customers have higher and higher requirements for quality, location and service, while rents are rising and housing prices are getting lower and lower. The industry has entered a phase-out period.
I dare not talk about other industries, but the homestay industry seems to me that there will be no retaliatory consumption. EpidemicAlthough love gradually stabilizes, its influence will continue. Even though the relevant departments have been encouraging the development of the accommodation and catering industry, retaliatory consumption has not come, many universities have not started school, and many events have failed to resume after the cancellation of exhibitions. At present, there are still restrictions on the movement of people in some special areas, and it is difficult to turn a profit this year. My partners and I can only guarantee the company first, and I wish you all the best.
“Everyone said in January to continue to boil, starting to sell furniture in April”
My Home Founder and CEO Chen Jiapeng
Opening time: September 2018
My residence has 50 suites in Beijing, mainly based on local characteristic homestays. Later, in Yangzhou and Zhenjiang, they won more than 50 suites, mainly serviced apartments. A few years ago, the team originally planned to open new stores in Changzhou and Zhuji. As a result, there was an epidemic, which forced the originally anticipated financing plan to be stranded. From January 23rd to 24th, all pre-orders are basically refunded. There are 3 orders left in Beijing and only 5 orders left in Yangzhou.
For this reason, the team directly shut down some houses in Yangzhou, leaving only half-25 rooms. Originally, fireworks went to Yangzhou in March, but the turnover in March this year was only 18,000 yuan in March, which is far less than half of the previous average turnover.
Beijing ’s cost of housing is higher. Our housing is mainly within the third ring road. Assuming the monthly rent of the house is 9,000 yuan, all of them are paid for three, and a house is 9000 × 4 yuan. Renovation (design, procurement, construction), the average cost of a house is about 100,000 small.
We take the 14-month payback as the limit. If the payback period of the house is higher than 14 months, it will be judged that it will not reach the revenue index, and we will change it.
According to regulations, all platforms in Beijing area cannot accept orders before June 30th, so the income of Beijing area during the epidemic is basically zero. Not only that, all housing in Beijing wants to sublet at a low price, even the community can not enter.
Because the houses are all self-operated and have their own capital investment, from February to March, our residence has lost millions, and has even been involved in some civil lawsuits.
The original contract signed with the owner is a five-year contract, which stipulates that the original furniture including soft decoration will be owned by the owner after the contract expires. All we got were clean water rooms. We renovated ourselves. When we withdrew from the store during the epidemic, we would remove some of the more expensive paintings or furniture.