Airbnb, as a competitor to HomeAway, is a good thing for Vacation Rental Managers.
- As a public company, even as part of Expedia, HomeAway needs to grow. Because the growth of the number of HomeAway listings is slowing, HomeAway is naturally looking for growth in the form of increased revenue per listing, especially based on a percentage of online bookings.
- Having a competitor like Airbnb provides an alternative listing solution for Vacation Rental Managers.
- Airbnb has a different listing model, which helps Vacation Rental Managers by giving them different types of choices.
- Vacation Rentals as a form of lodging have been well-publicized by HomeAway. The rise of Airbnb has accelerated this trend. As long as Airbnb rentals provide a good guest experience, Vacation Rental Managers directly benefit by Airbnb publicity.
- As an aside, companies like LeisureLink, who provide the ability to list properties in multiple places, similarly help Vacation Rental Managers by reducing the ability for HomeAway/Expedia to be most important game in town.
Will Airbnb dominate HomeAway?
- Airbnb needs to work hard to make it easier to list properties, let alone provide seamless online booking options. Online booking for Airbnb is yet another technological hurdle that Airbnb has to be able to deliver.
- HomeAway has the advantage here for two reasons.
- HomeAway has the maturity of working with this market for a longer time period.
- HomeAway has a property management software division. This gives them the experience and understanding on what is required to be able to offer online booking. They know all the crazy nuances of fees that owners like to charge, configurations of minimum night stays, revenue management tools, to name just a few things. Airbnb doesn’t have the insight that HomeAway has.
Will Airbnb dominate hotels?
- This Airbnb vs. Hotel study by CBRE Hotels’ America Research tells us that rental revenue from Airbnb is at most 5% in one or two markets.
- The real question is not whether Airbnb will dominate hotels, but whether Vacation Rentals have reduced Hotel revenue during the past several years. However, despite the increased popularity of renting a whole home, U.S. hotel occupancy increased in 2015 to be the highest ever. (STR, Inc.). In addition, the same Hotel Research study regarding Airbnb that I mentioned above shows that Airbnb listings rent for a higher daily rate than hotels. It certainly doesn’t appear that anything is threatening hotel revenue in any meaningful way.
How do things look from a Google Search perspective?
- During our Blizzard University Workshops, we like to take some time for a little fun. What’s fun (to us!) is to do a little Google Trends research. Google Trends shows the Google search volume for different keywords.
- For years, Hotel as a search term has been declining. However, it still trumps any other form of lodging at least 4 times over.
- Vacation Rentals as a search term has likewise been declining, and as far back as 2009, VRBO as a search term trumped Vacation Rentals.
- Airbnb, however, has quickly risen to beat VRBO as a search term in 2015, both worldwide and in the U.S.
In fact, in the U.S., Airbnb searches are neck and neck with Hyatt and Holiday Inn.
Also in the U.S., Airbnb surpassed TripAdvisor and Priceline as a keyword search term.
Does this mean that Airbnb will take over the world? Airbnb has a unique offering. People expect to live in another person’s primary home when they book at Airbnb. This is very different from staying in second home beach house or luxury retreat. Although Airbnb has these types of listings, it is still best known for its primary purpose, which was to turn someone’s place into a rental by adding an air mattress. It’s not likely that professionally-managed, high quality vacation rentals will ever be the majority of listings on Airbnb. Secondly, it’s very hard to be all things to all people. As I noted above, HomeAway/Expedia has the advantage of understanding the needs of the professionals in this market, the Property Management Companies who earn millions per year by renting their units. The needs of this market are vastly different from those earning a few extra thousand dollars per year.
Will it cost more in the future to use a website like VRBO, HomeAway, Tripadvisor, or Airbnb? Probably. If you read this HomeAway/Expedia investor transcript of an interview including Brian Sharples, after the merger was announced, it’s clear that HomeAway wants to make more revenue per listing, whether it’s from the guest, the property owner/manager, or both. Only time will tell whether rising fees will provide more value than the other alternatives out there for Property Managers.
Strategically, it’s always better to not depend on third parties. Know your guests. Cherish them. Keep them coming back. Boost your marketing to your current customers, and reach out to their friends. With more repeat business, you have fewer spots to fill with new reservations.
Don’t forget we can help! Contact us today to let us help you with your online marketing efforts.