Rentals have always been significant, but have recently been playing an increasing role in the timesharing business, both as a way to fill unoccupied inventory and as a generator of timeshare sales. It is therefore important news that the world’s leading marketplace for vocational rentals, HomeAway.com and its global brands — that include VRBO.com, HomeAway.com itself, and Vacation-Rentals.com in the US; HolidayRentals and Owners Direct in the UK; Abritel and Homelidays in France; FEWO Direkt in Germany, Alugue Temporada in Brazil, and many others — is now focusing increasing energy and resources upon the timesharing industry.
HomeAway.com
“HomeAway.com is the world’s leading marketplace for vacation rentals,” explained its senior director — strategy and new ventures, Jeff Hurst. “We were founded in 2005 by Brian Sharples and Carl Shepherd and experienced rapid expansion via a steady stream of acquisitions and organic growth. In 2006, the original company, WVR Group, Inc., became HomeAway, Inc. The acquisitions and growth continued. In 2011, HomeAway announced its initial public offering, trading on the NASDAQ under the ticker symbol AWAY and raising $216 million in the offering. As of mid-August 2012, we have a market capitalization of about $2 billion. We are based in Austin, TX, and have offices around the world including London, Paris, Madrid, Frankfurt, Geneva, Marseille, Rio de Janiero, and Melbourne. Across our brands we have more than 700,000 listings in 168 countries. We have over 1,000 employees globally. About 80 million travelers visit HomeAway.com’s site each year; that figure rises to 500 million if you include our family of sites.” Clearly HomeAway and its brands are Number One in the vacation rental marketplace (by comparison, TripAdvisor has approximately 275,000 listings).
Hurst said that HomeAway.com (hence HomeAway) defines vacation rentals as accommodations that include kitchens, shared living space, and private sleeping quarters. “Our mission is to help travelers take the best vacations of their lives by making it easy to rent a vacation home anywhere in the world. For both the owners and managers who serve them, we provide a full range of services to help maximize their financial success.” These include a vacation rental home insurance policy, property damage protection, a payment option, and more. Travel insurance is available to renters, as are flight and rental car options. “Our vision is that vacation rentals — including timesharing — will supplant hotels as the preferred choice for family and group travel worldwide,” Hurst offered. What about HomeAway’s clients? “HomeAway serves hundreds of thousands of individual homeowners and property managers in the capacity of marketing and managing their vacation properties,” Hurst responded. “Our clients cover a wide range of needs from the large property manager with thousands of properties to an individual home-owner through a fractional participant with as little as a single week of ownership.”
How HomeAway works
HomeAway is a subscription-based model. Home owners pay an annual fee to advertise on HomeAway’s site (www.homeaway.com). In exchange, HomeAway promotes their properties through its search engines on Google, Bing, etc., as well as its internal search engine on the site. HomeAway also engages in email campaigns, and some TV commercials (more on that later). Vacation renters access HomeAway’s homepage where they can search for inventory by dates, the number of bedrooms, the number of people the accommodation sleeps, and geographic location. Let’s say you want a two bedroom condo in Orlando/Disney: of HomeAway’s 4,523 listings in the Orlando/Disney area, there are 181 two-bedroom alternatives.¹ This list of properties is shown, as well as their rate per night, photos, maps, their amenities, reviews of the properties, and a description of the accommodations submitted by the property owner his/herself. If a visitor is interested in renting, all he/she has to do is submit an email form located in a ‘contact the manager’ box located right on the webpage. Phone numbers are also available. There is no fee charged to vacation renters by HomeAway; they pay only the posted rates directly to the property owner.
For property owners: “We offer a product for each of our customer types: individual home owners, HOA, developer, etc.,” Hurst said. “They are provided with a set of tools which enable them to create their advertisement: they can upload photos, choose their rates, set different rates by time period, set discounts and premiums (e.g. for the weekend), set rules — like a three night minimum for a weekend booking. We also provide tools that allow owners to respond to email inquiries. Overall, it gives the owner a tool set that makes it easy and cost effective and efficient to rent out their vacation home.” What about cost? “For HomeAway. com the range is $329 to $999 a year,” Hurst answered. “We have a few smaller brands in the U.S. For example, for VacationRentals.com it starts at $199. On VRBO.com, our most established brand, it starts at $349.” The biggest cost factor is how high up in the search the accommodation appears. The owner of the inventory decides which offers to accept, Hurst pointed out, in contrast to OTAs¹ where the OTA itself has the right to book owner inventory within the set of rules provided by the owner.
The prices quoted above are retail. “There’s some difference between having a three-bedroom house that you advertise with us and being a property manager, HOA, or developer that has 500 units,” Hurst explained. “We have a professional sales team that works with larger suppliers to create packages that make sense for them. There are two sets of criteria that determine pricing: how much of your inventory are you advertising with us and how much inventory do you have in general. In the timeshare space we are looking into piloting more of a pay for performance model. A booking model that feels more like an OTA experience. We get paid according to how many travelers book through our site. We anticipate that this will be popular with larger developers because our subscription model is a cash upfront model. Bigger suppliers prefer to work on a commission model. We are actively pursuing a few pilots in the timeshare space.”
HomeAway and timesharing
“We’ve always had timeshare owners advertising with us,” Hurst observed. “But for us, the overwhelming majority of our inventory has been from individual home owners. And our timesharing inventory was from individuals, too. As we’ve grown we’ve realized the value of professionally managed inventory. And so recently, after being approached by a former timeshare executive, we’ve examined how professionally managed inventory has performed on our sites, what the travel experience is, and how we want to approach those who control this type of inventory and design solutions for them that work. What we’ve learned is that there are a lot of timeshares on our site and travelers really like them. Timesharing provides us with one– and two-bedroom condo inventory — as opposed to three- and four-bedroom single homes — that we can use in places like Orlando and Las Vegas.” He added: “We’ve looked at individual markets like Orlando, Las Vegas, and Atlantic City and seen that our timeshare inventory either equals or outperforms our market average in terms of consumer popularity.” Why hone in on the timeshare industry? “We felt it was the best thing for our travelers,” Hurst offered. “We believe the timeshare experience will fit in really well with the breadth of our accommodations and that it fills a gap in our travel offerings in terms of smaller, two-bedroom units in resort destinations.”
Marketing power and fit
Search engines are HomeAway’s most powerful marketing tool, according to Hurst. “Type something like ‘Orlando two-bedroom vacation’ and between HomeAway.com, VRBO.com, and Vacation Rentals.com, we are a lot of the real estate on the first page for any of the search engines. We also run television campaigns. This year we had television spots during the major award shows (e.g. the Oscars, Golden Globes). In 2009 and 2010, we did Super Bowl TV ads. We also have a large email database of past travelers that provides us access to vacation renters. That’s important for the timeshare industry because these are travelers looking for the types of accommodations and experiences that timesharing offers. We are the world’s largest set of sites of people who have opted in for this type of travel option. We think we are a perfect match for the industry in that we have access to a very large population of travelers who are looking for the type of experience that timeshares provide.”
Moving ahead
“We decided to increase our stake in the timesharing industry,” Hurst emphasized. “We want to start a dialogue with timeshare developers, HOAs, and management companies and do two things: first, we want talk to everybody and figure out what the best product is for them, whether it be subscription or commission and demonstrate to the industry that we’ve got a lot of rental demand that can not only help their owners but also help them find a large group or renters and potential new owners. Second, we are building the technological products that will allow us to connect to the industry in a fashion that is more akin to what the OTAs do with the distribution switches — in the hotel industry this would be like Sabre, Pegasus and those technology providers who manage inventory across all of the hotels. So we will need to build a connection point for the timeshare industry to connect to us such that all of this isn’t happening through email and phone.”
Hurst strongly believes that HomeAway can bring something valuable and unique to the timeshare business. “What makes us unique is how we merchandise. We’ve got tens of millions of travelers who have booked vacations through us, and are coming to our sites every month, and they are interested in the exact type of accommodations timesharing offers. In addition to that we provide a rich variety of search tools that is completely unique from OTAs. When you are on an OTA you are competing with a 350 sq. ft. hotel room on price per night. When you are on HomeAway you are competing on the basis of price per week, typically for someone who has already opted into the type of unit they want (e.g. two-bedroom unit that sleeps six). So it really evens the playing field in terms of highlighting what makes timesharing great without establishing a race to the bottom in terms of pricing. We’ll be introducing new renters and potential owners to the timeshare industry and we know that that our travelers will enjoy the extensive range of timeshare resorts and destinations.”
1. Online Travel Agent