Why Service Accommodation Should Be Regulated With Paul Smith - FULL INTERVIEW

Foreign.

How is everybody doing?

This is Mark Simpson of the Boost Hospitality Podcast. We are on season six, episode 11 and today we're talking about regulation. I invited Paul Smith, Touchstone Education to come on and talk about all things service accommodation. It was an eye opener of a conversation. I learned so much in this discussion. You are going to learn all about regulation, about why you should be doing the bare basics. We talk about service to accommodation, how Paul got started in it and also as well we talk about Airbnb, we talk about booking.com and we talk about what Paul sees as the essentials to what you should be focusing on in your property. Paul's background is crazy. He's come from an engineering background.

Formula one fan.

I have gained a lot of knowledge from just watching the YouTube videos that Touchstone put out and just from chatting to him was was a real good eye opening experience that I think you'll all get a lot from. At the end of it, Paul will give you a little bitly link that you can go and access a free download that if you are interested in service accommodation finding out more then I thoroughly recommend that you go and check it out. But for now all I ask for you to do, sit back, relax and enjoy this episode of the Boost Hospitality podcast. Before you go, get in touch with me on Twitter ostleyuk. Let me know what you're thinking about this episode. Let me know what you know thinking about this series. I've got three more episodes planned of season six. Before we go back to good old hospitality marketing in Series 7.

I just.

Want to say thank you very much to everybody that has downloaded one of these episodes. I've broken records. My own personal records are just flying through because of the amount of people that are coming on board right now. So thank you very much. Go to booster.co.uk podcast to listen to the other 10 episodes in this season so far. All the other five seasons that I've recorded. Okay, so next you're going to listen to Paul from Touchdown Education talking about all things serviced accommodation.

Okay, welcome everybody. We're back to the Boost Hospitality Podcast. My name is Mark Simpson, I'm the founder of Boostly. And today, today we're going to be talking about serviced accommodation. We are now in season six, episode 11 and today I am joined by Paul Smith of Touchstone Education. We are going to chat to Paul along a wide range of topics all the way from service accommodation, how we got into this world, why he's based in Doncaster, what he's doing in Doncaster and just sort of getting a real good feel for a little bit more about him, about his journey, about Touchstone, about service home accommodation and about where he sees service accommodation going over the next couple of years. So without further ado, I'm going to stop talking and I'm going to let Paul just quickly introduce himself and then we will get started with today's show. So, Paul, welcome. If you could just take a couple of minutes, just explain a little bit more about yourself, your background and how you got into practice property. If you could please.

Perfect. Hello, Mark, and thank you for having me on. Real pleasure. So where to start? Okay, so I got into property, you're not going to believe this at the age of about 4, because both my granddads were into property different ways. I've got an Irish granddad, I've got an English granddad. My Irish granddad was like the local village auctioneer. So he bought all sorts of things and he ended up with pubs, he ended up with a petrol station, he ended up with sheep farms and yet all sorts of stuff. So it's all generically, I guess, what you'd call commercial property. My English granddad, quite different. He was in the army all through the Second World War and in them days, this might be a surprise to some of your younger listeners, Mark. There was no Internet, so he was away for, I think it was about seven years. Obviously he couldn't send his money home because there was, there's no way of, you know, you couldn't just wire the money home. So he turned up back home with like 6 years pay or something. Bought a field in Essex and built a bungalow on it himself. He was in the Royal Engineers, so he just got all his mates around and they built a house and he bought a big old field. And the first time I became aware of that, I wasn't a teenager. I was like, I couldn't tell you how old I was, but I was, you know, primary school and I just got. I was aware that he'd sold half of his land to the council and they built like a housing estate on it. So I could see my Irish granddad doing commercial stuff. I could see my English granddad building houses and selling off fields to the council. And then what my dad did, very bright guy, headmaster. He made more money from property than he made from teaching. So at the age of four or five, there was me under the floorboards I used, because he couldn't get down there and I used to get my money. So you, I don't know, you're from this neck of the woods. So the first house I can actually remember is in a place called Wombwell, which is like Barnsley more or less. And we bought this big old Victorian monster thing, like three stories high. And what we then did over the next few years, I say we, me and my dad, we kind of modernized it. So when I started I was four or five, by the time I finished I was like 15 and we'd done three or four houses. So we were putting in central heating, we were putting in double glazing, we were putting in like all the mod cons for us at that time, because any house that we bought, it wouldn't have an indoor bathroom. It have, you know, tin bath in front of the fire and the toilets at the bottom of the garden. So I got into property almost before I can remember and it was always very good to me because he would chuck me under the floorboards and I would rip out all the lead wiring and the plumbing and he didn't give me pocket money, but we would take all the metal down scrapyard and that was my money. So I all. From a very early age I've associated property with money.

Yeah.

And then. So that's quite early, isn't it? Have you ever had any four year old property developer?

Never, never in the series that we've been doing. That is definitely a first. So thanks for sharing that. So you've gone from associating property with money from a very early age, you know, and then you've obviously gone on and had a successful career from doing the research and then you've sort of come back into property in a big way, which is why we're now chatting and we're going to specifically focus on service accommodation because that is what this, this whole series of the Boost hospitality podcast is about. So why is it that you've sort of come full circle? Why did you come back into this and why are you now sat in Doncaster in your offices now, now sort of teaching people what was the sort of progression from where you are, where you were. Sorry. To where you are now?

Yeah, well, I had a very successful corporate career. Won't bore you with it, but age of 40, I was managing director of a multi billion pound company, thousands of staff and the company was taken over. So I got made redundant and so did my wife on the same day, believe it or not. So we went from two monster salaries to nothing. And when you're 40 years old, that really does make you think, like what I want to do the rest of my life. And we made A fairly fundamental decision. We don't want to work for anybody else ever. So we get and got into property and it was probably six, seven years after that that I first got into service accommodation. And I was actually property networking event. I sat next to a guy called Justin and we were talking about Formula One because I'm a mechanical engineer, he's an electrical engineer and he was William's chief telemetry engineer, which was really fascinating for me. I spoke to him for hours about that and towards the end of it I sort of said to him, what do you do then? And he said, service accommodation. I said, what? And he said, you know, Airbnb and all that. I was like, oh, yeah, yeah, yeah, yeah. I said, what are you doing that for? Then he said, well, it's good money in it. I said, really? And I said, well, where are you doing it? And he said, middlesbrough. And I was like, I laughed out loud. I said, what? And he and I, no harm to anyone from Middlesbrough. And this wasn't me being nasty, this was just like an instinctive reaction. I said, who the hell wants to go to Middlesbrough? He said, come up next week and I'll show you. So I did. And what he's got there, fabulous, he's got like a church with, you know, like the vicarage and everything and a big car park and he's converted it to. I can't remember exactly, it's like 16 or 18 apartments and he's making all kinds of money and I was just like, wow, wow. By that time I already had, oh, I don't know, 15, 16, buy to let flats and houses and stuff. So all I did literally is I converted one. One flat, one bedroom flat, place called Dumbarton. And anytime I tell anybody that story, they say the same to me that I said to Justin, why would anyone want to come to Dumbarton? And so it really doesn't matter where you are. I think with the right service accommodation offering, you can. I'm going to say something quite strange now. It's not about the money. You can't chase money. It's called service accommodation for a reason. If you provide the right service, the money will come. There's really good money in it. But if you're doing it for the money, you probably won't get any. If you're offering the right service, you probably will. So money for me is an output, not an input, if that makes any sense.

No, it does, yeah, definitely does.

And anytime I'm teaching anybody about service accommodation, we talk about KPIs key performance indicators. You know all the numbers. And I say to them, look, your most important number, I'll tell you what it is, it's not financial, it's your reviews. Your reviews is your number one KPI.

Yeah, 100%. There's many different types of property portfolios, like you mentioned, quite a few there. And we're obviously focusing on service accommodation because clashes with what we both do. So my background is obviously the hospitality side. It is what Boostly is all about. And like you say with service accommodation and there's so many property people that are coming in and converting places into service accommodation. I mean, one of the main things that people forget about when they're getting into this career or deciding that this is a career, whether it's rent to rent or buy into sa, is that the most important thing that you've got to realize is that you can spend all the money doing up the property. You can go down and chasing and trying to get landlords and estate agents to work with you. But at the end of the day, the most important thing is when those first guests walk through those doors because you've got to give them an experience to get the reviews that then get the word of mouth going to get more people to come back. So I'm really glad that you touched upon that and it sort of draws in nicely to. The next question is you're now obviously teaching people service accommodation. Touchstone is teaching people service accommodation. We've had Gaudy, we've got Abby coming up on the podcast from Touchstone. What is the one big mistake that you see when you send your delegates out into the wide world? What is the one big mistake that you see that most commonly mentioned when they're getting into service accommodation and all of this jazz.

Right, great question. So mistake might be a strong word for it. The thing that holds them back the most, the single thing that holds them back the most is they try and do everything themselves. And what I'll always tell people is, look, I'm trying to help you to set up a business here. Now, a business for me, I don't know how you would describe it. A business is a profitable commercial enterprise that works without you. And so many people will kind of ditch the day job, get into service accommodation. Fabulous. And making more money. But then they're doing everything. They're like ironing the sheets and they're scrubbing the pizza off the bottom of the oven and they're doing all the kind of. All the admin, they're chasing people for credit Card payments that have bounced because the expiry code is wrong. So a big part of what I try and get across to people is it needs to be done, but doesn't mean you need to do it. And so many people are very, very resistive to employing VAs, you know, virtual assistants. And in my head, anytime you're doing anything that could be done by virtual assistant, you're working for £1.50 an hour. Now, I don't know about you, but I didn't get into service accommodation to work for £1.50 an hour. Now that's not to denigrate to people in the Philippines or wherever else that do work, because, you know, over there, that's really good money. So I feel like we're doing, we're doing good in the world by allowing people that wouldn't normally get access to that kind of money to earn, by their standards, pretty good money. But then from our end of the telescope, all the bits and pieces that need to be done, get done and they get done well, but you don't need to do it. So long answer to your short question, the biggest mistake that people make, in my view, is to try and do everything themselves.

Yeah, no, 100%. And just to go over from what you said there, episode three of this series was talking about outsource and about working with virtual assistants and how it so effective. And I think the main takeaway that I'm getting from doing this season is there are so many things that people in the service accommodation world can learn from people who run the guest houses, people who have the rental accommodation from the hospitality world. But there's on the flip side, there's so many things that I believe that people from my world right now, so from the hospitality community group, from the Boosli group could learn from. And I truly believe that outsourcing, working with virtual assistants is one of the key ones. In fact, in what I do, a big part of my training group is talking about this and showing people how I've used it for Bruce Lee, how I've used it for the family business. And why is important because like you said, one of the biggest things that I notice is that people do try and do everything themselves and if they were to just to take a step back and find some tasks that they don't need to be doing, like you said, chasing up people for payment, chasing up emails, you know, doing all those sort of things, then I think that it would free up more time and, you know, you can lose all the money in the world and you can easily get money back, but there's one thing that you can't get back, and that's time. Everybody's time poor. So I think that that's an amazing answer, a really good one. And I think everybody watching doesn't matter what you do, whether you're watching for hospitality or you're watching for property or you're doing something completely different, then everybody should be taking that on board. So let's move on, then. Service, accommodation. A lot of people know about it, a lot of people are doing it. It's heavily unregulated, as in, anybody can literally get started like that and there are no licenses to go through or any thing like this. How do you envision it changing in the future? Do you think this will become regulated to fall in line with a lot of B&Bs and guest houses have to have to do to get opened, or do you think that is just going to keep as is? I'd love to get your opinion on this, because this is like a pretty big topic at the present moment in time.

Great question. So, number one, over time, almost indisputably, I mean, any industry where there are super profits, Sorry, this is talking management gobbledygook now. This is getting drawn from my mba. Any industry where there's a super profit, those profits normalize over time. And one of the ways they normalize is by regulation. So it's inconceivable to me that there won't be more regulation within the next 20 years. Will there be significant regulation in the next two or three? I don't think so, because it's not where the government's attention is. They're trying to deal with Brexit, they're trying to deal with immigration, they're trying to deal with massive issues, but they will get round to it because housing and the housing crisis is a big part of the discussion in society at the moment. Now, I'm not saying for one minute that service accommodation is responsible for the housing crisis, but I think it's indisputable that there is a housing crisis and therefore housing as a sector will get looked at. But just to go back to what you said to begin with, Mark, I would teach people that it is actually a legal requirement. I do teach people there's a legal requirement to register for various things and to do various things. So you're right. I hear all the time, you know what? Would you bother getting trained? You can just take your house and stick it on Airbnb. Well, you can you physically can, but you're breaking all sorts of laws if you do so. For example, from my perspective, I would teach people that you shouldn't be operating a business without professional indemnity and public liability insurance. You just shouldn't. And then the next, next thing, you've got a load of guest details and credit card numbers and email addresses and so on and so forth. Well, that's data protection. So you better get covered by the ico, the Information Commissioner's Office. So something I pound, I just mercilessly hammer it into any of my students is you got to be a complete Class 1 nutcase to operate in your own name. If you're not operating through a limited company, it's an open invitation for bankruptcy. Lose your house, go to jail, everything now. But you're right in the sense that almost everybody thinks there's no regulation, there's no requirements. I'm just going to get my house and stick it on Airbnb. And the number one question I get asked on Facebook is, how do I get away with xyz? And my answer is, you don't do it properly. Yeah, I'm an engineer. And fundamentally, as an engineer, the learning that you get as an engineer or any kind of scientific discipline is there's actually no safe way to do anything except don't do it. Therefore, if you're going to do anything, there are risks. And a huge part of my training is to help people mitigate those risks.

So, for me, looking from the outside in, I don't see this being talked about enough in the service accommodation world, and people are talking about getting into it, the things that they have to do. Now, I may be wrong, but if you could take on board one bit of advice that you see being given by your peers all over the property world, service, accommodation world, that you don't agree with, would you say that that is something that isn't being talked about enough, or is there something else that you see advice being given that you don't agree with that's as passionate as what we've just covered just then?

Yeah, well, okay, that's a good word. I am passionate about it.

So.

I could offer you other big subjects. Mark, I can't offer you anything that's more important than life and death. You said it just now, didn't you? You said, you know, if you lose your money, you can go and earn some more money, but if you lose your time, you're not getting it again. And I started working for my first job, I worked at Ford's in Dagenham. So I was two terms in university, six months at Ford's for like four years. And the relevance of that is at the age of 17, I saw three people killed in industrial accidents, like up close. And if somebody tells me they're having a bad day or they're stressed or life's crap or, you know, whatever, I've just got one stock answer or one stock question, Sorry. Somebody says to me they're having a crap day, I'll just say, okay, who's died? And if nobody's died, you had a good day. So please tell me something more important than life and death.

Yeah, I thought that was going to be your answer because, you know, it is a big. Is a big topic, regulations and making sure that you are covered when people. Because I mean, the thing about this, if you compare it to all the other industries, whether it's E commerce or whatever, when you're doing hospitality, you are literally having people coming into, you know, your homes. You're in charge of these people. So I think that, I mean, this is a real big sort of takeaway to have from this and from this interview and from your answer is, you know, just make sure that doesn't matter what you're doing, what type of property that you're doing, make sure that you are covered. You have got all the steps in process and this is obviously something that you teach and this is something that I wanted to move on to onto next. So just give us a little bit of a background about Touchstone, about when it was started, about the reasoning behind starting it and what you're currently doing right now to help people sort of avoid those pitfalls and how they can have a successful property career.

Sure. So Touchstone, or the forerunner of Touchstone, we had a really imaginative name before we called it Touchstone. It was called Smith llp. How about that for an imaginative. So I was going to call it the Smiths, but that's already been taken. Apparently.

Some.

Some.

Some nomarch.

Right. Some singer, someone. So Touchstone has been. So it morphed into so. But that's just a name change. So we've been doing this for. About doing this as in teaching other people for about five years now. And Touchstone's ethos, Touchstone's vision is to be the UK's premier wealth creation company. So everything about wealth, I believe, is either not taught or mistaught in our schools. Now let me just dismantle that a little bit for you. Warren Buffett says poor people invest in things wealthy People invest in time. And my interpretation of that is the true cost of anything is not measured in money. The true cost of anything is measured in the amount of your life you're prepared to exchange to achieve it or to do it. All right. And if you. So it isn't about how much you make, it's about how little you do. And a huge part of what Touchstone is about is 100% compliance. We're not about getting away with it, we're not about winging it, we're not about getting around, we're about learning how to do it properly. So regardless of the course that we're teaching, we're talking about service accommodation. There's a good. In a two day service accommodation course because that's like the normal two day. So we call it a service accommodation masterclass. There's like two hours on compliance. So it's not difficult or it's not. I mean, for instance, the data protection thing that I mentioned, the Information Commissioner's office. Would most hospitality units comply with that, do you think?

With the gdpr?

Well, specifically ICO for data protection.

Yeah, with GDPR specifically, after last year, or data protection, I would again, if we're going to go on sort of 50. 50. I reckon we're sort of looking at maybe 50. Yes. And you do a half. No, just. Just from what I see again, from the outside in. So, yeah, there's a large majority of.

People who aren't okay. But I mean, that's really sad for me because as a small company to register for data protection cost you 39 quid. It takes you about half an hour. So once you know it cost you £39, you're going to go and do it. But if you don't even know you have to do it, you won't because you're not aware of it. So there's the whole compliance thing next. From a wealth perspective, there's a huge piece for me around company structures and tax because most people, I don't know anybody else that teaches what I teach in this regard. And for me there's a right way and a wrong way to structure most businesses. There's a tax friendly way and there's a tax unfriendly way. And so many, many people that come on my courses are just amazed at how you can use the tax legislation to benefit you. So to give you an example, there's a guy called, a guy called Nigel and his wife Wendy from Kent, this is a couple years ago now, they had four holiday cottages around their house and they had a lovely house in Italy, place called Lake Garda. And they'd said to their accountants, can we get any tax breaks? And the accountants said, no, absolutely not. You can't. What you doing? You can't get a tax break. They'd heard about capital allowances. I don't want to drill deep into this because this is a bit technical for this time of night especially. But here's the bottom line. I reinforced their knowledge that they could go and claim capital ounces, which bear in mind, Mark, their accountant, has specifically told them they couldn't. All right? And with a little bit of simple paperwork, they reclaimed £650,000 in tax. Now, how the hell can you afford to ignore that if you're a business person? You know, for me, I'm a business person first and I'm a property person second. And when you've run companies and big companies, you know how to structure things. You know that tax is important. I mean, for Christ's sake, the amount of money you can make in service departments means that you very quickly can put yourself into the high rate tax bracket, the highest rate tax bracket, which is 45%. You lose all your allowances. If you don't know what you're doing, you'll be paying 53% of your income will be taxed. So you're not actually an entrepreneur at that point, you're a government employee because you're giving more of your money to the government than you keeping yourself. So the whole tax structure, for some people, it's going to be boring, but I think it's essential. And I don't think you can assume that your accountant can keep you straight, because in my experience, most accountants can't. They don't know it well enough. And then the third aspect, specifically to do with service accommodation, that I'd want to pick up here. So we've got compliance, we've got tax. The third aspect is vat. So many people out there are committing VAT fraud and they're not even aware because they don't know that they're supposed to be paying VAT on their service accommodation income. So they just don't. They just take the money and don't pay any vat. We can't do that. That's not legal. So, I mean, that's like, you know, bed and breakfast owners taking pound notes and stuffing it under the mattress or something, you know, at least they know they're cheating, so they're likely to get caught. Service accommodation people, they don't even know that they're liable for VAT on service accommodation. I just see horror story after horror story and people generally that come to me, they've had some other experience of service accommodation training somewhere else and they will routinely tell me that what you do, Paul, and I don't want to classify everybody in the same boat because they're not. But there are some people that will teach people just like the practical operational side, you know, this is how you should look after a guest and this is how many towels you should have. And you know, this is. I'm not saying it's not important to have towels, of course you need bloody towels. But for me, if you're behaving illegally, you're not compliant, you're not paying vat, you're paying far too much tax. Those things are a bit more important than should you have one towel or two towels for me, because that bit is kind of common sense. I don't know if I'm answering your question, but our whole ethos, our whole mentality is about professional, compliant, tax efficient wealth.

You definitely did answer it and it's good. And I know there's a lot of people that are watching this that will get a lot of benefit from this. I think the big takeaway that I'm getting is, and not only from this episode, but throughout, as all the guests that have been on, doesn't matter what they're talking about or what's fun focus that we have had, I think you've just got to make sure that you do your due diligence. Don't take this as a get rich quick scheme. Don't take this as a passive income thing, because it is not like Paul is saying time and time again, if you fuck up on this in one of the most core essential things of starting up a business, then you could damage everything that you've worked up to, to this point by not going limited, by not paying vat, which is again, insane. I can't believe people aren't doing that. By not having the health and safety certificates that you need for your properties, then I think that that is a core mental funnel. And funny fact, Nigel, the Nigel you're talking about, he's part of the Boostly Academy and I know exactly who you're talking about. So, yeah, it's a small world. There's Facebook and hospitality. So we've teased people enough, we've talked about your training, we know you're based in Doncaster. Now, if somebody wants to find out more, they want to maybe come to one of your training weekends or two. Day things or they just want to get started. They want to find out more about Paul Smith, they want to find out more about Touchstone. Where is the best place for someone to start right now?

Okay, two specific suggestions. First one is just climb onto YouTube and just put Touchstone Education into like the YouTube search bar, not the Google search bar because that will take you somewhere else and just subscribe to the Touchstone channel. And we got two regular programs that go out every week, one on a Sunday afternoon and one on a Wednesday and we cover all aspects of property. But so my second suggestion is if you want to get deep into service accommodation quick, then why not go get yourself a copy of my service accommodation success manual that I wrote about five years ago now. But what I'm going to do is I'm going to give everybody a digital copy of that for free at the end or whenever you want, really.

Yeah, well, we can give them the, we can give them the little bitly link now if you like, Paul.

Yeah, so it's just bit ly. It's all lowercase bit ly. And this is all one word. SA Success manual, just one word. Try to make it simple as I could. So it's kind of the name of the book.

Yeah, really easy, really straightforward. But if you're still struggling, don't worry, I will put everything in the show notes, I'll put a link in the post so wherever you go you'll be able to click on it and go to it. But yeah, YouTube, fantastic place to start. I am a subscriber, I'm enjoying the videos and I will definitely make sure that we get the essay success manual out as well. And if anybody wants to find out more about going on training weekends or really delving deep into Paul wealth management courses that he's talking about, like I say, at any point, go on to YouTube, reach out via social medias. Touchstone is not just Paul. There's a full office of people and someone will be able to help you and answer any questions. So, Paul, I just want to say thank you so much for that tonight and it's been an eye opener, it's been really effective and I think what I love about this series of the Boost Hospitality podcast is that we are delving into every aspect of not only just running a property business or a service accommodation business or a hospitality business, but just running a business. So really do appreciate that and I just want to say thank you to everybody that has tuned in. Doesn't matter whether you're watching the video or you're listening to this on a podcast. I really do appreciate it. This season by far has been the most successful in terms of downloads. I'm planning on doing three more episodes this season, so I'm going to end this on a high. We're going to be talking about marketing, we're going to be talking about running your business all through a phone. And we've got something special lined up for the final one as well. So please make sure that if this is the first time that you've listened to this, go to booster.co.uk podcast. You've got 10 other episodes that you can download right now. You can even check out the blog post behind it and get access to all of the digital downloads from each of those. One final thing that I could ask if you could please head over to itunes and go and leave this podcast one of those lovely five star reviews. More and more people are finding it. It's breaking the record for how many people are downloading this podcast at the moment and I truly believe that it's because of people going on leaving reviews. It's climbing up the rankings and more people can see it. So really do appreciate it. For everybody that is tuning, thank you so much and I'll be back for episode number 12 very, very soon.