From the June 24, Boston Globe, by Megan Woolhouse
Here's snippet's from the article with my commentary.
Fed up with policy changes and new fe es that made renting her home both more expensive and more complicated, the Dorchester resident canceled her subscription to the service earlier this year. Many other longtime HomeAway customers have turned on the site in recent months.
“There have been so many changes and HomeAway keeps saying these are improvements,” Levy said. “These are improvements that benefit HomeAway, and it’s pretty annoying.”
Mainly, those changes are geared toward one thing: increasing online bookings that result in incremental revenue for HomeAway via the "traveler fee". And that increases the "take" for HomeAway. Here's a story from the investor perspective, from TheStreet.com: "While HomeAway has a network of 1.2 million whole-home rentals spanning 190 countries, the company's economics lag. The vacation house rental site generates about $500 million in sales from $15 billion in gross bookings, a take rate of about 3%. Cowen & Co. analyst Kevin Kopelman noted that Airbnb's rate is about 10% and that online hotel booking rates are typically above 15%, as stated in a recent report."
The Boston Globe article continues with:
Since it debuted about a decade ago, a largely mom-and-pop online vacation home rental industry has morphed into a multibillion-dollar giant and a beacon of the sharing economy. Airbnb is the biggest and best known, with more than 2 million listings, but HomeAway is a strong contender with 1.3 million vacation rental listings, including its VRBO (Vacation Rental By Owner) subsidiary. Last year it was purchased for $3.9 billion by Expedia Inc., the online travel giant that also owns Orbitz and hotels.com.
But growth has meant the industry has moved far beyond its “send us a check and the key is under the shingle” roots. And as it has flourished, HomeAway has alienated a core of longtime subscribers who say it has become too impersonal and costly, while rentals have suffered.
Friends and Guests was founded by hosts and is focused on being host friendly!
The first large-scale change came in late 2012, when HomeAway began allowing customers to book online. Prior to that, the site was more of a pure matchmaker: introducing parties, but not requiring them to communicate and pay through the site.
Then, a year ago, it decided to phase out the system that allowed owners to pay for top billing on the site, instead introducing a new and more nuanced computer-generated algorithm. The company said it pairs renters with the best property for them, giving preference to properties whose owners accept online bookings. The company trumpeted the changes as improvements, but some homeowners griped that their bookings have dried up. They also said the new system has discouraged direct communication with renters in an effort to increase bookings.
In February, shortly after HomeAway was purchased by Expedia, it began charging a new service fee to renters, which some called the final insult.
“HomeAway got to where it is by being owner-friendly, by not taking them for granted,” Elliott said. “But there’s a perception now that it’s taking advantage of its market position.”
“It’s not working for me,” she said of the new system. HomeAway has “fundamentally changed the business model without our involvement.”
Friends and Guests wants HomeAway/VRBO customers to get involved!
Hoefar declined to comment on the lawsuit, but said the service fee will help the company continue its marketing efforts and global growth.
That's the stated reason. The real reason for the pricing change is because it is profitable for HomeAway. See the article mentioned above.
For example, HomeAway said owners who keep their availability calendars up to date, post at least 24 photos of a property, or book guests within a 24-hour window get better placement in the site’s property listings.
I'm guessing that huge part of "best match" is the overall conversion rate to paid book it now online bookings, and Christine, below, agrees.
Christine Hrib-Karpinski, who worked for HomeAway until 2011 and wrote the book “How to Rent Vacation Properties by Owner,” said since the company was bought by Expedia, it is wooing a different group of travelers who are looking for last-minute stays, not the typical demographic of a family planning a vacation.
The algorithm, she said, penalizes people for not booking through the system, as a way to stop them from circumventing fees.
Friends and Guests is focusing on:
- Planned vacations where travelers have time to adjust dates to suit availability of a desired place.
- Repeat bookings from guests that love your place.
- Referrals for bookings by leveraging the social networks of you, your friends and your guests.
- Family friendly travel for guests and hosts, as families are more concerned about the uncertainties involved with "strangers"