When HomeAway announced that it was being acquired by Expedia in November of 2015, one of the first things that was discussed was the plan to add traveler’s fees to their pricing model for the vacation rental management portal.
During that announcement, CEO Brian Sharples stated “Today we’re announcing business model changes, including the addition of a traveler service fee in mid-2016, which will dramatically change our ability to compete and thrive in the coming years. Better monetization will allow us to accelerate revenue growth, but most importantly will provide more resources for an even better product and service experience for our owners, property managers and travelers.”
In addition, Sharples noted the following:
- Fees would be based on a sliding scale
- They were generally going to result in a 6% additional cost to the customer (lower than rivals such as Airbnb)
- They will be initiated in the second quarter of 2016
- HomeAway plans to lower their commission fees for pay per booking customers
- There will be other financial incentives for subscribers based on annual bookings
As of last week, HomeAway started to add the traveler fee to its US based websites, including HomeAway, VRBO, and VacationRentals.com. So far, the fee has varied from 4% to 10% of the total value of the booking, not to exceed $499. Travelers booking through any of these sites will be able to review the fee by looking at “view details” of the booking section. Brian Shaples commented to Tnooz that this fee will enable HomeAway to “invest in more marketing and product and services, and to cover some operational costs.”
Reaction to this new policy by vacation rental management companies who work with HomeAway has been primarily unfavorable. Comments on the VRMIntel blog announcing this policy are telling:
“Roughly 1000 per property was not enough, this now amounts to 5000 per property annually. Another customer lost with many listings”
“This was a shock to me today when I responded to an inquiry. I am livid and DISGUSTED with homeaway. They have not partnered with us to help us attract potential renters, but rather sneakily imposed this new service fee. For the same cost to a traveler, they could actually stay in hotel instead.”
“When a 2-week rental was not booked as promised I sent an inquiry email to the client at which point I realized that the new service fee had been applied. That’s why the client did not book. This fee was applied directly to the client — 120 dollars on a 2,000 dollar rental.”
Vacation rental management companies may try to outwit the system at their own peril for the listing algorithm on the HomeAway sites. Lower booking conversions will definitely impact the search results for that companies’ properties on the HomeAway booking sites.
Some companies see this as an opportunity. One Barefoot client welcomes this as an opportunity to compete with HomeAway by being vigorous with their own website SEO and niche marketing. He noted that he can undercut HomeAway’s price by 10% and get his entire service fee. He perceives this as being a huge positive.
Using portals is going to continue to increase complexity for the individual vacation rental management company. It is important to understand fees and the changing needs of the feed to the portal from your vacation rental management software. A strong relationship between your software provider and the desirable portals is crucial. That is one of the reasons why Barefoot has a full time partner manager that provides a liaison between our clients and various marketing portals.
If this new policy impacts you, you should visit this FAQ page on the HomeAway website. Now is the time to have a conversation with your relationship manager at HomeAway to make sure that you get questions answered and understand the tactical steps that you may need to take. 2016 was predicted to be a year of change in the world of Vacation Rental Management and this is a great example of that.