In HomeAway’s Q3 earnings call yesterday, CEO Brian Sharples made comments and answered questions that give some insight into HomeAway’s plans for 2015 and beyond. Here are some of Sharples’s comments which impact professional property managers.
“We’ve made it very clear recently that we are placing emphasizes on a multi-year marketing strategy that much of our efforts focused on driving demand and efficiencies that increased bookings and saved time for our owners and managers. We’re also equally committed to elevating the traveler experience on our sites.”
Driving Online Booking
“The most impactful change we can make to enhance traveler experience is to drive adoption of online booking. And so I want to make it very clear that we have set a goal and it is our intention to require the vast majority of our listings to be online bookable by the end of 2016.”
“What this means is that travelers will see an online booking button will listing, know the calendar and rates are correct and have the option to send a booking request and be confident that they will receive a prompt response. It’s important for you understand what this means for our owners and managers, first, the online booking system will accommodate both subscription and PPB as we believe this flexibility gives us the competitive advantage in the marketplace.”
“These changes over the next two years will require that owners and managers maintain their calendars publish rates that accurately reflect all fees and respond the booking request as quickly as possible and within 24-hours certainly to be competitive on our sites. All of these items are important elements of listing quality and in the shorter term will be faced into our sort algorithm which determines where listings appear with sort order.”
“…We have, if you look at our new online booking metric, taken online bookings from 5% 12 months ago was 5.4% of our customers to 32.6% one year later today. So our objective of getting that to a 100%, we are actually arguably on pace to do that. I think we’re going to bend the curve up, because of some policies decisions and other things we’re doing. But we’re giving the customers enough of heads up that I actually don’t believe, we’ll see a lot of churn and I think the other reason is that where they are customers going to go, I mean Trip now (TripAdvisor), Airbnb now the most is the competitors are online booking based. There really aren’t any major sites that deliver the kind of traffic we do that don’t have that kind of an experience.”
“Our owners have resisted online booking historically. And even two years ago, when we surveyed our owners, 90 plus percent said they had no interest in online booking. And that’s because, our owners make tons of money and they are doing it in a certain way and they are happy doing it that way. But I think traveler expectations are changing in part, because of competition.”
Responsiveness Scores Will Be Visible to Guests
“Starting in the fourth quarter, we will also make responsiveness scores visible to travelers and while we’re aware that there may be some owners and managers who initially are uncomfortable with these changes, lack of response outdated calendars and confusion over rates creates poor traveler experience and is not consistent with the experience that we want to deliver and that we believe we have to deliver going forward in the future.”
Integrated Pay per Booking Listings: Property Managers
“With the integrated property manager listings, that (conversion) has been a challenge, those are lower converting listings for whole bunch of reasons. Some of them have to do with the complexity integrations and the systems they have and the quality of data that we get. Some of them have to do with the fact that those listings are marketed in a lot of different places, some of them have to do with the fact that some of those listings aren’t as price competitive, as the ones that we have that come in through the platform. And that’s regardless of where they sit on the sites.”
“Now we are keeping those listings pretty low (in search rankings), because until we see a high conversion rates, we don’t want to replace our subscription listings with those listings. And so until that happens, once we get conversion up and some of things are working on, some of them are technology oriented, some of them are have to do with, specifically how they are marketed on the sites and then have to do with many of those IPMs. For example today, we haven’t reported over the reviews yet and once we get the reviews it should help with conversion. And so there will be a double whammy -Once we get to the place where the conversion is adequate for us, then we will be incented to move them higher and you will get a combination of both effects.”
Marketing to Millennials
“…We’re just looking at the next generation of travelers in the Millennials and people who grew up with technology. I mean, our kids grew up with cellphones in their hands and they are used to getting things done instantly online, not talking on the phone, not negotiating with people. And so, if you’re going to be a player in this business from an owner perspective or property manager, the word we’re putting out is you’re going to have to adapt over the next few years.
“We are thankfully in a position where we deliver so much revenue for our customers that I think we can now take a leadership role and say to them, we’re done trying to just convince you, we’re now going to say you’ve got to make this happen in the next couple of years.
“And we’re going to – we’ll develop tools and all these other of things to make it easy for you. But in the long run, our belief is that we will capture more business and get more travelers staying in vacation rentals versus hotels by creating that experience.”
Sticking with Subscriptions
“Now, competitively, there are still a number of differences that will exist as the market evolves. So, I think all the major competitors will have online bookable inventory.
“However, what will be different on HomeAway? Online bookable doesn’t mean we’ll get out of the subscription business. Our customers love subscriptions, they love it. The vast majority of customers don’t want to be paying commissions to somebody. So, we are going to keep to that as a differentiator in our business, no question about it.”
“We are going to be free to travelers. TripAdvisor and Airbnb have chosen to charge big fees to travelers. Well, we’re going to have a pretty sizeable marketing budget in the next few years. And we’re going to be letting everybody know, when you come to our platform and you don’t pay a fee and we think that’s a big deal, because if you look historically at the travel industry, those competitors who adopted no traveler fees first are the ones that ended up being the big winners in that business.”
“There is no doubt that we can charge higher prices, we have said that consistently. But there is a limit.
If you look at right now naturally, what’s happening in our subscription prices, I mean was up 12% year-on-year this quarter and that’s been – I mean it’s been virtually every year, been in the business it’s between 12% and 14%, compounded every single year.
So prices are going up pretty rapidly. I think they will continue to go up pretty rapidly.
Now, we have opportunities. Lot of people asks this, well, when are you going to do geographic pricing? We are not working on geographic pricing right now, that’s potentially a long-term opportunity. People ask us, well, when you’re going to raise the high-end, because the value of being a platinum subscriber in your site is really high. And the answer of that is, yep that’s a huge opportunity we have too. And we may do a little bit of that in 2015.
But as long as the pricing is going up naturally, that’s a level we can save, if we need that in the future. And we really like to be the company that continues to deliver good value. Because if we take the value away that we deliver then we’re just the same as everybody else. And so, that’s also why I say the subscription business is a huge competitive advantage for us, because once somebody is a high performing customer in one of these businesses they have a preference for that, because it’s a better value and that makes them very sticky customers for us. And I am not sure everybody quite appreciates how important that is.”