This week Expedia-owned HomeAway announced recent changes to its revenue model for vacation rental managers. The new pricing and fee structure includes a 25 percent increase in the cost of listing subscriptions along with a new fee assessment for property management companies using “integrated software” systems.
In an email to vacation rental managers, HomeAway informed suppliers it is increasing subscription fees from $399 to $499 per listing. In addition to the pricing increase, for vacation rental managers using “integrated software” platforms, HomeAway will invoice an additional 10 percent fee for direct bookings made that HomeAway can attribute back to inquiries on their websites in a process being referred to by property managers as “match-back.” Read the entire email here.
According to multiple vacation rental managers who are using software integrations, HomeAway will examine a vacation rental management company’s direct bookings, “match” email addresses and inquiries conducted on HomeAway’s sites “back” to direct bookings, and will invoice property management companies a fee which “will amount to 10% of the pre-tax total booking fee for direct reservations.”
Update: HomeAway’s Jeff Hurst discusses off-platform booking attribution
The policy is based on an assumption by HomeAway that any revenue derived from a guest who booked directly with a vacation rental company—and who had previously inquired on a HomeAway site—should be attributed to HomeAway, and HomeAway is entitled to ten percent of that revenue.
The changes will be implemented “for all new subscriptions, and for all listings with an annual subscription term that is set to renew on or after March 15, 2018…Renewals of currently-active subscriptions that are due to expire before March 15, 2018 will not be subject to off-platform booking fees until the end of their one-year renewal term.”
The news sent vacation rental managers reeling.
One vacation rental manager on the East Coast tried to get more answers from HomeAway. “When the email came out this week I asked Homeaway for a preview of the new terms,” he said. “I received a response that they weren’t available yet. Honestly, no surprise there, but it would be nice to know the rules of the game in order to determine how we fit into this new model.”
Another manager in Florida said, “Imagine if Expedia charged Hilton ten percent for all direct bookings in which a shopper also did a search on Expedia for the same dates!”
“These changes are a deal breaker for us,” wrote a California-based vacation rental manager. “We will no longer be renewing or adding any new subscriptions and will allow all current subscriptions to expire. The changes seem like a desperate attempt to ‘skin’ the sheep (operators) rather than sheer the sheep in the face of either mounting competition or a flawed business model.”
Expedia’s Money Grab Since Purchasing HomeAway
Since Expedia purchased HomeAway in late 2015, the company has been aggressive in seeking to further monetize the HomeAway family of website marketplaces for vacation rentals.
On the same day that Expedia purchased HomeAway for $3.9 billion, it introduced a new fee for travelers that, according to then CEO Brian Sharples, “is expected to add an average of roughly six percent to most transactions that run through its online shopping cart.”
Since then, the HomeAway has made significant changes, including inching up and testing guest fees, requiring online booking on the platform, eliminating the ability for owners/managers to communicate with shoppers outside the HomeAway website platform, removing vacation rental brands, phone numbers, and external links from listings, adding a comparative pricing tool and changing lodging rate policies for software users, rewarding “offer strength,” changing the owner portal with direct owner communications, taking over the branding of PM guest apps, adding a “Premier Partner” program complete with a pledge to keep bookings on the HomeAway sites, and creating a search algorithm that rewards compliance of its policies.
As a result, while HomeAway is showing double digit YOY gains that are significantly contributing to Expedia’s wellness, suppliers are questioning whether or not the company’s growth pace is sustainable and are seeking out alternatives to reduce dependence on HomeAway.
Below is a hypothetical example of how HomeAway’s pricing increase and new fees might affect a vacation rental management company with 250 homes under management and an average rental revenue per home of $38,000:
The data in the chart is based on generalized feedback from property management companies, not data provided by HomeAway.
In this example, under the new revenue model HomeAway would benefit from $718,750 in annual revenue from an mid-sized vacation rental management company using its software tools.
A number of property managers have recently distanced themselves from HomeAway in an attempt to regain independence from the Expedia-owned marketing channel. In a recent panel discussion at the VRM event in Wilmington, NC, leaders from several large vacation rental companies discussed their decreasing reliance on HomeAway’s websites for bookings. One CEO told the audience that he had pulled all of his listings off of HomeAway’s channels and saw a three percent increase in overall revenue. Of the twenty-two companies in attendance, only a handful still use HomeAway for bookings.
As a result of HomeAway’s changes since Expedia’s purchase of the company, several online forums have sprouted, including the Facebook group “Say No to VRBO Service Fee” with over 4,500 members who regularly discuss ways to decrease reliance on HomeAway’s family of websites.
Update: HomeAway sent the following for clarification:
“We are charging 10% for bookings that originated with a booking request or inquiry that the traveler sent through HomeAway and that then convert into a booking. We are not charging a fee on bookings that are truly direct through the PM and not tied to any prior HomeAway booking request or inquiry.”
I am not a property manager but I am a vacation home owner who used to love the benefits of listing on VRBO. Of course that is no longer the case. After reading this article and all of the comments I am left shaking my head and wondering how can this be legal? How can HA access a 10% fee if a traveler found a property on the HA website but decided to book directly with the property? If I find a dress at Nordstrom and then go to Neiman Marcus and see the same dress and buy it at Neimans, Nordstrom doesn’t get to claim 10% of Neiman’s profit on my purchase. I am angered and outraged by how greedy Expedia has become; surly a class action law suit is on the horizon. Property managers and owners must unite and bring forth change.
For many UK holiday home owners and even hoteliers, acquisition of direct bookings and business and marketing strategy in general are a massive afterthought. OTAs are used as a service with little consideration of the financial implications.They are businesses and therefore will be run for profit. Expedia may be sucking the life out of HA but owners are attached to the brand and have not made contingencies. There is also a heavy reliance on third party software for channel management and bookings also. A squeeze in the marketplace may be the wake up we all need.
I stopped working with these jerks when they tried to take the money management away from me with their collection process giving them all of the float and then adding insult to injury by not supporting me in any charge back situation because they had all of the banking information from their client. They wanted the cash flow but not the responsibility of it. That’s a loose loose situation.
As a customer “RENTER “ I am disgusted. ENRAGED a more precise word! All I want to do is book 1 of our 2 annual Vacations. This is the SECOND Time in Less Than TWO MONTHS…Yes less than months that I am being put through ….§~#@ trying to book a place to stay via VRBO.
HELLO VRBO I am the CUSTOMER. Dah yah member dat meaning of dah WORD!
Calling all professional managers with 20 or more units! We are creating a private LinkedIn group for our industry to discuss these sorts of changes candidly. We need to organize to effect real change, and this is the first step. Please join the group here: https://www.linkedin.com/groups/8637987 (Vacation Rental Managers – United Professionals).
This group is currently limited to professional managers with 20 or more properties. No vendors, listing sites, or associates permitted.
With respect sir, you are missing the point. This is another way that Expedia is trying to manage and control your business. Booking fees, hiding guest information, rising subscription fees, suggesting that they deserve any fees via guests renting outside their system, etc. etc…. come on. The next step is having homeowners sign contracts requiring them to list only with them or not at all. They are already forcing the financial transactions through their site. Please spare us the “explanations”. If they are not able to implement this now, they will soon be able to. Look at the big picture. They want to use their leverage (i.e. placement of listings) to control us. Wake up. If we take our homes away from them, we gain control and leverage. Dump them. Don’t be an apologist. That just makes you complicit.
I hope they enjoy this heyday as when it’s all over, they’re all going straight to Hell. Unconscionable group of greedy, dare I say, human beings? Awful.
Letting my 2 subscriptions on HOME AWAY expire when due for renewal. Tired of them getting between my guests and I.
Also I’ve done the same.
I have 7 houses, now from me they don’t receive nothing.
I stopped using VRBO and Homeaway once they decided to block the clients info and charge clients a booking fee. It is pathetic how greedy they got .
Also, they did not reply to all the calls or emails and it is hard to deal with .
After 30 years iin business, I can’t deal with all this greed and negligence.
Full disclosure, my name is Carlos Corzo and I am the CEO of Streamline Vacation Rental Software. I wanted to shed some light on the subject from the point of view of an integrated Homeaway partner.
When it comes to Streamline and our integration with Homeaway, here are some facts you will find interesting:
* If you are not integrated with Homeaway at all, we don’t share individual reservation or unit information with Homeaway.
* If you are integrated but you do not have a unit turned on to be shared with Homeaway, the information on that unit is not shared with Homeaway. You MUST have a unit turned on and mapped to Homeaway before any individual unit data or reservation information will be shared with Homeaway.
* Streamline only updates Homeaway on bookings made through their platform. Reservation information for any bookings/inquiries/leads outside of a Homeaway defined source is NOT provided to Homeaway. The only information they can see is if an individual night in a unit is available or not. Homeaway only sees a 1 or 0 for availability per day. They have even less insight than someone going to the property manager’s website to look at availability calendars.
I can’t attest for how Homeaway utilizes the data in their software. I also don’t know the protocols used by other integrated property management software systems. The only thing I know is how Streamline handles the sharing of data with Homeaway.
There is a fear that Homeaway will market to your personal guests, outside of the bookings from Homeaway. Based on how we share data with them today, this would be impossible.
There is the fear that they will be charged 10% for an offline booking, just because an initial inquiry came through Homeaway. If the lead came in through Homeaway but ended up booking through another platform, they don’t have visibility into these details. Homeaway relies a lot on an honor system. The more bookings you make through their platform (online or offline), the better your ranking will be. They feel it is to your advantage to report offline bookings, pay 10% and get higher ranking.
Something I don’t think many people know about the new pricing structure is that if you have a subscription and you send an offline inquiry to book and pay on Homeaway, you would NOT pay this 10% additional fee.
I hope this helps.
It is my understanding that through the new changes to the API, Homeaway is passing us dates and email addresses to match with reservations in our system. (We are integrated through our custom software). We aren’t sharing all of our reservations booked through sources outside of Homeaway, but the API is passing specific dates and emails for this new matching. I didn’t think this was optional. Our developer is still working through the changes, but just wanted to get your feedback on whether or not we have the option to opt out of sharing that information with them? I’m guessing this would lead to much lower placement on the site?
I am considering entering the VR industry with my property – can people tell me what the other marketplaces charge eg airbnb and priceline compared to vrbo? Thanks
“Of the twenty-two companies in attendance, only a handful still use HomeAway for bookings.”
I would think the ppl attending the seminar in NC were predominantly from the east coast. Compared to those of us in ski markets, the east coast has a more robust business model. They do not have to work with third party booking agencies (Booking.com, HomeAway/VRBO, Airbnb, etc). I would love to not have to rely on third parties for some of our bookings, but the occupancy levels require it.
Airbnb is close to surpassing homeaway and our Beach market which rents 46 out of 52 weeks a year
This just gets worse. So off platform means that we’ll get a 10% booking fee if the lead originated from HomeAway. Sooooooo if they ultimately book through Flipkey then we’ll be paying a 10% fee to flipkey PLUS 10% to HomeAway. 20% total. Imagine if they go through booking.com at 18% – 28%. Add onto that a channel manager like RedAwning booking through booking.com then you have 18% booking, 9% RedAwning and 10% HomeAway – 37% total… shocking. Plus homeowners don’t get it, they’re not going to swallow it. PM’s can’t swallow it, so ultimately here at The VIR Group, we’ll have to start pushing those fees onto guests.
As a property manager with 100+ homes, this forces me to pull listings from HomeAway and market our listings via other avenues. I contacted my HomeAway account rep as soon as I read the notice, and he confirmed they are tracking inquiries via email addresses – so there is no doubt about that question. When I asked him how HomeAway can make the assumption that were entitled to 10% from a booking when someone shopped on their site, he replied because of the email match. Nevermind if that person shopped on multiple websites, then booked with us, they are claiming entitlement based off of shopping history, but not an actual purchase. I don’t know how this could ever hold up as legit. He then, proceeded while I was on the phone to scan our Escapia data to let me know that 30% of the bookings we processed in 2017 they would claim as entitled to the 10% in 2018 – big red flag on this – did we give HomeAway access to use our data for their pockets..if so, goodbye
That 30% figure is outrageous! We are not renewing any of our subscriptions and we are also getting rid of Escapia and moving over to Ciirus. We haven’t made the switch yet, still in the process of setting everything up, but the value is much better than Escapia.
This is very very disturbing……you’re cooked…..travellers shop many many sites and become numb from the variety by price, location, features, acclimations, visual presentation etc. and in most cases they cannot remember Hilton from Smilton or Waldorf from Motel 20. But you get whacked for their shopping habits?
Looks like legal challenges about who is the “procuring cause” will slap this egregious reach for your purse-
Expedia lost their shirt on their first VR acquisition, and if they get too greedy they will destroy the VRBO brand. VRBO succeeded because they understood what VR owners and renters wanted – the ability to communicate directly with each other to better understand the details of the property and activities in the area. Expedia is trying to control both of their customers and ultimately will alienate many. I allowed Expedia to generate 10’s of thousands of $$ on my properties last year with their service fee. My attitude was that the renters pay, so why should I care? I don’t use an agency so this most recent change wont affect me, but it is clear that I need to move to another platform ASAP before they invent another revenue stream for themselves that will impact me.
There is a video of a speech that Brian gave (former CEO of VRBO) that they would never interfere with the relationship between the property owner and the renter. That all changed with the Expedia acquisition. Obviously, it was beyond his control. I don’t blame him for taking his billions but it is unfortunate that Expedia is alienating their customers.
What is the best fee only VR software today? I guess I’ll check the Facebook page and jump ship during the holidays.
Thx for a wonderful snapshot that puts today’s news in historical context! As the publisher of an “alternative” VR site – news of increasing fees and strong-arm strategies mean more and more VR owners and managers are seeking to diversify their marketing and retake control of core business functions. While it might be a bumpy road ahead … this volatility is producing some exciting changes in how and where people search for and find VRs.
Hello Blog, I understand that HomeAway is going to charge 10% commission on all bookings, that can be attributed to a search on their platform. I also understand that this only works with vacation rental managers using HomeAway‘s own software. However, why under this circumstance would managers use that software and not an independent product instead, if this could save them the 10% additional commission?
I would think it applied anyone with an integration to HA. Which Im assuming is most PMS. I dont currently use Escapia, but I am integrated thru my PMS and they can see all bookings attributed to HA, and perhaps can crawl further to match emails (?)