HomeAway: Airbnb’s negative publicity “doesn’t help us”

Airbnb’s market of primary-home rentals is fundamentally different than HomeAway’s second-home vacation-rental market, argues the CFO of HomeAway, but “when Airbnb gets a lot of bad news,” such as when it is incorrectly declared illegal in New York City, “that doesn’t help us.”

Of course, Airbnb hasn’t indeed been declared illegal in New York City, although the practices of some of its hosts clearly violate short-term rental laws.

Lynn Atchison, HomeAway’s CFO, was fielding questions the other day at the Raymond James Internet/Software Crossover Conference in Half Moon Bay, California, and one thing was clear from her presentation: For HomeAway, Airbnb is the proverbial elephant in the room.

Atchison said Aribnb has a “fundamentally different supply and demand” than HomeAway, but HomeAway keenly monitors what Airbnb is up to, and has learned lessons from it.

Disruptive risk

“They are a disruptive risk in our market because there is nothing that prevents them from going into our market,” Atchison said.

On the regulatory front, though, Atchison said Airbnb is “probably in a worse position than we are” because Airbnb’s hosts often are renting out subleased apartments.

Airbnb is subject to a lot of pressure from landlords questioning whether tenants have the contractual right to rent out their apartments, Atchison says.

Atchison noted that HomeAway has formed a coalition with Airbnb and TripAdvisor’s Flipkey to ensure that short-term stays aren’t banned.

Taxing issues

The taxation issue is one problem HomeAway shares with Airbnb, Atchison said, noting that HomeAway has offered a service to hosts for several years that guides them in complying with local tax laws.

When an Airbnb official declares that the company is doing more rentals in New York City than hotels are, that attracts a lot of attention, Atchison says.

It’s clear this sort of attention is not something that either HomeAway or Airbnb desire.

In addition to its focus on second-home rentals, HomeAway has another advantage over Airbnb on the regulatory front, Atchison says. Airbnb draws closer scrutiny from taxing authorities because it is the merchant of record in transactions while HomeAway is merely faciliating a marketplace between owners and guests, Atchison says.

Learning from Airbnb

On the lessons learned front, Atchison said Airbnb’s website and apps are beautifully designed and its booking process is seamless.

Airbnb pays a cost for that design, though, Atchison said, because it is less SEO-friendly than HomeAway’s sites.

In other news, Atchison said HomeAway envisions charging 8% to 10% commission in its new pay-per booking pricing model, which it expects to begin to roll out in the second half of 2013.

HomeAway believes that the pay-per-booking model, which will supplement its subscription model, where owners pay for listings but booking are free, will help the company make gains in about one-third of the market in particular — homeowners who rent their homes for just one to eight weeks per year.

“The commission-based model will address that part of the market that we don’t think we are winning right now,” Atchison said.

Airbnb’s shadow is again hanging over HomeAway’s pay-per booking strategy.

Charging travelers

Atchison said HomeAway will not charge travelers in its pay-per booking model unlike what two competitors (including Airbnb) do.

Doing so would “really put the whole category at risk,” Atchison said.

Charging travelers for bookings would be a “fundamentally wrong thing to do,” she said.