Roughly 4 – 5 weeks ago HomeAway introduced its new ‘traveler fee’ to a lot of negative feedback from owners. Since then the discussion over HA’s business model, fees and future direction seems to have amplified massively.
A section of owners are very upset with this change of direction by HomeAway, some have gone so far as to start a protest movement, complete with social media accounts and a website highlighting the comments of HomeAway’s customers and generally bashing this policy change.
The negative reaction to the new fee even drew a response from Brian Sharples (HomeAway CEO) in which he attempts to answer some of the more general comments which have been aimed at his company.
At a recent Expedia (HomeAway’s new parent company) investors meeting (reported excellently by VRMIntel) their CFO commented on HomeAway’s future direction and on the performance of conversion rates after the traveler fee introduction.
To sum up, HomeAway introduced an additional fee and property owners are not happy about it.
Let’s explore some of the reasons why this is and make some predictions on how it may all pan out.
Why Have They Brought In This Extra Fee?
If you read both the Brian Sharples response and the Expedia investors meeting notes (linked above) you will find that they are basically saying that the fee is for the following:
- to be able to compete against the likes of AirBnb
- to grow the VR market overall
- to grow their own market share
- to battle legislation against the home sharing economy
All the points seem logical and straightforward from their point of view.
AirBnB have basically turned up and made a massive impact in the home sharing space over the past few years, their growth has been phenomenal and HA see a lot of that down to the fact that AirBnb manage to keep somewhere up to 15% of the revenue from each transaction that happens on their platform.
Brian claims that HA’s traditional take is only around 3% with subscription listings so there is obviously a gap here that needed closing up.
HA are also making a point of the new traveler guarantees which cover things like fraud, double bookings and problems with a customer’s rental property experience.
What Are Property Owners Issues?
HA’s customers have a different take on this new fee, reading through many social media comments the general feeling seems like it is simply a money grab on the part of HA and it is not hard to see why this conclusion has been reached.
A lot of the negativity comes from the fact that many customers have paid a fairly large subscription fee on the basis of an advertising and business model that has now been changed by HA.
When their CEO states in November 2014 that HA is going to be free for travelers, and then they announce and introduce a ‘traveler fee’ less than 18 months later there is always going to be a bad reaction to this.
There has also been a lot of noise about owners losing bookings because of the new fee, reports of big drops in enquiry and conversion rates since the fee introduction and complaints about how the fee is displayed to potential guests in the booking process.
@homeaway @travelblogger Fact: No bookings from @vrbo in 13 days. 2 properties. Normally summer rentals fill up now. #vrboservicefee
— Chuck Breckenridge (@ChuckWBreck) March 17, 2016
.@ClarkHoward See how @VRBO is being transparent w/ #vrboservicefee Screen shot of VRBO app. #findthefee #fuzzymath pic.twitter.com/7ZBFazmwQT
— Royce Ard (@royceard) March 4, 2016
@VRBKNOW @HuffPostTravel @YahooFinance @FTC VRBO owner loses guest due to new #vrboservicefee #boycottVRBO pic.twitter.com/o2O0ylW0mY
— BelmarVacationRental (@BelmarVRbyO) February 28, 2016
A recent article on the evolve VR blog covering the new fee has also sparked a bit of commentary from disgruntled HA customers. The article made some points about the evolving nature of bookings and the conversion process. I’ll cover my thoughts on this shortly but I wanted to first highlight a comment from ‘OpinionatedVROwner’ on the new service level that HA claims to be offering guests:
It’s very hard to disagree with what they are saying on many of the points relating to the HA traveler guarantee.
The Cynical View
Astrid (in the evolve blog article above) sees the new fee as ‘inevitable’ and I think it is too but not for the exact same reasons.
Expedia have just paid $3.9 billion for HomeAway and will want a return on this. HomeAway see their biggest threat to be AirBnb who charge both owners and travelers and have a 4/5 x bigger slice of revenues generated through their business model.
As HomeAway there is absolutely no way on earth that they are not going to try and take a lot more revenue out of the business model. AirBnb have proved travelers will pay it, it would be crazy for them not to take it.
Do they need to charge this to compete with AirBnb and other listing sites? Probably, AirBnb have a model which generates more revenue and they have a lot of investment behind them, they are a formidable competitor so a major jump in income for HA will obviously help with this battle.
It would also be naive to think that jumping from a roughly 3% take rate to something approaching 12% – 15% isn’t going to impact their share price either…
Are they bothered if some owners complain? Yes, of course any negativity is bad for business but they will be betting that in the long term owners and travelers will just accept it and I think eventually many will. Albeit reluctantly.
How It Will Pan Out
In my humble opinion, this is what is going to happen.
- Some owners will continue to protest against the fees but HA will not reverse their decision.
- Some of these owners will leave HA and find other marketing channels with varying levels of success
- Many owners will stick with HA because it is all they know and whilst they may not be happy with the increased fees they see little option for change
- HA will shortly reduce the annual subscription fees to ‘compensate*’ for the introduction of owner and traveler booking fees
*I use the term compensate lightly, HA will still end up massively better off due to the increased fees but will spin a reduction (or even elimination) of subscription fees as a positive for property owners.
This is my prediction and I’m happy putting it out there for anyone to see.
Final Thoughts
I have some final thoughts which I’ve been mulling over the past few weeks / months.
1. HomeAway and AirBnb are different beasts. Whilst on the surface they are very similar, AirBnb target rooms in homes whereas HA has always targeted second / holiday homes. Whilst these are obviously related they are two distinct audiences and business models.
Yes, there is always going to be some overlap, and yes, AirBnb will likely start eating into HomeAway’s market sooner rather than later but that doesn’t mean that HA should be forcing their entire customer base into an AirBnb style model either.
2. Properties are mainly owned by real people. Comparisons between the home sharing economy and traditional hotel rooms have been made a lot recently. Services like AirBnb have the potential to impact on hotels profits, hence the new legislation battles going on right now.
HomeAway and AirBnb see this battle and want to provide a model which will let them compete with established hotels. Online instant booking is a major part of this, it’s hard to compete without it. The problem is that the inventory, people’s houses and homes are just that, people’s house and homes! Despite wanting to earn income from their homes (and second homes) there will always be a large segment of owners that want a lot of control over who stays in their properties.
The ‘hotel’ instant booking model will never cater for this for everybody’s needs.
3. Ever increasing fees are not the only option for home owners. Relying on any one listing site is not a good idea, it never has been. Property owners should be exploring ways of having their own website, with their own ability to take bookings and card payments, bypassing commission payments entirely.
This way will be a bit more work to setup and will take some time, but should pay for itself in a reasonably quick time frame.
Even if you keep an account with HA I’m sure it would be nice to accept bookings and payments on repeat guests, or referrals without having to go through a major listing sites booking process and paying the fees involved with this.
This is all possible for the pro-active owner.
So, that’s my take on it all. Agree? Disagree? Think I’ve missed something crucial to the debate? Just let me know below.
You are certainly spot on that HomeAway and AirBnB are different beasts. You may have overlooked one additional result from HomeAway’s imposition of fees on both travelers and property owners: New competitor websites may appear that will cater to subsets of the rental market thus stripping away some parts of HomeAway’s business model. For example, properties that normally rent by the week or month may find other sites more appealing … and travelers not wanting to part with 10% + fees may gravitate to them. Certainly repeat customers will negotiate directly with owners rather than pay the travelers fees.
I agree about competitor websites springing up. I think a lot of home owners who manage their rental themselves will find the extra fees hard to swallow, there will be a group of property managers though who will simply pass on the costs to either the customers or the property owners and I think a lot of these will see the recent HA changes as an opportunity. That for me is where HA are going wrong, they are upsetting the property owners who self manage and I think they are a massive part of the equation.
I advertise on both Homeaway and Airbnb ( and holidaylettings/trip advisor). I am gutted by this massive hike to my tenants booking process by Homeaway. The biggest difference, as you’ve mentioned, is I PAY for Homeaway listings, whereas Airbnb and by choice, holidaylettings charge only commission, no upfront fees to advertise. Yes, also agreed that Airbnb and H A are 2 different beasts, or have been! Sadly that is set to change… and after 12 or so years… My relationship with H A looks set to end. V sad
Hi Darian, yes, I’m hearing a lot of people echoing your thoughts regarding HomeAway. It will be interesting to see how things progress for them over the coming 6 – 12 months, whether people will actually stop advertising with them or not. Unfortunately I think many will as they see little other option. Darren
yes there are options and we should all stop using them
I agree. This year I have very little interest from HA. Holiday renter do not want to see a service charge imposed which has nothing to do with the cost of the property they are renting.
I pay an annual subscription and this is enough.
I shall not be renewing with HA
Hi there, I am facing the same problem.
I have been advertising with holiday-rental.co.uk for years, then purchased by Homeaway/VRBO. I like dealing with final customers directly, I am not happy with the additional service fee and I am not accepting to have payments going through Homeaway, I guess this is the reason why I have receiving less enquiries and I noticed I have less visibility. Have you managed to find a valuable alternative in the meantime? Thanks a lot and ciao, Federica
I have rentals in Provo Turks and Caicos
I have rented successfully with multiple properties thru homeaway and vrbo for years
I have just dumped the greedy pigs
The extra fees seem to be putting a lot of renters off HomeAway, I don’t think you’re the first to ditch them and I doubt you will be the last by what I’m hearing…
I hope you are one of many to dump VRBO and Homeaway .
I for one was using them every year until this fee came up , greed pure and simple.
Other alternatives such as dealing directly with the homeowners .
I agree that business models need to change to compete in an evolving market. I list with VRBO and other sites and do not fundamentally have a problem with a reasonable service fee. What I find interesting, is that I have averaged 2-3 bookings a month with VRBO and it has changed to 1 booking every 2 months since February. Clearly, Expedia has done something wrong in evolving their model. I had 95 % of booking coming from VRBO and 5% from Airbnb. That has now inverted. Why? I think part of the issue is how they are showing listing. With my subscription (which appears to now have no value even though it has 9 month remaining) I used to show up on the first page of listing. This along with my 50+ 5 star reviews generated booking. With their new best match system I am on page 4 of the listings. Nobody goes to page 4. They seem to have changed fundamental aspects of the booking model that have nothing to do with adding fees to boost their revenue. I am now reading about lots of travelers that are not as happy with their VRBO accommodation. This is not a surprise to me. People that paid top dollar for listing and have high quality reviews tend to offer a quality product. If these properties are now low in the listings, and unrated properties that may have great looking copy but are not vetted are at the top (for reasons only known to the developer of their new ‘best match’ system) there is a higher chance of an unhappy client. Furthermore, I think people are getting a false sense of security in renting these units because of the new VRBO guarantee they get as part of the service fee. This is one useless guarantee, if you think about it is obvious. Here in Hawaii during high season if a property is bad how is some guy in India going to find you a replacement? Get real.
‘Best match’ does seem a pretty ironic name if the best properties like yours are now being pushed further down the results. I also agree about the new ‘guarantee’, it is pretty unrealistic and from a home owners point of view, almost unworkable, however does the casual guest realise this? I’m not so sure yet.
I agree with your comments. I was with VRBO 20 years and was normally on the front page. Now my inquiries are putrid from VRBO. My condo is in Maui. Very few guests go to Hawaii for less than 7 nights. H/A allows owners who have “instant booking” to go to the top of the rankings. If you have to decline a request to rent you get knocked down in the rankings. Example: I had 14 nights open and an island hopper picked 3 nights out of the middle. Left me with 6 nights on the front and 5 nights on the back side. Allowing guests to instant book totally messes up your calendar so I opted out of instant bookings. Ranking went down. I joined MauiOwnerCondos which is based on the old VRBO model (where potential guests can see my info and call me). I can’t say I have had more rentals from them as I have H/A however I get to talk with the guest and the guest doesn’t get soaked with fee’s. Might want to check them out if your condo is on Maui.
I’m a VRBO owner who has not set up my own website but probably should. I’ve circumvented the service fee by allowing my guests to book directly with me which is more of a hassle but an option almost all of my guests have taken me up on and more than appreciate. I was advertising a “no service fee option” on VRBO’s website before the VRBO Gestapo temporarily suspended my listing. My guests are now instructed to contact me directly to discuss “special discounts”. When booking with other VRBO owners, I simply ask if I can book directly with them to avoid the service fee which VRBO can do nothing about. VRBO’s “online booking guarantee” is bogus since they can’t possibly live up to their end of the bargain having never stepped foot inside of my house. If a problem occurs at my house, I’m the one responsible for fixing it. Not VRBO who won’t give guests a refund or pay to have my air conditioning unit repaired should it break.
It sounds like you are doing the right thing by giving guests the option of booking directly with you, I’m guessing a lot of owners are doing the same thing now a days if they can.
As I only have a couple of properties for rental, I was registered with HomeAway and Owners Direct for their ‘Pay per booking’ service as opposed to a subscription on the basis that I would pay more by subscription due to low number of rentals. However, HomeAway have now removed my listings on the basis that the number of bookings is low compared to communications. That is rather ironic to say the least when the service charge now being levied by HomeAway makes it even more difficult to obtain bookings. I agree with you that HomeAway and Airbnb are different beasts. Interestingly I get far more bookings through Airbnb than any of the other similar sites. However, Airbnb tends to be for shorter term rentals of a couple of days or so as opposed to a week or more. We are all in business to make money but an important lesson is not to screw both sides, in this case the Owners and the Customers. And finally, when removing my listings Home Away had the audacity to say that I had been warned this would happen. Needless to say I could not find one email relating to possible removal of my listings. Only emails are about the new payments structure. Probably buried in the small print then!
We are also fed up home-owners. Try googling the CEO ‘s of HA and Booking .com (anhttp://fortune.com/2016/05/25/dara-ceo-pay-highest/d) and Sharples , etc . They took home obscene paychecks last year by insinuating themselves between the owners and guests , quietly buying up the competition so we owners could not go elsewhere, then adding the booking fee . And they have managed to convince the owners that they have to repay the cost of their acquisitions !! One wonders how anyone managed to book a holiday before they came along…..
No wonder they are so highly rated in the world of great capitalists.
Fed up homeowners seems to be a recurring theme these days, I’ve had many conversations with plenty of others. The answer has to be in the form of taking back control of your bookings and customers from them, relying on the big listing sites is handing control of your business and property over to them and hoping that they will treat you right.
To say 2016 was a bad year for vacation home rental owners in North & South Carolina would be quite an understatement. The upheaval in the marketplace by HomeAway / VRBO has turned a once thriving industry into a mesh of confusion, with owners now feeling the full pinch.
In February 2016 HomeAway / VRBO rolled out a new service fee, charging travelers who book through their websites. Some homeowners were lucky, they were already booked for much of the summer when the fee came to play, so they would not feel full effects right away. But now, as booking season is upon us for summer 2017, owners are seeing a dramatic decrease in listing views, views to contacts and contacts to bookings. Based upon an analysis of 150 random listings through North & South Carolina, listing views are down an average of 45%, with some owners seeing as much as an 80% decline. Booking aren’t faring any better, with the average rental seeing a 50% or more decline in bookings through HomeAway / VRBO.
The way HomeAway / VRBO has identified (or hidden) the service fee has left travelers with a bitter taste in their mouths. The service fee is not made evident to travelers without them having to search for quote details. And then, it only say’s service fee, with some travelers assuming the owner is charging the fee. Owners who have sought to clarify that it is not their fee in their responses to inquiries have been chastised by HomeAway / VRBO and some have been de-listed for being what HomeAway / VRBO calls bad actors.
With the new service fee in place, many rentals listed in HomeAway / VRBO are now priced higher in total cost than rentals of competitors (rental agencies) as homeowners most often have priced their rentals to match those listed with with the rental agencies. This has led to some owners reducing their rates in order to stay competitive. So, the service fee does not necessarily come out of the travelers pocket.
While the implementation of the service fee and how it was mismanaged from the start is certainly a driving factor, other moves by HomeAway / VRBO have proven just as disastrous and have contributed greatly to the booking declines, which have been seen across the board.
The “Best Match” search that was implemented by HomeAway / VRBO has made searching for vacation rentals by travelers a daunting, if not impossible task, and has thrown owners so far down the rabbit hole that some cannot be found at all. Areas that once had just a few hundred rentals listed now thousands with best match search including rentals fifty or more miles from where the travelers are looking to go, with listings for the area buried beneath those for other areas. Owners who previously showed up on page one are now showing on page 27 or deeper, with some not showing at all. This is frustrating for both travelers and homeowners.
Of course, the overall goal for HomeAway / VRBO is to essentially force everyone to accept online bookings so they can collect their service fee. To accomplish this they put in a series of “warnings” to travelers throughout their sites and on listings that the only safe way to book is through HomeAway / VRBO. The number and placement of these warnings has varied as HomeAway / VRBO continues with their changes, but they have essentially demonized homeowners trying to scare travelers into thinking everyone is a scammer, making travelers distrustful of home owners from the start. Couple that with their hiding owners information and telephone numbers from some rental listings (it is happening sporadically as HomeAway / VRBO does constant A/B testing and confuses everyone as some listing show some thing and other different) So, the only way renters are be able to some contact owners is through the HomeAway / VRBO system.
The A/B testing itself has been and continues to be a total disaster. HomeAway / VRBO continually changes layouts and information displayed on some listings but not others, going back and forth between layouts. So, as travelers search for homes they see different things on different listings. Such inconsistencies are detrimental as travelers want a consistent experience when browsing a site and deviations lead only to frustration.
One of the most conspicuous (and ludicrous) things HomeAway / VRBO has been A/B testing is removing the rates and calendar from the listings. I mean, seriously? What on earth are the folks at HomeAway / VRBO thinking? Travelers want to see the seasonal rates for when they plan to vacation and what dates are available at the vacation rental.
Most frustrating to homeowners has been an absolute lack of communication from HomeAway / VRBO regarding changes. They implement changes without forewarning in a hap hazard fashion, only to hear the outcry from homeowners and travelers as the changes become apparent. HomeAway / VRBO is obviously out of touch with reality and lives by the motto “It is easier to ask forgiveness than to ask for permission”.
The result of all of the decisions by HomeAway / VRBO has been felt far and wide by vacation rental owners. Some have just given up and sold their properties. Others have turned their rentals over to agencies to manage. And then there are some owners who are totally oblivious to the changes. Believe it or not, there are some owners who aren’t even aware there is a service fee. Yup!
So, as 2016 ends on a low note, one can only wonder what is in store for 2017. We can certainly hope for better, but that is most likely out of the realm of possibility. HomeAway / VRBO is already planning to increase subscriptions by $50 on January 1st. So you can pay more, for getting less.
We cannot tell you what HomeAway / VRBO will do in the coming year, because we have to wait until after they do it to find out. But, you can bet your ass it will not be good. There are rumors of commissions on bookings taken from homeowners, or auction type bidding for higher rankings. Of course, we can only speculate as they offer no advanced notice of anything. We can only say, the best of luck to all you homeowners and travelers. Buckle up, the road is going to be bumpy.
Hi Bob,
Thanks for your comments, it is quite clear how frustrated you are. You’d think HomeAway would see customers frustrations and try to understand them rather what they appear to be doing right now which is blindly carrying on pushing through changes that only serve them.
As a business owner I can tell you frustrated customers is one step away from disaster, as soon as a viable alternative is found I think a certain segment of their customers will leave immediately, many others will follow in time.
Thanks again for the point of view,
Darren
I switched to Booking.com and even though they charge to us a fee, I’m getting a lot more bookings at a higher rate. There is no subscription. Give it the try and you will see the difference. I have 2 properties with HomeAway, I re-new one of them this year, the other I will not. Next year I will be completly out of HomeAway.
here is the solution – albeit may take 1-2 years. Stay with the greedy pigs and that includes all middle men
tripadvisor/vrbo/homeaway/holidaylettings/airbnb et al who arked their websites on the first page of the google permanently and there is no chance of any small guys like us to advertise our properties.After each reservation, interact with your client informing them of how much they would have saved had they known you and spread the word to their friends so they are not screwed by these parasites making 20% + and being an absolute nuisance and forcing us to advertise through them. there is no short term solution to this but eventually they will either drop their fees, diversify or disappear completely.
I speak as a traveller and when you look for a holiday home you have a budget in mind particularly if you have a family it has totally put me off after thinking I had found a nice property within my budget to then go to the booking process to find the service charge fee added on to that not only that there does not seem to be any indication of a deposit option anymore not that is affordable at the time
we families have to save for our holidays and have no objections to securing a property with a fair timescale to pay for it do not see that anymore
I think this is wrong and must affect the bookings somewhat is this the way to book anymore sadly I am now not convinced it is somewhat misleading that you do not discover this charge until you attempt to book
What other webaited are out there besides homeaway/vrbo. I’m getting totally frustrated with them. And now they are demanding you take homeaway payments
We previously advertised on homeaway and as soon as they brought this “service fee” into effect, we began to do some research into alternative options. We just hated the idea that these greedy pigs would be making extra money from our bookings, and it´s extremely unfair to the holidaymakers.
We found rent-in-france.co.uk who are just an advertising portal for French homes, a small West Sussex based company but they have a pretty substantial database. They charge a standard fee (which imo was reasonable again, 125.00 a year) they´ve got a great ical calendar system that is super easy to use and update, no booking fees and all the enquiries come straight to us. There´s no middle person involved. We took out our listing with them in 2016 and have renewed twice now. We will be sticking with them and would definitely recommend. https://www.rent-in-france.co.uk/
Now, most of the people start hating from HomeAway Bcos they charge a subscription fee, as well as a huge booking fee and service, charges If Property owners will show unity they can list their property on those sites who can not charges booking fee and take a minimum SUBSCRIPTION FEE.
Has anyone noticed HA/VRBO raised the “traveler service fee” schedule (no longer published by the way) significantly – over 45% at the $3,500 rent level. Expedia has a set of brass ones IMHO.
Hi, the Yapstone payments issue is the last straw for us. Therefore, just wondered if anyone can recommend the best place to advertise our vacation home for sale? Also, do you have to use a realtor in Florida or can you sell yourself like here in the UK? Is there somewhere specifically where people can list a VC when they want it to continue with existing bookings? We have had enough of the greed of the big corporates and cannot continue to make our payments with Yapstone wanting to take 6% of our money, just to get it when the guest pays. We have a lovely rental in the Orlando area that is rented for the best part of the year and we have 5* reviews but even with that and after 14 years of ownership we are still going to sell at a loss so we were keen not to sell but enough is enough.