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The recent growth of the vacation rental industry is perhaps most evident in Airbnb’s success. The company’s 2015 revenue of $900 million – up from $250 million in 2013 – simply can’t be matched by major hotel chains. In June 2016, Airbnb raised $1 billion in debt facility, on top of its latest funding round of $2.39 billion from June 2015. It’s easy to see how the shared rental company is poised to dominate the lucrative lodging market.
Airbnb, however, was not the first player in the game and their success will not go unchallenged by their competitors. At Pillow, we believe it’s important to be familiar with the various options for renting a property.
In 2015, when Expedia announced intentions to buy HomeAway for a whopping $3.9 billion, they clearly signaled their plans to become a major player in the vacation rental industry. While HomeAway is similar to Airbnb, homes listed with HomeAway are usually professionally managed properties or long-term, second home rentals. Furthermore, HomeAway’s focus is on properties mainly in resort areas – rather than traditional residential neighborhoods. This is, however, changing as HomeAway increasingly begins to move into urban areas.
Airbnb and HomeAway vary in their platform fees. HomeAway, effective July 11, 2016, will offer one annual subscription fee of $349 for listings that use online booking. They also have a guest booking fee which was implemented earlier this year, of between 4-9% of the rental cost of the property. Airbnb facilitates payment from the guest in the form of a guest booking fee, and doesn’t charge subscription or listing fees to the host; instead, they charge the homeowner a host per-reservation service fee (usually 3% of the transaction).
TripAdvisor, popular for its trusted peer reviews and user-generated content, has become one of the world’s largest travel sites. As of June 2016, rumors are heating up about a potential acquisition by The Priceline Group. The company offers homeowners multiple site choices for listing their vacation rentals. Most notable within the U.S. is Flipkey – a pay-per-booking platform. In an attempt to remain competitive with Airbnb, Flipkey lowered its fee for professionally managed properties to match that of individually hosted rentals. Guests are charged a fee ranging from 5% to 15%.
Villas.com is Booking.com’s designated site for vacation rentals and offers guests a multitude of rentals to choose from. Homeowners get free advertising with one of the world’s most recognizable travel brands, booking.com, and their commission fee for bookings is similar to that of HomeAway’s, but is slightly higher at 15%. Villas.com also focuses on providing a seamless experience so travelers can search, book and pay for their stay in a vacation rental within minutes. This is accomplished through instant booking and confirmation, making reservations easy for both guests and homeowners.
Airbnb may dominate as the household name and poster child for the industry, but they have competition, and that’s good news for the homeowner. In the end, you win because it’s now possible to list a room, apartment, condo, or house on multiple sites simultaneously, via rental search engines like Tripping.com, for example. Airbnb competitors just mean more exposure and ultimately more bookings for your property.
At Pillow, we help you make the most of these exciting opportunities. We’ll list your short term rental across all major platforms and make sure your listing has the pictures and descriptions it needs to succeed. You’ll maximize earnings from your rental plus enjoy a hassle-free experience as we communicate with guests, clean properties and facilitate other necessary support like key exchange and maintenance.
By: Todd Conway
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