Owner Policy: Net Payout Figure Requests

Company Position:

Property Providers’ vision is to “Help People Live Better” by being Sydney’s most flexible residential rental company. This vision is driven by three core values: Passion, Performance, and Partnership. This policy has been created based on our belief in our guiding principle, that all great long-term partnerships have a solid foundation of mutual respect, mutual reward, mutual investment, and mutual risk.

Background:

Property Providers prioritize financial fairness and transparency in delivery of all short-term rentals that we manage. Our commitment to delivering exceptional service is reflected in our comprehensive management approach, which includes dynamic pricing strategies, regular market analysis, and transparent reporting. The short-term rental market can be very lucrative, however, it equally can be unpredictable and is influenced by a range of interdependent factors such as seasonal demand, market trends, other factors (like weather or special events) influencing local market conditions, and of course property-specific variables. These fluctuations make it challenging to provide precise net payout figures in advance.

Our experience has shown that providing net payouts can lead to misunderstandings and unmet expectations. Instead, we focus on optimizing rental income through adaptive strategies and maintaining open communication with property owners. This approach ensures that we can respond effectively to market changes and maximize returns for our clients.

What can be predicted is the Total Gross Rent minus Agency Commission. However, other booking fees and expenses cannot be forecasted at the time of the booking confirmation, which is why the Agency will always only provide Gross Rent as the value for owner’s to approve for booking requests.

Document Purpose:

The purpose of this document is to clearly communicate the company’s policy as it relates to providing owners with net figure payouts on current or forward bookings.

Objectives:

• To provide a clear explanation with examples as to why Property Providers are unable to reliably predict net payout figures at the time a booking is presented/confirmed.
• To ensure property owners understand the factors influencing “in the hand” rental income and to provide education as to some real examples that may arise.
• To maintain transparency and build trust with partner clients.

Policy

For short-term rentals, Property Providers is unable to reliably and consistently provide specific advanced net payouts. This is because of the reality of several factors/situations that could arise from unplanned events.

Property Providers will legitimately try to adopt a proactive approach; however, Owner/Partners will need to acknowledge and accept that there are situations that are outside both our circle of influence and control.

The agency may elect to provide an “indicative range or guideline” using Agency commission plus an indicative cost base, however this is provided on the reasonable understanding that these are estimates only and may exclude additional costs or unexpected factors associated with managing a non-homogeneous product an a non-centralized location.

Property Providers will reasonably endeavour to attain upfront approval for property expenses to manage repairs and maintenance, guest / tenant requests or escalations, which may not be specifically noted within the Short-Term Management Contract.

Property Providers reserves the right to decline Estimated Net Figure Payout Estimates on the basis that Owner/Partners are made aware of the total gross rental and have a copy of their signed management agreement, which outlines our remuneration and schedule of fees and charges.

Mechanics:

If an owner requests an Estimate Net Payout it must be escalated and facilitated/communicated by a senior member of staff.

Estimates may be provided only after the Owner/Partner has been sent this policy and acknowledges in writing that they have read and understand it.

Rationale:

Short-Term Property Managment is really a very different service and therefore cannot be directly compared to Long-Term Leasing.  To put it plainly Long-Term Leasing has stable and consistent revenues and costs in contrast to Short-Term Rentals which more directly relates to a hospitality service/market.  Property Providers commonly describe this as, “blending boutique property management with luxury accommodation”. 

The needs and demands associated with providing short-term rentals are therefore significantly different and therefore require a higher degree of resources. From a high-level perspective, outside of the Property and Booking Management commission, operational costs can vary between 5% and sometimes as much as 10% of Gross Rental Income. Please note that this is an estimate only and actual costs may differ.

Some of the reasons why net payout figures are challenging to provide include but are not limited to:

1. Revenue/Rental Estimates: While we are happy to provide an estimate range of potential earnings, we cannot accurately account for shifts in the market supply and demand.  These are typically driven by; Currency Fluctuations, Inbound /Outbound Travel Trends, Migration Levels and Weather Patterns, (i.e. Insurance Claims) etc.  We have recently integrated Dynamic Pricing Technology for the benefit of owners which automatically adjusts rental rates according to actual and real time market booking data.  The core objective of this technology is to minimize vacancies (which is certainly a core performance metric) through ensuring competitive pricing according to similar properties in the same competitive sets.  Pricing is no longer an art, it’s a science.
2. Direct Costs: Things come up from time to time, in which the agency does not have control or influence over.  In these cases, costs may be appropriately allocated to the owner.  Examples of this may include:
   • General Repairs and Maintenance: Work like emergency plumbing, electrical, air conditioning/heating, pest control are normal and should be expected.
   • Out of Scope Work:  Our commission includes, booking service, channel management, pricing, finance, legal requirements, managing compliance etc. However, there are times when the agency may need to be engaged in activities that are out of the scope of normal booking and property management like additional labour e.g: shopping/sourcing furniture, fittings, amenities. A property may need a new set of wine glasses or replacement crockery which would involve a staff member running down to the shops, purchasing what is required, delivering to the property, removing and disposing of packaging etc. In this case, the time associated with such a job would be charged to the owner according to our management agreement and labor rate card.
   • Owner Contributions to Bookings: Owner’s agree to pay various expenses as a percentage of the cost to contribute to the costs associated with managing a guest booking. These expenses are outlined in the Management Agreement and may vary from booking to booking.
   • Additional Cleaning/Housekeeping:  From time to time additional cleaning may be required when an owner is exiting a property after living in it for an extended period of time or if a property is empty for a few weeks, it is appropriate for us to send the housekeepers to the property to “refresh” it by wiping down surfaces to ensure the property is properly and professionally presented in order to deliver a premium guest experience.  Cleaning and housekeeping is, an incredibly important part of the customer experience and we have provided additional guidance to owners in relation to this in our blog “Understanding Cleaning Costs with Short-Term Rentals”.  Lastly some cleaning/housekeeping may need to be executed on Sunday’s or Public holidays (usually to facilitate a back to back guest rotation or owner return) which is almost certainly beneficial to the owner.
   • Fulfilment of Owner Bookings:   Owners regularly “gift” the use of the property to friends and family and in these cases there maybe costs associated with linen rental/usage and cleaning.  Please refer to our Owner Booking Policy for more information.
   • Project Management: This is when a particularly complex repair, maintenance or upgrade is required.  In these cases, it may be appropriate for the agency to charge a Project Managment Fee.  Another good example may be a request from an owner to manage an Insurance Claim.  For more information, please refer Property Management vs Project Managment.  In these cases, it is important for all parties to agree upfront to a clear scope of work associated with the project and fair remuneration.
   • Booking Cancellations by Owner:   As channels become more advanced, they are increasingly vigilant in charging owners/hosts for cancellations.  Where an owner must unfortunately cancel a booking, there may be costs associated with this cancellation.  Please refer to our owner cancellation policy and our blog The High Cost of Owner Cancellations.
   • Guest Compensation Requests: Although rare, sometimes providing compensation may be appropriate for experiences that may happen that are outside of the Agency’s circle of control.  This would be for severe inconvenience or disruption of peaceful enjoyment that that guest/tenant has had to endure.  A good example of this would be nearby heavy and excessively noisy construction that neither we nor the owner/partner is pre-warned or informed of.  In these cases, the agency would need to fulfil our fiduciary duty and would engage in a negotiation with all parties to achieve a reasonable and agreed settlement (with of course the owner’s guidance and approval).  In an example like this we would follow our standard processes, procedures and polices like Property Providers Local Construction and Renovation Policy.
   • Acts of God: A similar approach to the above would be applied for unforeseen situations arising from severe weather resulting in damage to a property which would force a guest/tenant to exit the Property if it becomes unsafe or inhabitable.  We passionately encourage owners to purchase Landlord Insurance to manage these types of risks. 
   • Formal Channel Dispute Resolution: We actively try and resolve matters independently, however once or twice a year individuals involved in the transaction are unable to reach a mutually satisfactory resolution.  In these cases, the dispute may be referred to NCAT or NSW Civil Administration Tribunal whereby our NCAT Policy applies to allow for the preparation, response and representation.
   • Switching Between Services/Models: Property Providers’ competitive advantage is our unique ability to switch between short-term stays and long-term leasing.  When this is requested, there are appropriate costs associated with this work.  Note: This is far more complex than one would expect as there are different guest/tenant expectations associated, and legal frameworks associated with each strategy.  Please refer to our Switch Policy for more information.
   • Accrued and Unpaid Charges:  Fees may be deducted from owners/partners ledgers for costs outlined in our Managing Agency Agreement. These can include (but not limited by): remitted Initiation/Setup fees, Reactivation or Switch fees, Annual Marketing Subscription, Additional Marketing Uplifts, Linen withholds etc.
   • Administration Fees and Charges. Monthly fees are applied either at a fixed rate or percentage on each booking or disbursement. These expenses are outlined in the Management Agreement and the total cost may vary from booking to booking.

In conclusion, the short-term rental market is influenced by numerous factors, including seasonal demand, market trends, and property-specific variables as well as endless situations. These compound effects of all these interdependent variables (or moving parts) make it incredibly challenging to accurately predict net payouts. In fact, providing hard net figures could lead to confusion, misunderstandings, unmet expectations and ultimately conflict which demand huge amounts of time and resource to manage.  Therefore, we feel it is important to proactively avoid these types of situations and rely on the business demonstrating the behaviours that align with our company (and hopefully shared) values of Passion, Performance and Partnership.

Timing

The above has been a foundational part of our business operations for years, however this policy was drafted and formalized in November 2024.