Self-catering accommodation in Langeudoc Roussillon: The financial issues.

Grants

First, the good news: grants are available to set up gîtes and other types of self-catering accommodation in certain parts of Languedoc-Roussillon, south France. Now the bad news: as a general rule, to be eligible for a grant, the property must be in a commune of less than 1,500 inhabitants, and in all cases, you have to apply through Gîtes de France, a body allied with the French Ministry for Tourism and renowned for its “stickler” attitude and, by way of contrast, a general disregard for nationwide legislation, preferring to interpret (or should that be misinterpret?) rules at a local level, via its autonomously-run departmental offices. The first step is to find your departmental Gîtes de France office (see www.gites-de-france.fr) and take it from there. Good luck.

Is it viable?

There’s no much point in letting out your Languedoc self-catering accommodation if you barely cover your costs; remember, you’ll being paying for cleaning, repairs and maintenance, wear and tear, gardening and so on. The rent you charge must be commercially viable, yet competitive – figure out what the going rate is and match it. I’d suggest you avoid undercutting, which is guaranteed to piss off other gîte owners; try offering some little added extras instead, to serve as an enticement.

Calculate your costs

Tot up the initial capital outgoing – in other words, the price of the self-catering accommodation itself, and the cost of any renovation or decoration, equipment, fixtures and fittings. Then estimate your annual fixed and variable expenses. For fixed expenses, think mortgage repayments, maintenance costs, tax and insurance; for variable, include anything that changes depending on the number of weeks occupied (e.g. cleaning and laundry costs, consumables, maintenance, repairs and redecorating, and of course, marketing. Any unoccupied weeks (voids) also count as expenses. After that little lot, you need to figure out your gross annual revenue (what you earn before expenses and tax - which is essentially the number of weeks of occupancy, multiplied by the amount you charge).

Supply, demand and competition

The number of weeks you can fill your Languedoc-Roussillon self-catering accommodation depends on demand, and of course the competition. The more you charge, the less number of weeks you are likely to sell, but if you under-charge, you may not cover your costs, in which case, why bother? You need to find that delicate balance between what the customer is prepared to pay, what everyone else seems to be charging, and that USP (Unique Selling Point) that will sway holidaymakers in your favour (think what would ring your bell, if you were making the booking: a Welcome Pack of delicious snacks on arrival? Or fresh croissants delivered to the door every morning?) When it comes to self-catering accommodation in Languedoc, you need to out-smart your rivals.

Gross and net revenue

I was never much good at maths, but I can just about get my head around gross and net revenue. Your gross revenue is the number of weeks of occupancy, multiplied by the amount you charge; your net revenue is the same amount, minus your costs (which you need to calculate per unit, per week). The point is this: it still costs you the same amount of money to wash and dry all the bedlinen and towels, buy toilet paper, soap and cleaning materials, etc., whether you rent out at a high, low, or medium rate. The higher your prices for your self-catering accommodation in Languedoc, the less weeks’ occupancy you are likely to achieve, but drop your prices too low and you’ll end up with lots of guests - and lots of work - at a cost to you that is still the same. The happy medium is (surprise, surprise) somewhere in the middle: enough bookings at a high enough rate to make it worth your while. To find the happy medium, start with your break even point, where takings are the same as costs; this is the bare minimum you’ll need to charge, before you even start turning a profit. From here, the only way is up!

Rates and seasons

What you can charge to let out your self-catering accommodation in Languedoc, in the south of France, will vary depending on the time of year (as well as the area, size and quality of your property). The high season is usually considered to be July and August, and possibly the first two weeks of September; mid-season rates are around 25 per cent less and are charged in June, September and October (and if your rental lends itself well to short breaks off season, maybe Easter, Christmas and New Year, too). Low season is the rest of the year.

Charging for extras

It’s not unheard of to charge extra for heating and cleaning your self-catering accommodation in Languedoc. Be fair to your guests and include an allowance (some suggest 8kwh per person per day) in the rental price to cover lighting and hot water, and only charge if they exceed this amount. For rural self-catering property rentals in mid- and low-season in Languedoc, you might want to supply a couple of loads of logs for an open fire, and then charge thereafter, but please don’t be stingy – nothing will turn your guests off more than a mean, money-grabbing landlord. Clients are usually expected to leave self-catering accommodation clean, which seems reasonable enough to me - but then, I also believe that cleanliness is next to Godliness. Not everyone has my high standards, of course. To encourage your guests to toe the line, you can insert a clause to the effect that you’ll deduct an amount from the security deposit if excessive cleaning is needed, which should serve to discourage the sluttier element.

Tax

Let’s keep this short but sweet. You MUST declare tax when let out self-catering accommodation in Languedoc-Roussillon, south France – on all income from property letting, regardless of where you live. If you’re going to let out your French home, you need to look into property tax, income tax, and in some cases, local and special taxes (e.g. taxe de séjour – see Contracts on our Legal Issues page for more details). It all mounts up, you know.