If you are in the travel industry you'd not actually think this news is a suprise.
The timing is also 3 days after the close of the VRMA (a large travel exhibition for vacation rental managers this year held in New Orleans)
I had the severe misfortune of going to last years VRMA. I travelled over from England... anyway, the VRMA (which is suposed to be a somewhat neutral organization looking after managers best interests) decided in their infinite wisdom to give the spotlight to HomeAway's COO (Brent) and CEO (Brian).
The keynotes speech shocked everyone!.. Essentially, Brian Sharples turned an event that was suposed to be generic advice for the betterment of the entire industry into a marketing pitch about HomeAway and it's vision for the future. This wasn't abstract advice.. this was specific details about how managers will use HomeAway in the future. This was the KEYNOTE of an event that 800 managers paid several thousand dollars to attend.
Anyway, he told all managers that within 24 months they will be on "Instant Book". This is a shock because the transition to Instant Book signalled that they are trying to phase out the listing model.. (The listing model has always been in favour of managers because it meant that they can handle their own enquiries and bookings/payments). Pushing people down the instant book route has always visibly been because they need the numbers to be attractive to Expedia and because after increasing the listing modules from $300 to over $1000 per listing (this is for platinum) they need more ways to increase shareholder value.
PS. On return back to England, the forums and community boards were in uproar about this. Our company paid to get the recordings of the event.. guess which speach out of 48 different lectures and presentations were missing... the keynote by Brian Sharples.
It's actually obscene that we were paying over $100k per year to HomeAway for platinum listings and then users on a basic listing were being ranked higher than us because they had "Book in Now" enabled on their properties. This is all because transparently, they need the bookings to be processed through their system to prove they are a valuable purchase for Expedia. (It's been no secret that everyone has known it's going to be Expedia buying HA).
Further proof/conjecture(?), is that for a long time they stopped providing us emails of enquiries made for our properties through their system. This is as they assure the community because of "phising" fears etc...
I've long said, the best thing that can happen to the industry is for Expedia to buy HomeAway. I think this is going to be a really good thing. Expedia is going to force book it now, which isn't practical for managers who can't handle the instant bookings (due to real time availability and calendars issues).
Bit of a rant. I've never hidden my criticism of HomeAway. They've always been the gorilla in the room who force you to play by their rules and demand control of the entire booking process. (Keep in mind that they are long before AirBnb. They might not be as glamourous, but HomeAway and VRBO have done amazing things for the short term rental travel industry.... which can't be forgotten.)
> It's actually obscene that we were paying over $100k per year to HomeAway for platinum listings and then users on a basic listing were being ranked higher than us because they had "Book in Now" enabled on their properties. This is all because transparently, they need the bookings to be processed through their system to prove they are a valuable purchase for Expedia. (It's been no secret that everyone has known it's going to be Expedia buying HA).
Having used HomeAway / VRBO before, this seems like the sensible approach. Instant booking provides a much better experience for the user - I don't want to have to email a bunch of places to determine which are available. They definitely should be ranking these higher than other listings.
I can see how as a property owner paying for a listing but handling bookings yourself would be appealing.
As a travel-consumer, a more integrated (find the property, get accurate availability and pricing immediately and book it now) experience is more appealing, and I wondered why so many properties went with HomeAway and VRBO instead of AirBnB.
So HomeAway has a lot of professional managers. These are managing companies that handle guest arrivals, cleaning etc on behalf of a home owner.
My partner in my startup also runs an agency/manager business with about 600 properties. (Some exclusive, some non-exclusive). I probably should have added a disclaimer on my initial post about my involvement in the industry.
Now anyway, on the exclusive properties, he controls the calendars. The company knows exactly if a property is bookable and they don't have to go to the property owners to check availability before taking a booking.
Of these 600 rentals, let's say 150 were actually marketed on HomeAway. You would pick a good spread of rentals so that you optimize your enquiries... You want as many enquiries as possible, EVEN if the properties are unavailable... This is because it wouldn't be cost effective to list everything. In one destination, he has about 90% of the entire locations rentals. Why pay for more listings when you are going to be getting any enquiry from an individual anyway. Keeping in mind these listings are anywhere from 700-1000$ per year.
The problem however, is when your 100k investment is actually used as a pivot for the company to subsidise the transition to a different business model and the inevitable buyout. HomeAway performed the biggest bait and switch in the history of marketplaces.
They decides that this listing model which previously ranked properties based on subscription level, is now going to only be part of the equation. Anyone who has been on a subscription model has seen a huge decrease in enquiries over the last year. This is because the visibility of their listings has also decreased as HomeAway push other forms of revenue ahead of them... (They already have your subscription revenue.. why bother sending guests to you when we can send them to rentals who have instant book enabled).
> Paraphrasing what the account manager told us....
"Based on our consumer feedback, we know that most of our guests want a book now experience, so if you don't have book now with instant booking enabled on your rental you won't have an optimized ranking score."
We even have PDF's that they produced to explain to people how to get the highest ranking on HomeAway. The biggest factor coming in to play was enabling instant booking.
(This means that people who aren't paying a subcription will out rank you regardless if they are even on a paid subscription level).
The other irony, is that the company that they use for their instant bookings to handle payments gives HomeAway a kickback of a percentage for providing the merchant facilies. (Plus HomeAway take a booking comission).
AirBnb is great for instant bookings and for businesses just starting out (this is because they can adapt their business to suit themarketplace). However, for managers who are established, moving to a "Instant Book" model means either increasing their rates by 12-15%, or taking more comission from the owners of the rentals.
Where-as there pay to list model didn't have these problems.
Hope that shed's some light on why AirBnb and HomeAway aren't true-rivals. Professional managers will always find it hard to use AirBnb because they won't neccessarily control the calendars and real time availability. (This is the same reason why some people refuse to use Booking.com, because of extremely burdonsome booking conditions that are enforced on them).
Secondly, as a large manager, cashflow becomes a huge issue. Marketplaces won't pay you until the guest has left. This means that you have millions of euroes/dollars/pounds locked up for 6-9 months of the year.
You're assuming it's managers as an aggregate against Expedia/HomeAway. It's not. It's AirBnB vs Expedia's HomeAway. Property managers are just fodder in the fight between booking behemoths.