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Industry News for Vacation Rental Managers

Expedia CEO Talks Vrbo: We ‘Removed Vrbo from Google’s Vacation Rental Meta Product’

Expedia CEO Talks Vrbo: We ‘Removed Vrbo from Google’s Vacation Rental Meta Product’
mm
Amy Hinote
February 11, 2021

During today’s Expedia Group earnings call, CEO Peter Kern and CFO Eric Hart told its investors that Vrbo provided a bright spot for the company during COVID-19 as the whole-home vacation rental market has been attractive, family travel has been attractive, and North American travel has been stronger than in other geographies.

In contrast to past earnings calls, the bulk of today’s conversation focused on Vrbo and the alternative accommodations sector. Here are some takeaways for vacation rental professionals. 

 

Vrbo’s Marketing Strategy

With the strength of the alternative accommodations sector over the last year, Kern shared that Expedia had bumped up performance marketing spend for Vrbo in Q4, but that it had pulled Vrbo’s inventory from Google’s Vacation Rental meta platform.

“In the fourth quarter, we were investing more heavily in marketing,” Kern said. “This was intended to get ahead of what we thought would be the coming demand from the vaccine rollouts, but it was largely focused on the upper-funnel brand marketing side of Vrbo where we knew there was a lot of momentum.”

Kern continued, “We are using this moment to try to drive as much brand recognition and long-term value into the brand over time. So we pushed into Vrbo on the performance marketing side, which we view as more of a quick-torch muscle. We continue to be relatively conservative.”

Vrbo No longer listing on Google’s Vacation Rental meta Platform

However, Kern noted that performance marketing has a downside during volatile periods.

“Again, we saw lots of closures happen across the globe. Those closures drive massive cancellation spikes, and they can make performance marketing very unattractive very quickly when it goes the wrong way. So we’ve been relatively conservative,” Kern explained. “In that vein, we’ve actually removed Vrbo from Google’s Vacation Rental meta product.”

“Again our focus is, as much as possible, on driving direct traffic, driving incremental profitability from all our performance marketing, and as we see opportunity to remove unprofitable activities, we do that. And as we right back into a more normal market we think we’ll be able to drive more into the upper funnel, more direct traffic, and be much more calculated in performance marketing.”

About performance marketing, Kern provided more insight into its strategy: “We’re very sharp minded about it in the sense that we’re happy to invest in anything that drives incremental profitability, good revenue, and good profit; and we’re not keen to continue on a path of just continuing where investment is not productive. So we didn’t find investment in the Google VR (vacation rental) product to be particularly incremental, we didn’t think the customer experience was particularly valuable, and we are in a period where we are seeing great direct traffic for Vrbo so we found more profitable ways to drive traffic.”

Airbnb pulled its listings from Google Vacation Rentals in August. Booking.com is back after delisting for a period of time. It makes sense for the top home-rental providers to shun Google to keep consumers from finding large supply listed on its meta platform. The consumer experience still has a long way to go with rate display, location pins, and nonsensical filtering options related to features and amenities. 

When asked to provide a little more insight into the decision to remove listings from, Kern said, “Google VR was not particularly significant, and we concluded that it was not additive, which is why we made the move that we made.”

 

Vrbo Starting to See Longer Booking Windows for Summer Stays

Expedia attributes January’s uptick in performance to domestic North American travel and to longer booking windows at Vrbo. 

“The summer is a strong opportunity for the Vrbo use case, and we’re seeing people lean into that as the year opens up,” Kern said. “I don’t think we’ll breakout exactly how good it was, but Vrbo has been strong.”

CFO Eric Hart expounded on the trend they are seeing with longer booking windows.

“Historically, during COVID, we saw a shortening of booking windows, and we continue to see that on the conventional lodging or on the hotel side of the business,” Hart said. “But what we’ve seen is Vrbo [booking window] elongate again and look much more like we would have expected to see in any other year—which goes back to the summer bookings that Peter is mentioning.

Hart added, “We know there is pent-up demand, and people wanting to travel, and people have confidence that they are going to be able to travel—at least domestically, using the US as an example—so they are starting to book for the summer months now.”

 

Expedia Group will not break out Vrbo Separately

With Airbnb’s recent IPO, analysts were hoping Expedia would decide to break out Vrbo’s financial performance to provide more insight into how the businesses compare. It’s not going to happen.

“No we don’t intent to break it out . . . because we believe it’s one business. We view this as just another product that the traveler will want,” Kern said. “Obviously, it’s having a great moment, and we’re glad that we own it, and we believe we can ride some of the success of travelers being exposed to the product type. But we view it collectively. We view it as one business that we’re driving, whatever the best outcome for the consumer is, and driving that outcome across all lines of business. We think the separation has been artificial, and we’re not planning to report on it that way in the future.”

 

Getting Alternative Accommodations Inventory on Brand Expedia

Since Expedia acquired Vrbo/HomeAway, we’ve heard several CEOs talk about integrating whole-home rentals onto the OTA sites, and it’s a little surprising that it still hasn’t happened.

“We’ve been saying that for a long time, but we are now highly focused on doing it,” Kern said. “It’s not ready to roll yet. We do do it, but the consumer experience is not yet where we want it, but we are highly focused on driving that in the future and that will be the way we attack markets where we don’t have an exisiting Vrbo or other alternative accommodations brand.”

Kern also discussed how to present whole-home inventory alongside hotel inventory in an attractive way and so that the consumer understands the difference. 

“We still have work to do to make sure it’s a good experience.”

It sounds like 2021 will be the year during which intent becomes actual strategy. 

 

We continue to expect a bumpy ride

“We continue to hope and expect the vaccine rollout to drive consumer confidence and drive things forward, but we certainly are not trying to predict what consumer sentiment will be as the virus changes over the ensuing months,” Peter Kern added.

“We continue to expect a bumpy ride.”

Related Itemsalternative accommodationsEric Hartexpedia groupFeaturedgooglemarketingperformancePeter Kernvacation rentalVRBO
View Comments (2)

2 Comments

  1. mightymouse says:
    June 19, 2023 at 6:51 pm

    SHORT EXPE. VRBO is going under, from what I can see–IMHO.
    Multi-property owners are running for other vendors. The conflict of interest between Expedia and VRBO is causing VRBO to become nothing more than a blood sucker of it’s members to promote the hotel/motel industry that is Expedia’s bread and butter.
    But the stock is crashing. I’m shorting EXPE

    Reply
  2. Jason Sprenkle says:
    February 16, 2021 at 2:06 pm

    Great info as always! Thanks for sharing, Amy.

    Reply

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Industry News for Vacation Rental Managers
February 11, 2021
mm
Amy Hinote

Related Itemsalternative accommodationsEric Hartexpedia groupFeaturedgooglemarketingperformancePeter Kernvacation rentalVRBO

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