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Hoping for a slice of the multi-billion-dollar industry that’s revolutionized holiday accommodation, Expedia acquired vacation rental veteran, HomeAway, for $3.9 billion before the close of 2015. HomeAway – now equipped with Expedia’s resources and support – has big plans for the future. The first significant change since the takeover? A new guest service fee that comes nearly three years after the company claimed charging travelers would be, “fundamentally wrong.”
HomeAway’s new guest service fee, which rolled out in February, is charged to the traveler and calculated on a scale of four to nine percent of the rental cost of a property, excluding a deposit and taxes. The company says the charge will cover the cost of introducing new features – such as enhanced fraud prevention – and marketing endeavors, something that will benefit both guests and hosts. Travelers will pay the new fee directly online, so hosts won’t be responsible for collecting any money from guests or remitting payment to HomeAway.
HomeAway’s new guest fee was met with some controversy, with hosts complaining about the additional cost, which, they claim, could impact their bottom line. The Detroit Free Press reported hosts in Michigan have noticed a downturn in renter requests since HomeAway implemented the charge; others have flooded VRBO’s Consumer Affairs page with gripes about the changes. However, when testing out the service cost in 2015, HomeAway expected the fee to average at around six percent for most renters, lower than what rival Airbnb charges its users.
The new guest booking fee is the first in a series of HomeAway changes that will come into effect in the future. Mark Okerstrom, Expedia’s CFO, told investors on March 16 that the company’s transition phase would take a few years. HomeAway will increase its take rate, which is currently at three to four percent, bringing it in-line with services such as Airbnb and Booking.com, who charge 13 and 15 percent respectively. The brand will also make the majority of short term rentals bookable online, offering guests more choice.
Since being acquired by Expedia, HomeAway can now draw from the resources of its parent brand, a company that yielded a whopping $6.67 billion in global revenue in 2015. Expedia will list vacation rentals on its main site, exposing properties to a huge audience, some of whom have never stayed in a rental before. According to WhereTraveler, the HomeAway-Expedia partnership could overtake Booking.com as the world’s largest lodging seller.
Expedia says that its HomeAway takeover will provide “robust experiences” for travelers and homeowners around the world.
While its new service fee might take some travelers a while to get used to, listing a rental on the new-and-improved platform could generate bigger bookings for hosts and more choice for guests.
By Michelle Giuliano
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