Villa Secrets Sample Mandate

By Nick Ray Ball 16 September 2016

Dear Valued Villa Owner or Manager,

Thank you for considering Villa Secrets to market your property and manage your bookings. If you have not read ‘1,000,000 Reasons to sign Villa Secrets Mandates’, we suggest you read that first. This post presents how we shall spend over ZAR 1,000,000 in guaranteed marketing and development for your ‘qualifying’ properties alongside 5 other significant details. For a detailed breakdown of the marketing budget, see ZAR 1,00,000 marketing budget due diligence, Which includes a section on which properties qualify

Index

1. Basis for the Agreement
2. ZAR 1,000,000 Dedicated Marketing Budget
3. Property Management
4. Commission Rates
5. Villa Rates
6. Prepare for Sale
7. Accounting

1. Basis for the Agreement

This agreement is between a property owner or their proxy and a Cape Town based Villa Secrets network franchise in conjunction with Villa Secrets Ltd. UK who assists with web development and marketing, but also provide oversight and ombudsman service. If one is unsatisfied in any way with your local representation, Villa Secrets Ltd. UK is there to help. Villa Secrets Ltd. UK is regulated by the UK government appointed PRS (Property Redress Scheme) and ASTA (American Society of Travel Agents).

There is no fixed length for this agreement. However, we do ask that if the villa remains available for rent after cancelation of exclusivity, (unless due to breach of contract) that Villa Secrets can continue to market the property at a best or equal matching STO (Standard Tour Operator Rate) (discount) rate.

2. ZAR 1,000,000 Dedicated Marketing Budget

Based on a suitable property worth about ZAR 40,000,000 in Camps Bay.

Villa Secrets will spend, from its own commission at least ZAR 1,000,000 in marketing over three years. The exact breakdown of this spending is presented in the article ZAR 1,00,000 marketing budget due diligence. The accompanying spreadsheet can be downloaded here ‘Magic Mandates Spreadsheet’ Please note that the different tabs present different components.

One point to note from this spreadsheet is that we are not marketing up our staff or items. Where a programmer costs ZAR 350,000 a year, we pro rata the cost. And where we get bulk purchase details on YOAST SEO WordPress plugins and items such as Best of the Web blog subscriptions which cost an individual $300 each, we only account for our cost that is $75 each.

3. Property Management

a. Choose from the best vetted bespoke Property Managers and small owner run Property Management companies. Or appoint your own.

However, unless one knows the industry well, it’s a risk for owners working with an individual or small company. If things don’t run to plan, there is no recourse, and trust can also be an issue particularly when villa owners do not live in the same province or country as the property manager.

This is where Villa Secrets fills the gap. We know the best property managers and we are happy to recommend them. Villa Secrets does not charge a referral fee for recommendations, the only condition is that we do the marketing and manage the bookings calendar.

Should you be unhappy with your property manager we are on your side, after all we make money from bookings, not the managers.

b. The cost of the property manager is for the Villa Owner’s account, but can be paid to the property manager by Villa Secrets from booking income.

We appreciate that some other agencies have in-house property management services, that would from the outset appear of better value. However, in most cases their commission rates are higher and we know from experience that a dedicated owner run property manager team or capable individual will do a much better job. And will encourage and promote repeat business.

c. Property Managers charge between ZAR 5,000 and ZAR 20,000 a month. Their responsibilities are presented in a separate document.

4. Commission Rates

In general in Cape Town commissions range from 20% to 45%, the bigger companies charging higher. 20% is standard. However mostly when one hears 20% it is part of a 40% total commission with the mandated agent charging 20% and the referring Agent receiving same.

The maximum one pays for a Villa Secrets mandate is 25%, unless one uses expensive booking channels such as Booking.com & Expedia, or in the rare case that an exceptional source of bookings is found for mid and out of season bookings.

The average booking commission will be about 22.5%.
We guarantee the average commission will not be more than 25%, unless with specific permission from the villa owner.

Each property has flexibility in their commission rates, the following is the standard rate.

If the Villa Secrets mandated agency generates its own booking via its website, the villa website (which we create and advertise on Google, Bing and AdRoll), from subscription sites such as HomeAway, Cape Stay, Quintessentially or social media, content marketing or any other direct enquiry, the commission is 20%. Including the option to negotiate the overall price (with set limitations) for good and exceptional bookings.

If the mandates agency generates a booking via an affiliate agency (For Instance, www.luxuryretreats.com or www.rhinoafrica.com), the commission is 10% for the mandated agency and between 10% and 15% to the affiliate agency. (20% in exceptional circumstances)

If the mandated agency creates a booking via a booking channel such as www.flipkey.com or www.villas.com , the commission is between 10% to 15% for the mandated agency and between 5% and 20% to the booking channel (The villa owner may choose the max commission payable to a booking channel so limiting total commission to 25%).

If the mandated agency creates a booking via a PMS (Property Management System) such as KIGO or MyBookingPal, the commission is 15% to 20% for the mandated agency and between 2.5% and 5% to the PMS

5. Villa Rates

For rates please see the spreadsheet ‘Magic Villa Rates’

On which we see some examples of different rate structures for different properties that were available for sale. Note that there are many tabs at the bottom with different ‘Mid-Season Rates’

On the tabs one can easily change the rental forecast by changing the ‘Mid-Season Rate’ in the top left. One can also make quick adjustments to the Peak, High, shoulder and Low Season Rates, by adjusting the percentages. Lastly one can adjust occupation by changing the days booked column.

In each case we shall prepare a tailor made rate card, over 3 years, increasing by more than inflation each year due to the marketing budget and the growth of the network.

The rate card we provide will be a low forecast, which will have a variable of 15% in the first year. Which accounts for good or bad luck. If in the very unlikely circumstance we perform below the minus 15% variable, in any year then a reasonably substantial penalty will be levied.

When it comes to villas over ZAR 100,000,000 there are a few ways to price, one can price lower than usual in non-peak times, or one can price the same. Or one can price the same but offer discounts for longer stays. The full merits of the different strategies will be presented by Villa Secrets Ltd Uk’s CEO Nick Ray Ball.

6. Prepare for Sale

For this section please follow this link
http://network.villasecrets.com/villa-secrets-cape-town-network/1000000-reasons-to-sign-a-villa-secrets-mandate#prepare-for-sale

7. Accounting

Accounting will be monthly and shall include all booking data, including the cost charged by affiliates and booking channels (when known)

In all cases it is Villa Secrets policy to pay the villa owner before the client arrives (unless in the case of some booking channels where payment it only received after a guests arrives)
In general Villa Secrets has a ‘max 3 working day’s owner payment policy’ however many villa owners prefer to be paid all in one go at the end of the month when the money arrived.

Currently we provide statements and excel spreadsheets, however we are working on custom software called the TFBMS (Total Financial, Business and Marketing Software) in which the TFMS component parts 1, 2, 3, 4, 5 and particularly parts 15 the Property Managers CMS and 16 the Property owners CMS provide every transaction made in relation to your villa updated three times a week, alongside a lot of other useful data and functionalities