[note: I don’t work for CEA, but I did recently invest in a house to live in and do events in.] I wrote a piece on my blog about why. Here’s what I wrote:
Real estate purchases can make sense for financial planning reasons in some cases. This money should not be considered to trade off against, e.g., donations to effective charities. Instead it should trade off against short-term rental budgets for retreats, conferences, etc. And because banks are willing to loan against real estate at very good rates, it is surprisingly cheap to invest in real estate, requiring little cash upfront and low ongoing interest costs. And you can make use of it while you own it. So if you can either use your real estate effectively, or rent it out when not in use, you should be approaching cost-competitiveness with short term rentals.
One risk to making effective use of the real estate is that you can’t just pay for what you need at every moment, you have to buy the whole thing and then waste any unused bits. This risk is compensated by commensurate upside—that of making the whole thing relatively cheaper. So if you have knowledge of how much utilization you’re expecting to get from some real estate (and that utilization is higher than whatever the market / existing owners get) then you’re likely to be beating the market by buying the property.
All the above analysis is all else being equal. But realistically, the venue you choose for an event has a major effect on everything that happens at the event. Some venues will be conducive to smaller conversations; some will force everyone into one room. Some venues will attract fancy people; others will attract nerds, or frugal types, or creative types, or whatever.
One venue isn’t right for every type of event. But I’ve done enough event planning at rented venues to know that sometimes the event will go fine at whatever venues are easily available on the market, and other times I am making substantial tradeoffs.
Occasionally my event has requirements that won’t work for an available hotel or airbnb. An example of this I can think of was wanting attendees to be able to relax in the evenings somewhere that was private, quiet and had no time pressure/social demands. The hotel rentable rooms felt very stuffy, the hotel bar was too public, and there were no available airbnbs that were big enough. In general, the short term rental market is not that liquid and doesn’t have huge amounts of inventory; if you don’t see what you want you might just be out of luck. Whereas if you buy, you can guarantee availability, and customize things to your liking. Such customizations, if done well, pay off event after event. If you believe (as I do) that facilities have a big impact on the quality of an experience, then it’s easy to see how such an investment would pay off, even if it is more expensive than whatever you would be able to get in the rental market.
I haven’t spoken to the CEA folks involved in the Wytham Abbey decision, but I assume they were thinking along similar lines when they pulled the trigger on this. To me, the critique in this thread is quite overblown—I think most of the shock is coming from over indexing on how things look (fancy estates, large numbers) rather than the economic and practical realities.
[note: I don’t work for CEA, but I did recently invest in a house to live in and do events in.] I wrote a piece on my blog about why. Here’s what I wrote:
Real estate purchases can make sense for financial planning reasons in some cases. This money should not be considered to trade off against, e.g., donations to effective charities. Instead it should trade off against short-term rental budgets for retreats, conferences, etc. And because banks are willing to loan against real estate at very good rates, it is surprisingly cheap to invest in real estate, requiring little cash upfront and low ongoing interest costs. And you can make use of it while you own it. So if you can either use your real estate effectively, or rent it out when not in use, you should be approaching cost-competitiveness with short term rentals.
One risk to making effective use of the real estate is that you can’t just pay for what you need at every moment, you have to buy the whole thing and then waste any unused bits. This risk is compensated by commensurate upside—that of making the whole thing relatively cheaper. So if you have knowledge of how much utilization you’re expecting to get from some real estate (and that utilization is higher than whatever the market / existing owners get) then you’re likely to be beating the market by buying the property.
All the above analysis is all else being equal. But realistically, the venue you choose for an event has a major effect on everything that happens at the event. Some venues will be conducive to smaller conversations; some will force everyone into one room. Some venues will attract fancy people; others will attract nerds, or frugal types, or creative types, or whatever.
One venue isn’t right for every type of event. But I’ve done enough event planning at rented venues to know that sometimes the event will go fine at whatever venues are easily available on the market, and other times I am making substantial tradeoffs.
Occasionally my event has requirements that won’t work for an available hotel or airbnb. An example of this I can think of was wanting attendees to be able to relax in the evenings somewhere that was private, quiet and had no time pressure/social demands. The hotel rentable rooms felt very stuffy, the hotel bar was too public, and there were no available airbnbs that were big enough. In general, the short term rental market is not that liquid and doesn’t have huge amounts of inventory; if you don’t see what you want you might just be out of luck. Whereas if you buy, you can guarantee availability, and customize things to your liking. Such customizations, if done well, pay off event after event. If you believe (as I do) that facilities have a big impact on the quality of an experience, then it’s easy to see how such an investment would pay off, even if it is more expensive than whatever you would be able to get in the rental market.
I haven’t spoken to the CEA folks involved in the Wytham Abbey decision, but I assume they were thinking along similar lines when they pulled the trigger on this. To me, the critique in this thread is quite overblown—I think most of the shock is coming from over indexing on how things look (fancy estates, large numbers) rather than the economic and practical realities.