Booking.com’s New Star Ratings for Short-Term Rentals Shake Sector

Booking.com earlier this month began applying star ratings to its listings of short-term rentals. The online powerhouse is ranking properties on a one to five-star scale — where a five-star rating signals that a property has the most overall appeal.

Booking’s move is bold because the travel agency giant is rating the properties itself. Until now, rentals have gone unrated. That’s put vacation homes and apartments out of sync with hotels, which third-parties and governmental organizations have long categorized by star ratings. The star ratings are separate from a property’s average score, which continues to be driven by customer reviews.

“Star search is the most-used filter we have on Booking,” said Olivier Grémillon, vice president of global segments, during a panel talk. “Before, when someone was searching on Booking for three-, four- or five-star, no vacation rentals were showing up. Now when they search, the vacation rentals are showing up, the conversions are going up, and everybody benefits.”

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The company strives to adjust the calculations to be relevant. A case in point: A property in a cold climate like Copenhagen isn’t going to be dinged for lacking central air conditioning the way a property in the tropics would.

Booking.com rates rentals on about 400 factors. For example, a property is a bit more likely to get a five-star rating if it has an espresso machine.

Executives explained the ratings, first reported on by VRMIntel, to owners and managers of homes during presentations this week at a Vacation Rental Management Association conference in New Orleans.

Some managers attending the event welcomed the move.

“I think it’s a good step because category ratings are long overdue,” said VTrips founder and CEO Steve Milo, in an interview. Vtrips is a property management service for rental properties that manages about 1,800 in North America.

“I get that we’re at the early stages and still fine-tuning,” said Milo. “But it’s very important not just to have reviews but also have ratings to help set customer expectations. For instance, there clearly could be a two-star rated property that has stellar customer reviews and that a two-star rating would help put the review score in context.”

Some Grumbling

But a few managers were unhappy with the ratings Booking.com had given some of their properties. A few managers said they preferred lower star ratings, for example. They would rather keep customer expectations somewhat low. Their theory is they could then pleasantly surprise a guest, who will then be more likely to post a review with a higher review score. Some managers feel customer reviews are more influential with consumers.

Others complained that the move would confuse some consumers. For example, short-term rental listing service Airbnb only offers ratings powered by customer reviews on a one to five-star basis.

It’s tricky to be accurate with star ratings, said Jeff Hurst, chief commercial officer at Expedia Group-owned Vrbo, during a separate panel talk at the conference.

“When I think of my hotel experiences, I’ve stayed at four-star hotels and not had four-star experiences,” said Hurst. Vrbo doesn’t offer star ratings.

Grémillon, whose job includes overseeing Booking.com’s rentals unit, said that its customers give higher review scores for vacation rentals, on average, than for hotels. The company’s new star rating system will give an additional data point to help online shoppers comparison shop, he said.

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