see more posts
5 PBSA Sector Operational Challenges and Proven Solutions
5 min read
Student Housing News

5 PBSA Sector Operational Challenges and Proven Solutions

5 PBSA Sector Operational Challenges and Proven Solutions

Student Housing News

Apr 2, 2024
5 min read
Author :  
Apr 2, 2024
5 min read

Purpose-built student accommodation stands out as a premium housing option for international students to elevate their academic journey. PBSAs usually are close to universities and offer high-end amenities, specifically to cater to student needs and preferences.

With the popularity of the PBSA sector, comes a challenge - a shortage of PBSA beds globally. Several factors contribute to the shortage, including economic uncertainties, legal compliance, seasonal variations and developmental hurdles.

Let’s discuss 5 major operational challenges encountered in the global PBSA sector and the viable solutions that may help operators manage their properties effectively.

#1. Challenge: Price Fluctuations

Pricing fluctuation is one of the major operational challenges for PBSA operators. It can directly impact the financial planning and tracking of income & expenses accurately for the sustainability of these accommodations. It also impacts the overall student housing operating expenses, occupancy rates, rental income, and quality of the accommodation, making it more challenging for property operators to plan budgets effectively and ensure profitability.

How to Mitigate the Impact of Price Fluctuations?

  1. Price sensitivity analysis: PBSA operators are required to conduct a regular price sensitivity analysis for their portfolio and make cost-effective schemes for potential fluctuations in rental amounts. This method analyses how price variation can affect the buying behaviour of students and how operators can make an informative decision about pricing strategies.
  2. Dynamic pricing strategies: Dynamic pricing strategies serve as an effective solution to price fluctuation by allowing property operators to adjust prices in real-time, based on various factors such as demand, supply, student behaviour, and seasonality. (Source: Faster Capital)
  3. Market monitoring: By closely monitoring market trends, operators can stay informed about changes in demand, competitor pricing strategies, and economic conditions. This proactive approach enables operators to adjust rental rates in response to price fluctuations.

#2. Challenge: Last-Minute Booking Cancellations

The uncertainty of last-minute booking cancellations creates a challenging situation for managing and sustaining occupancy rates for property management groups. There are many reasons for last-minute booking cancellations, like students who are unsure about a particular place or city to pursue their education. Such reservations may get cancelled at the last minute, especially if they have paid a minimal deposit or no deposit at all to reserve the accommodation.

Another reason contributing to booking withdrawal is poor communication between operators and tenants. Students usually cancel their bookings due to a lack of transparency about the reservation policies of the accommodation.

How to Minimise the Last-Minute Booking Cancellations?

  1. Flexible booking process: Being adaptable to flexible booking models and offering alternatives like rescheduling or flexible move-in dates can help avoid cancellations.
  2. Clear communication: Clear and transparent cancellation policies and well-trained staff can assist with proper communication outlining. Any cancellation fees or pre-booking fees incurred during the booking process should be clearly stated and communicated to the tenant. This can help tenants make an informed decision and avoid last-minute hiccups.
  3. Policy review and updates: Regularly reviewing and updating cancellation policies as per property norms can ensure superior service quality and student satisfaction.
  4. Waitlist management: Manage a waitlist for prospective tenants interested in renting units due to cancellations or other reasons. Track enquiries, preferences, and contact details. Use digital tools for efficient organisation and communication with waitlisted individuals.

#3. Challenge: Changing Student Preferences

Student preferences and needs evolve rapidly based on market trends. In today’s day and age, students expect more than just beds from their student accommodation. They have begun prioritising quality of life, technologically advanced services, personalised experiences, mental health considerations, sustainability, diversity, and inclusivity.

Moreover, housing international students may vastly vary from domestic students and their preferences. Not only that but students hailing from different regions around the globe also have different requirements, especially for room types. Hence, making it more crucial for PBSA property operators to understand the needs of student tenants.

How to Keep Up With Student Preferences?

  1. Market research: Conduct thorough market research to understand evolving student preferences. Engage with students through surveys, focus groups, and feedback mechanisms to gather insights. Take review and feedback from students already living in the property to understand improvement areas.
  2. Technology advancement: Invest in technology integration for seamless booking processes, communication, and service delivery. Implement smart building solutions for enhanced safety, security, convenience, and energy efficiency. Create an all-in-one platform where students can maintain their rent records and lease agreements while easily communicating with the support team in case of any discrepancies.
  3. Flexible accommodation models: Offer a range of accommodation options to cater to diverse student needs and preferences. Provide flexible leasing terms and room configurations to accommodate varying requirements. This approach allows operators to meet the diverse needs of students and elevate their living experience.
  4. Inclusive living spaces: Providing an inclusive environment, where staff are well trained to communicate with tenants in their language, can create a positive impact on students. By celebrating festivals and maintaining a social calendar, student housing operators can foster inclusivity within the residential spaces.

#4. Challenge: Regulatory Challenges

A key challenge in the PBSA sector is regulatory and policy changes. This includes community opposition, clashing with historical architecture, time pressures, and potential legal revisions. These challenges highlight the complexity of local policies and regulations while ensuring the successful development and operation of PBSA projects.

How Can PBSA Operators Navigate Regulatory Challenges?

  1. Engagement with local authorities: Establishing open communication channels with local authorities can be of great help to PBSA operators. By understanding and aligning with updated policies and compliance, student housing management groups can ensure smooth project approvals. Additionally, student accommodation operators can establish open lines of communication with nearby residents to avoid any legal actions by local administrations.
  2. Diversification of offerings: Diversifying offerings into alternative sectors like build-to-rent or HMO options can provide flexibility in response to changing regulations and market demands. This will also mitigate the risk of failure, and diversify your portfolio to other sectors as well.
  3. Stay updated with policy changes:  PBSA operators should stay informed about policy changes, be agile in adapting to new business models, and incorporate long-term considerations into development and operational plans. This can help student housing operators navigate regulatory shifts effectively.
  4. Building safety standards: Local authorities are extremely rigid and vigilant about the safety standards of student accommodations. Ensuring that the property is adhering to all the safety measures like fire safety and CCTV surveillance can help the operators avoid any legal complications.

#5. Challenge: Regular Maintenance

Maintenance issues pose a significant operational challenge for PBSA operators, impacting occupancy rates and tenant satisfaction. Regular maintenance tasks such as cleaning common areas, fixing leaks, repairing appliances, and maintaining landscaping are crucial for attracting tenants and ensuring high occupancy rates.

The complexity of accommodation setups can impact the management of maintenance, security, and cleaning operations, requiring more resources. Moreover, seasonal variations in student enrolments can also impact occupancy rates, turnover, and maintenance demands.

What Are the Best Practises for Maintaining the Property?

  1. Regular property inspections: Regular inspections of the properties can help operators identify maintenance issues in the early stages. This could help them pay attention to the overall condition of the property and safety features like smoke detectors during these inspections. This will also help identify the issue and avoid last-minute maintenance during the move-in time.
  2. Staff training and review: Ensuring on-site staff are well-trained, responsive, and equipped to handle student requests promptly can improve the overall experience of maintaining the property. Regular reviews and audits of staff performance are essential to maintain service standards.
  3. Tech integration and automation: Technology solutions like automation, scalability, and integration capabilities help streamline maintenance processes. This includes self-service student portals, mobile apps for inspections, and powerful billing & reporting capabilities. For instance, StarRez aims to deliver an exceptional resident experience through tech-integrated solutions.

Long-Term Sustainability in the PBSA Sector

PBSA operators face various challenges when operating in the student housing industry. Through proactive measures like price sensitivity analysis, regular market research, tech integration, automation, understanding student preferences, and timely updating policies, the property management group can properly address operational challenges in the PBSA sector.

To gain comprehensive knowledge about the PBSA industry, explore resources like “PBSA Real Estate 101: Everything about Purpose-Built Student Accommodation” and gain invaluable guide insights into the student housing market.

Uploaded On
April 2, 2024
last updated on
April 2, 2024

At amber, we make the booking process seamless with efficient booking & robust sales support.

Partner with us

At amber, we make the booking process seamless with efficient booking & robust sales support teams

List Property