How Two ‘Old School’ Travel Platforms are Beating Airbnb
Entrepreneur has an affiliate partnership with Hurdlr so we may get a share of the revenue from your purchase.
You can’t read the business section these days without coming across an article on the “disruption economy.” Chief among these disruptors is Airbnb, which since 2008 has upended the traditional hotel and vacation rental industries.
It’s not without merit — in the five-year period between 2010 and 2015, Airbnb guests during peak summer travel increased by an astonishing 35,300 percent. Tens of millions of people use Airbnb’s platform each year and the average host makes more than $500 a month to supplement their income. With those numbers, it’s logical that traditional competitors like hotels and vacation booking platforms would see a drop in business.
It’s surprising then, that two companies that pre-date Airbnb and are competing in the same travel and vacation rental space are not only surviving, but thriving. HomeAway, the Austin-based vacation rental platform that also owns brands such as VRBO, recently reported 50 percent quarter-over-quarter revenue growth. And TripAdvisor, which entered the vacation rental space in 2008 by acquiring FlipKey, has seen listings numbers explode from 50,000 to 830,000.
We spoke with executives at both HomeAway and TripAdvisor to find out how they’ve managed impressive growth despite competition from disruptors like Airbnb. Their answers were strikingly similar: focus on your core competencies and build meaningful relationships with customers.
It’s a lesson all business owners can take value from, regardless of your industry. Read on to learn more.
Ben Drew, Vice President of Business Development at TripAdvisor Rentals
Hurdlr: How do TripAdvisor’s vacation rental brands like FlipKey offer a superior value prop to Airbnb?
We’re a platform like no other; our travelers get the insider knowledge of our homeowners, combined with the collective wisdom of our 500 million+ travel reviews. We’re the only place a traveler can find their rental and then go on to book themselves into the top-ranked restaurants, tours and attractions in their chosen destination, as decided by of hundreds of millions of TripAdvisor travelers all over the world.
We have the unique ability to serve every traveler on every trip, and the planning experience we provide is holistic. Take, for instance, a traveler going to Sydney. Whether that traveler is looking for a private room, a three-bedroom house, a boutique hotel or a large chain, they’re going to find and book that property through us, and then finish planning their itinerary on our attractions and tours, restaurants and flights pages.
We’re always improving our platform to stay at the top of the industry. It’s been hard in the past to find and book rentals and we’re making that easier and easier. We’re constantly growing our supply of homes to keep up with demand, we’re making it increasingly easier to search our 830,000 properties to surface the best matches, and we provide safe, reliable and protected payment methods.
Every section of our business — hotels, attractions, restaurants and rentals — is fundamental to our raison d’être: to help travelers have amazing travel experiences.
Arrabelle Chalet Penthouse in Vail, Colorado. $4,650 per night via TripAdvisor
Jordan Hoefar, Communications Manager at HomeAway
Hurdlr: What’s the difference between brands like VRBO and other brands in HomeAway’s portfolio? Do you see an established name like VRBO competing directly with Airbnb? Why or why not?
HomeAway and our other brands are very similar; the difference is that VRBO, for example, has great brand awareness since they were one of the original vacation rental websites on the internet. VRBO was our biggest competitor until we acquired them in 2006, and at the time was the biggest “rent-by-owner” online platform.
Google News, Bing News, Yahoo News, 200+ publications
HomeAway brands target a specific group of traveler, so in a lot of aspects we don’t see ourselves competing directly with Airbnb. All of our brands are focused on listing owner’s second homes and vacation rentals as opposed to urban destinations. We primarily appeal to families and big groups looking to go on vacation rather than solo or business travelers.
Why should a family book their vacation on HomeAway rather than Airbnb?
HomeAway’s brands like VRBO focus on entire spaces rather than single rooms or couches. We have listings in all the top mountain and beach destinations, and in that regard, we’re superior to, say, Airbnb or Booking.com. HomeAway is, quite simply, the premier destination for family and groups going on vacation.
When you do the math, it’s also very affordable to rent an entire home compared to multiple hotel rooms. Whether you have a large family, multiple families, or a big group, the price per person per night drops very quickly. With a HomeAway listing, guests get their own beds, bathrooms and kitchens, which isn’t usually the case with a hotel or single room off Airbnb. When guests can cook their own dinner rather than going out to eat, for instance, they’re saving a lot of money, so there’s hidden value upside to renting a home.
A lot of vacation rentals on, say, VRBO are owned by people who have been renting their property for 15 or 20 years. They’re professionals trying to create a great hospitality experience — they’re not trying to be your friend.
Waterfront Estate in the Hamptons, New York. $7,000 per night via HomeAway
HomeAway’s fee to list properties is $399 per year or 8 percent per booking. Airbnb charges hosts roughly 3 percent of the booking price. What more do listers get at 8 percent vs. 3 percent or are you specifically targeting the vacation property owners at $399 per year?
HomeAway has two primary types of listers: individuals and small businesses that manage properties. Individuals are typically couples that bought a beach house or ski cabin as an investment, so they intend to rent their properties for most of the year. The average owner makes about $30,000 per year renting out their property for just 18 weeks, so the annual subscription makes a lot of sense.
We introduced the pay-per-listing option for our enterprise clients — the property management companies — rather than individual hosts, since an annual subscription of $150,000 for example was cash-flow prohibitive. Paying per listing allows property management companies to market their properties to millions of potential guests on HomeAway’s platform but requires no upfront costs. It’s a win-win.
For all of our hosts we offer 24/7 support should they need it. Hosts also get access to our advanced insights dashboard which empower them to better manage their business. We’re focused on investing in these tools to make them even better going forward.
Noona’s Mansion in Key West, Florida. $1,766 per night via HomeAway
How do you encourage HomeAway hosts to stay loyal and not ‘double list’ on multiple platforms? Do you help hosts increase their profitability through features like smart pricing recommendations, professional photography, or add-ons like tax collection, cleaning, and expense tracking?
Each year HomeAway hosts an annual owners conference with property managers. This gives us the unique opportunity to get feedback directly from hosts, share the latest industry trends and help owners network with each other.
In addition to the current insights we provide to property owners we have a lot of exciting future initiatives in the pipeline. Overall we’re trying to simplify the user experience. We just introduced something called the Activity Feed, which helps owners understand what actions they could be taking to maximize their revenue, like adding the optimal amount of listing pictures, property summary, and what similar competitors did differently that got them booked.
HomeAway also identifies “best of breed” partners for services like tax, accounting, insurance and cleaning that hosts need to run their vacation rental business. This makes it easy to find highly-recommended local businesses through HomeAway. However HomeAway’s bread and butter will always be creating the biggest and best listing marketplace for vacation rentals.
Disclosure: This is brought to you by the Entrepreneur Partner Studio. Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, we may get a small share of the revenue from the sale from our commerce partners.