HomeAway To Stop Charging Guest Fees And Start Charging Owners Instead.
I’m sure that you’ll agree that the traveller fees have had a big impact on the vacation rental business.
It has basically raised the cost of vacations by 6 – 25 percent.
Travellers aren’t stupid and they are starting to push back against the fees and are finding ways to #bookdirect.
No-one likes paying more than they have to.
So, what’s new?
Responding to a question from analysts during the Expedia Group Q1 2018 earnings call, Expedia CEO and president Mark Okerstrom stated…
“HomeAway has operated a hybrid model (owner fees and guest fees) for some time and believes having a combination of the two puts it in a “great position” to flexibility”.
He also said that “In the near-term, a hybrid approach will remain, yet this is likely to change as the overlap of properties on different platforms increases”.
He added “I expect that the monetization will shift a little bit more to supplier pays and away from traveller pays based on what we’ve seen in other industries.”
Expedia chief financial officer Alan Pickerill said
“There is a gradual move of the business over to “pay-per-booking,” shifting away from the traditional subscription fee that was favoured by HomeAway pre-acquisition”.
“The company is in “mid-innings” in that evolution, he says, with some degree of “headwind” as a result”.
“Now it shifted from being both a volume and rate headwind to being essentially just a volume headwind and I think once we kind of fully normalize the subscription side of that business then the take rate can start to normalize.”
So, vacation rental owners can expect the long-predicted shift to a commission based model where those commissions will come from the homeowner. This is going to hurt.
Price Parity Will Come With These Changes
This is where it gets really ugly for VR owners that have taken the ‘Premier Partner Pledge”.
Previously the Homeaway group stated that they expect
“those that are premier partners that list a property on multiple websites, set their rate on HomeAway either at or below the rate on competing sites“.
They have since reworded that statement to this current one…
The pledge is a commitment to continually:
“Set and maintain fair, competitive, and consistent pricing“
but now the traveller fee comes out of your fair, competitive, and CONSISTENT price!
Putting two and two together there is only one way that this can play out.
HomeAway will insist on price parity because it can’t have it’s base prices 10 to 20 percent higher than those on Airbnb, Tripadvisor, etc.
Travellers (and metasearch) will identify the higher prices on HA and people will abandon the platform when that happens.
Owners will be forced to swallow the bitter pill of paying 10 to 20 percent in commission.
Like it or not, and let’s face it who is going to like it, that’s what’s going to happen.
Alan Egan is co-founder and head chef at Vacation Soup, a platform that helps vacation rental owners build their brand in order to help them escape the ever-rising costs of doing business with the big listing companies.
The soup is a commission-free platform where we encourage owner/guest communication throughout the entire booking process.
Find out how vacation soup works here