What is becoming of HomeAway & VRBO?

Aug 26, 2016

Many North Carolina vacation rental owners who have traditionally listed with HomeAway and VRBO now find themselves scrambling to understand the transformation that is occurring this year. So, we though we would put it into perspective for you.

In 2015 HomeAway was bought by Expedia for $3.9 Billion. That is a lot to pay so Expedia, in an effort to recoup it's investment has implemented new fees and restrictions on HomeAway and VRBO.

Service Fee

In February 2016 HomeAway & VRBO rolled out a new service fee that they are charging to renters who book through their websites. While HomeAway / VRBO say's the fee will range between 4% and 9%, please keep in mind they calculate the fee based on the rent and any other fees you charge, so it may end up being as much as 12% of your rental rate. It is not assessed on taxes charged or security deposits. So, if your rent is $3,000 and you have another $300 in fees, the service fee will be based on $3,300.

This is a service fee they are charging the renters for using their site and they keep all the money. You get none of it. They label it simply as “service fee”. Understandably, renters are often confused, as they think the homeowner is charging the service fee, and not HomeAway / VRBO.

With the new service fee in place, many rentals listed in HomeAway / VRBO are now priced higher in total cost than rentals of competitors, as homeowners most often have priced their rentals to match those listed with with rental agencies.

Cancellation Policies

HomeAway / VRBO has also implemented limited cancellation policy options, which often do not fit your actual rental. Many vacation rentals reservations are made 6-12 months in advance. And, if someone cancels 60 days, or even 30 days from their check in date (especially if the rental period is in prime season), it is difficult, if not impossible to re-book those dates in such a short time frame. And often, you have to discount the rate to fill that vacancy, if you can fill it at all.

Online Booking

Their next move has, and continues to be, to force homeowners to use their Book It Now feature to ensure they can collect the service fees. They have been penalizing homeowners who book around their system, and have placed onerous messages throughout their websites that the only safe way to book is through their system and even dropped listings who do not use Book It now to the bottom of the heap. Now they have even been asking people to report homeowners who work around the system to save renters money by avoiding the service fee.

Put that together with their new "best match" rankings, which had expanded search to include areas sometimes hundreds of miles from your vacation rental, leaving you in a mix of hundreds, if not thousands of listings, and now you are almost invisible.

Limited Contact

Now they have begun blocking telephone numbers from some rental listings (we imagine it will soon be all listings), so the only way renters will be able to contact you is through their system. It is only a matter of time before they begin hiding renters contact information (email address, telephone number) from the homeowners until they book, leaving the only communication possible being through their system.

Commissions

While not confirmed, rumor has it that early next year all homeowners will be required to use their Book It Now feature and HomeAway & VRBO will begin taking a commission from the homeowner for each rental, anywhere from 3% to 10%, in addition to taking the service fee from renters.

What is Their End Game?

Simply put, they are planning to emulate AirBNB in every possible way. All of the changes are meant to bring them in line with the AirBNB model which, in itself is not suitable for most North Carolina vacation rental owners. Basically, we anticipate  HomeAway and VRBO will end up like this, which is what AirBNB already is:

  • No way of direct communication with potential renters, except through their system, until after they are booked.
  • Service fee to renters of 4% to 9%
  • Commission taken from owners of 3% to 10%
  • Limited cancellation policy offering renters full refunds
  • Homeowner does not receive money until guests check in

While some of this has yet to come to fruition, much of it is already being implemented, and homeowners are already feeling the pinch.