I wrote this blog in June 2010 while working for Instant Software. The VRMA had recently sent out an RFP and announced its intention to go forward with an initiative to build a GDS for professionally managed vacation rentals. -Amy Hinote

 

The “VRMA Switch”

 

The Vacation Rental Managers Association (VRMA) recently announced a plan to create a “switch,” which they define as “a centralized location for vacation rental managers that would allow managers to easily–and at a low cost–select distribution channels, allow distribution channels to access vacation rental inventory in a well-structured format, create a revenue stream for the switch builder and software companies that participate, and help VRMA fund industry promotion efforts.”

 

For our clients who are members of VRMA: Instant Software (ISI) wants to address some of your questions and concerns about this undertaking.

For our clients who are not members of VRMA: Below is an initiative being implemented by the VRMA. If you have any further questions, we will be happy to try to answer those for you as well.

Because we want you to have the best and most relevant information about industry news and the “VRMA Switch,” the VRMA information below was taken from The Switch FAQ from the VRMA website. After each question, you will see the VRMA response followed by Instant Software’s (ISI) comments.

Note: One of the phrases you will see mentioned often is distribution channels. Distribution channels are websites which distribute your properties to Web customers (i.e. HomeAway, FlipKey, BidAVilla, etc.).

 

First, what exactly is the “VRMA Switch”?

VRMA says, “The switch is a tool that will allow Vacation Rental Managers (VRMs) to distribute inventory data to a multitude of resources via one channel. Rather than having to upload/update data on multiple sites, the VRM will update data via the switch and all distribution channels will receive the updates simultaneously.”

 

ISI: The “VRMA Switch,” hypothetically, will work for other VRMA members the same way ISILink currently works for you as an Instant Software client:

Many of the Property Management Companies (PMC) that are not using an Instant Software solution do not currently have a way to send their data to distribution channels (i.e.HomeAway, FlipKey, etc.) without manually entering and updating property information and availability on these sites. And they are not able to compete with your properties on these distribution sites without spending extensive time and energy.

 

Why do we need a “VRMA Switch”?

VRMA says, “The switch will allow access to distribution for all VRMA members regardless of other affiliations. The switch will allow property management companies to maintain their unique company brand. The switch will also create stronger trust relationships with consumers especially in developing trust in online bookings because the information provided on all distribution channels will be consistent and current.”

 

ISI: The short answer to this question is –as an ISI client –you don’t.You already have a “switch” in ISILink.

The “VRMA Switch” is not a distribution channel in itself. If they can build it properly, it is just a middle man that will centralize your data and carry it to the distribution channels you select, which is exactly what ISILink does for you. The “VRMA Switch” is much more beneficial for PMCs who are also VRMA members who also do not currently have an easy way to distribute their properties to the Web. That is not the case for an ISI client.

In addition, it is difficult to normalize and centralize data while differentiating brands. It appears that maintaining your “unique company brand” means having a logo or company name on your distribution channel listings, which many distribution channels currently offer. All offer the ability to put your company name in your descriptions.

 

Who will have access to my data if my company uses the “VRMA Switch”?

 

VRMA says, “The switch will permit selective control of distribution by individual, VRMA member, management companies. If the switch is owned, developed and maintained by VRMA it will eliminate the possibility of outside companies dictating how property management company data can and will be used.”

 

ISI: Unfortunately, eliminating data flow while enabling real-time, online booking is not possible. If your company utilizes the “VRMA Switch” VRMA will have access to your data, the Switch-building company will have access to your data, and any distribution channel you select will have access to segments of your data. It will work in a very similar way to ISILink. Please read What is ISILink? to see how ISI protects your data.

 

Who will pay for the switch?

 

VRMA says, “The provider that is selected to build the switch will be responsible for the cost of building and maintaining the switch ongoing. The provider will receive a contract that will entitle them to transactional fees for as long as the switch exists.”

 

ISI: To summarize, you will be billed per booking. You will also be billed by the distribution channel per your agreement with them.

 

Why does VRMA want to own & control the switch and what does this protect vacation rental managers from?

VRMA says, “To make sure that the switch is not used to bottleneck distribution and remove the rules that keep the managers unique company brand as part of the transaction. To ensure free market distribution.”

 

ISI: At Instant Software, we are committed to partnering with you –our clients. Your success is quite literally our success. We have heard it said in our industry that we “hoard” your data, which we find to be a compliment. We like to think of it as protecting your data. We do not allow everyone to have access to your data for many reasons (i.e. protecting your owners, customers, vendors, etc.). We also do not sell your data. In the entire existence as a company, ISI has never been accused of leaking data. We understand the magnitude of the information entrusted to us and take it very seriously. That is why we invest so heavily in state-of-the-art data centers, multiple redundancy options and high-level security.

 

We also have spent millions in developing our software and do not allow companies, whom we believe to have the malicious intent of backwards engineering our proprietary solutions, to have access to our products or your data.

 

Note: Free market is an interesting phrase to use here. By nature a non-profit, membership- only “VRMA Switch” discourages competition among your software companies and your distribution partners. However, by making it easier for your competitors to put their properties on the Web, they are encouraging more competition for your company.

 

VRMA only represents 10% of the industry. What about the rest?

VRMA says, “The VRMA represents approximately 150,000 properties which are in most cases bookable online. While the number of companies may only represent up to 10%, the number of properties represented is far greater due to the average size of VRMA member companies. It is also the hope of the VRMA board that the switch gives those managers who do not currently participate even more reason to do so.

 

ISI: Even with $0 cost and a 3-click turn-on process, approximately half of ISI customers currently take advantage of ISILink. From our experience having created a similar switch, VRMA is unlikely to have 100% buy-in for the “VRMA Switch” by its members for three reasons: many VRMA members already have an effective Web distribution strategy in place, some members simply don’t distribute their properties through large-scale distribution sites and would gain no advantage from the “VRMA Switch,” and many companies are very concerned about protecting their data and would be uneasy with this distribution format.

 

What is VRMA’s view on creating/eliminating a “choke-point” in the industry?

 

VRMA says, “The VRMA is for open distribution as long as the managers’ company brand stays intact. The VRMA believes a transactional model with little or no upfront cost to managers or channels will facilitate this open distribution and eliminate choke points.”

 

ISI: VRMA, in these FAQs, refers to choke-points and bottlenecking distribution. Besides the fact that some software companies do not have the technology to centralize data for the distribution channels, we do not see a choke point or any bottlenecking of distribution to distribution channels.

 

As a VRM, how easy is it to sign up, upload my properties and get started?

 

VRMA says, “If the software company that the manager uses integrates with the switch it will be a very simple interface. If not, a manual upload or alternative XML feed (textual data format) will have to be used which will make it more cumbersome. It is the hope of the VRMA that all software providers will participate in the switch. The switch will compensate the software providers on a transactional basis which will minimize the cost to distribution channels to participate which will open up distribution.”

 

ISI: While we think it’s generous of VRMA to pay your software company for use of your data, at this point, it is premature to position ourselves on integration possibilities.

 

How will the property management software companies respond?

VRMA says, “As we have spoken to them through the process, we feel that many will be excited about it and some will not be. There has been some concern over the ownership of the switch as certain for profit entities feel it should reside with them.”

 

ISI: We are not bidding for the creation and development of the “VRMA Switch,” since we have already created one for our clients. Therefore, we have no competitive interest in having the “VRMA Switch” reside with us.

 

Will the Switch facilitate other data streams from PMS, such as; owner info, maintenance, housekeeping, accounting, analytics, which will allow for other vendors to connect and build applications to better improve company operations?

 

VRMA says, “The primary purpose of the switch is to meet the distribution needs of the industry. The Switch should be developed in a way that will allow other data to be streamed in the future, however this is not a requirement for launch.”

 

ISI: As your software company, we are accountable to you -our client -for the partnerships we create and maintain. Accountability is a critical factor in data integration. We highly recommend that VRMA’s PMCs strongly consider accountability in any data integration their company accepts.

 

 

While we do not yet have enough details to thoroughly endorse the “VRMA Switch” to our clients, we want to share with you the preliminary information we have gathered in the early stages of, what is sure to be, an interesting discussion over the coming months. Please feel free to contact us with any of your questions or comments.