In yesterday’s meeting with investors, Expedia took time to provide an update on activities related to their recent purchase of HomeAway. Expedia CFO Mark Okerstrom described the growth opportunities for HomeAway in two pieces, secondary homes and primary homes in urban markets.
Okerstrom also laid out a two phase plan to increase revenue for HomeAway which included 1) take what HomeAway already has, turn it to be 100% online, and better monetize transactions, and 2) leverage opportunities in the urban market.
“The traveler fee has been launched in the US, early. Encouraging signs. We like what we see,” said Okerstrom.
“We have really tilted the focus of this business from being a very supplier-focused business focusing on one side of the platform, focusing on getting subscription renewals – the right thing to do at the time – to really a two-sided platform, taking this formula (that Dara described to you) of bringing online marketing, world-leading conversion platforms, utilizing test-and-learn technology and supplier facing technology and turning it into a real online business”
Okerstrom added, “We’ve taken some of the money that we’ve seen incremental from the traveler fee, and we’ve started to put that back into the business. The introduction of a ‘Book with Confidence Guarantee’ essentially says, ‘Traveler, if you book on the HomeAway platform, and you don’t like the property or you have a dispute with the owners about the damage deposit, we will take care of it for you.”
“This is a difficult transition that we are pulling off, but we are opportunistic about what we’ve seen so far.”
During the Q&A, Expedia admitted that they had seen a “tick down in conversion rates” on HomeAway.
“It is so early, and the teams are still testing various combinations of subscription rates and traveler fees, so it is too early to give a take rate. We have seen a tick down in conversion rates as you actually might expect, nothing out of the ordinary, entirely expected.”
“We feel good about what we see,” he restated.
Expedia Inc. CEO Khosrowshahi reiterated that Expedia believes it can build HomeAway into a business with $350 million in earnings before interest, taxes, depreciation and amortization (EBITDA) by 2018, up from about $120 million last year.
Im just not understanding this whole disagreement with vrbo at all. After 20 years of using VRBO, a homeowner still doesnt have a website that draws its own traffic, others feel like theyre being played, a successful listing site that draws a lot of traffic is canceled because the owner cant figure out how to promote online.
Renting properties short term is becoming more of an online business, which running a vacation home will require more skill on how to do. That is the problem. Sooner or later, owners and managers will have to realize the days of easy money eventually turns into a bubble and the real players are the ones who remain which will be those who have used listing sites like vrbo for a few years until they can be completely independent. Vrbo has been an awesome partner. They allow me to run my own business the way I like. They have never interfered with trying to control my taxes, my leads, my phone numbers or any refunds. The problem that everyone has bought into was accepting such a horrible website like airbnb which, thanks to them has had vrbo change its tune. Unless owners disengage with airbnb, these changes will continue to happen. The boys at airbnb have created putting the guests first like Sam Walton did with his customers at Walmart. And I know I don’t have to explain how vendors were put into the grinder for Walmart.
Putting the customer first works until the customer takes advantage and wants an excuse for a last minute cancellation, have parties and ruin homes. If owners disengage from a leading website, it will only be more challenging to attract traffic, emails, phone numbers etc. that can grow your following organically. The new fee allows the guests to cancel at the last minute or get a refund if they dont like your place even after countless professional photos and details. This move comes from sites like airbnb which owners and guests have all approved. As long as vrbo doesnt keep the guest phone number and email from me prior to booking, who cares. I am now accepting an alternative payment plan PLUS coming out a hero to help my guests save money on fees. Wow. What a concept. With this I’m growing my following, accepting payments, sending monthly newsletters, drawing traffic to my website and receiving texts from returning guests who have thanked me for the heads up. I’m still an online marketer with a successful online business.
Please – do me a favor and remove your listing from vrbo if you want. That will just leave me with less competition to grab the traveler, become a hero and create loyalty with them by staying in touch with them.
I completely agree. Those who see this as a negative are not looking at their business from their own perspective but someone elses. This has been a huge win for me because now that I have another way to offer how people can pay, Im also coming out like the hero. Ive been working on my own mailing list since I started – a year ago – and so far Ive already received guests returning.
It amazes me how vacation rental owners dont take advantage of improving their own businesses and instead rely so heavily on these listing sites. Who cares how they are working. As long as they share the information on people inquiring about my property, I could care less about how they make their money.