HomeAway turns to tiered pricing to keep business rolling in Europe

HomeAway has faced a recent slowdown of business in Europe due to the ailing economy, but is readying to remedy the downturn with the launch of its tiered pricing payments in Europe. The vacation-rental company had already launched the program in the US and UK, and reports initial positive feedback.

The tiered pricing is also expected to increase renewal rates. Overall renewal rates dropped this quarter due to the first-time inclusion of the nascent Australian market in HomeAway’s earnings and a decline of renewals in Europe.

Co-founder and CEO Brian Sharples explains that renewal rates improved in the US after the tiered payment plan was introduced and expects a similar effect in Europe. “Actually, our highest renewal rates right now are with customers who have adopted the tiers…renewal rates are slightly up in the U.S. which means tiered pricing is a happier story on balance for everybody… We can now look and see that we have higher renewal rates for people who have adopted tiers.”

HomeAway is also building up its e-commerce offerings to drive revenue. Online payments and booking have been introduced to HomeAway UK and will be included on sister sites Abritel in France and FeWo-direkt in Germany. Purchases of HomeAway’s Property Damage Protection have grown at a steady rate and the company is set to introduce a new cancellation protection product to European properties next year.

HomeAway expects the effects of Hurricane Sandy to impact earnings in Q4 and 2013 as 10,000 to 13,000 listed propertied may have been damaged by the storm. Third quarter earnings were the first to be reported since VRBO was completely integrated onto HomeAway’s common platform.

Other key figures from HomeAway’s Q3 earnings call:

• Total revenue increased to $73.1 million, up 19.6% quarter-over-quarter and up 23.9% year-over-year.
• Listing revenue increased to $61.4 million, up 16.9% quarter-over-quarter and up 21.7% year-over-year.
• There were 720,031 paid listings at the end of Q3, up 14.9% year-over-year.

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