Learn How to Convert C1 Hotels, Guest Houses, and B&Bs into Aparthotels with Carly Houston

The growing potential of aparthotels

In this episode of Deal Finder’s Corner, Carly Houston, an expert in service accommodation and aparthotel conversions, shared invaluable insights into transforming C1 buildings—such as hotels, guest houses, and B&Bs—into profitable aparthotels. This strategy is gaining traction as the short-term rental market faces significant changes, particularly with the anticipated legislative shake-up affecting service accommodations like Airbnb. Carly's expertise and hands-on experience offer property investors a unique opportunity to adapt to these changes and leverage them for financial gain.

Key Insights on Service Accommodations

Carly began by addressing the surge in popularity of service accommodations, driven largely by platforms like Airbnb and the favourable tax benefits compared to traditional buy-to-let properties. The looming introduction of new legislation, including mandatory registration and new planning classes (C5) for service accommodations, could see a number of operators exit the market, reducing supply and potentially increasing demand for high-quality aparthotels. Carly emphasised that this presents a massive opportunity for those prepared to adapt.

She then provided a detailed framework for identifying and converting suitable C1 buildings into aparthotels, highlighting that these conversions often do not require planning permission, making them particularly attractive investments. The buildings she targets—guest houses, B&Bs, small hotels, and hostels—are often outdated and struggling to sell, making them ripe for negotiation and creative financing. Carly also discussed how to increase the number of rentable units within these buildings by reconfiguring existing layouts without extending the building or changing its use class.

Designing a great product

Designing a great product is crucial, according to Carly. She advises creating a range of units—from studios to full apartments—with varying levels of facilities to cater to different market segments. An example from her own portfolio includes converting a traditional eight-bedroom B&B into a 12-studio aparthotel, effectively doubling the property’s value and tripling its operational profit.

During the session, Carly emphasised the importance of understanding market trends and how the evolving landscape of service accommodation can be leveraged. She discussed how the introduction of mandatory registration and new planning classes (C5) for service accommodations is anticipated to create a shift in the market. This regulation presents opportunities as some operators may leave the market, reducing supply and potentially increasing demand for high-quality aparthotels. Carly remarked, "The upcoming legislation is not a threat, but a massive opportunity for those prepared to adapt."

Carly outlined how to identify and convert C1 buildings suitable for conversion without the need for planning permission, enhancing their value and profitability. She suggested looking for outdated properties that are struggling to sell, as these present opportunities for negotiation and creative financing. Creative finance methods, such as working with private investors, vendor finance, and purchase lease options, can be utilised to acquire and fund these projects. Additionally, converting existing layouts to create more rentable units without extending the building or changing its use class is a key strategy. Carly provided an example where she converted a traditional eight-bedroom B&B into a 12-studio aparthotel, doubling its value and tripling the operational profit. 

"A great product design attracts guests, maximises occupancy, and increases profitability."

Systemising the business

Lastly, Carly highlighted the importance of systemising the business to manage operations efficiently and reduce the need for hands-on involvement. Key components of this systemisation include secure digital door locks and CCTV for security, automated booking systems to streamline operations, and a robust team following well-defined processes. As Carly stated, "Systemisation is key to freeing up your time and allowing you to focus on growing your business."