MGT3SMG Strategic Management Online Tutoring

AIR BNB and REAL ESTATE

PART 1: Introduction

This report is based on the domain of strategic management. Being a consultant, I have designed this report to help my business customers in various aspects of building strategic portfolio. There are four main areas i.e. Bundoora, Kingsbury, Preston and Heidelberg West for considerations with the requirement to own 30 residential properties. Moreover, each property should comprised of 4 bedrooms and 2 bathrooms.
Diversifying portfolios is a technique used in strategic management process to incorporate a wide variety of investments into a particular one portfolio to earn greater returns. Furthermore, in order to generate a more than-average return, the client needs guidance as to whether to position all 30 assets in the possession of an agent of real estate, on AirBnB or make a portfolio that includes both types of properties. In addition, in this task, the selected period for revenue forecast is around 1 year or 52 weeks.
This task is designed in the form of report that consists of 7 parts. Section 1 introduces the report.  Section 2 offers information on market analysis and on the efficiency figure of the customer resources. Section 3 explains the portfolio of the client in depth. Parts 4 and 5 provide a demonstration of revenues and costs. Section 6 focuses on the overall net position. In the last, there is Section 7 which dealt with the overall conclusions and recommendations.

PART 2: Market research and efficiency figure of the properties

This part is based on the market research related to the 4 types of properties. The first thing is to define the efficiency figure for all 4 types of properties registered on AirBnB. Moreover, market research is the process identifying terms like median rental and median house price.
On the basis of analysis, it is suggested that not every solo AirBnB managed property is rented 100% of the time; therefore, I find that AirBnB property is rented 4 days out of 7 days a week, rendering an efficiency figure of 57.14%. This efficiency figure is intended as:
[(4/7)*100] = 57.14
Nevertheless, the efficiency figure for the Agency-managed properties is constant, that is 90%, previously indicated in the task details.
The data in this task is defined on market research conducted by two main websites such as realestate.com and airbnb.com. Whilst doing analysis from realestate.com, it is concluded that the figures are real, excluding the case of Kingsbury and Heidelberg West, where a predicted numbers were used due to the absence of data as presented in Fig 5 and 11. In the instance of AirBnB, all figures are predicted on the basis of the approximate availability of airbnb.com data.

PART 3: Client’s Portfolio

The portfolio of my client is consist of total 30 houses in the 4 suburbs i.e. Bundoora, Kingsbury, Preston and Heidelberg West. These all are composed of 4 bedroom and 2 bathroom.
Bundoora has 152 properties accessible for rent on the realestate.com for the agency-managed properties. The Bundoora map is shown in the Fig 1.anaged properties. The Kingsbury map is depicted in the .

PART 4: Demonstration of revenues

This part discuss the calculation of revenue of both types of properties i.e. Agency managed and AirBnB. For the first type of properties, data of weekly median rent is available for 2 areas i.e. Bundoora and Preston while data of Kingsburg and Heidelberg West is not available so I estimated the values. In the case of second type properties, all the figures are estimated based on the in-depth research because of an unavailability of data.
Table 1: Overview of revenues of Agency-managed properties

Table 2: Overview of revenues of AirBnB managed properties

Based on the figure mentioned in table 1 and 2, it is highlighted that AirBnB houses appear to possibly make pointedly extra median rent per week in comparison with agency-managed houses and their lower efficiency figure backed in this regard.

PART 5: Demonstration of costs

This part involves the presentation of costs, including the money paid to real estate agents usually charged for maintaining rental possessions, and also the percentage that AirBnB receives from customers. Both types of property managed agent charged different fees like there is mentioned that real estate agent gets 10% while AirBnB charges are 3%. So it is clearly seen that AirBnB charges less fees. After agency fees for Agency managed properties is
(100% – 10% = 90%)
AirBnB charges:
(100% – 3% = 97%).