HomeAway Must Determine How to Prevent War Between its Customers

Now the fun begins as HomeAway has to figure out how to navigate increased tension between professional property managers and individual vacation rental owners.

HomeAway officially introduced its optional pay-per booking model for vacation rentals in the third quarter, and now it has to figure out how to ensure the model doesn’t anger individual owners who merely pay a subscription fee to list their properties.

Since 2010, HomeAway has acquired three companies — Instant Software, Escapia and Second Porch — that provide software geared toward the big players: property management companies.

With pay per booking, which would largely be used by professional managers who handle perhaps dozens of properties, they pay HomeAway a 10% commission per booking and don’t have to pay just to list their properties.

People who might own a single vacation home can sign up for pay-per booking, as well, but it’s unclear how many would sign up.

HomeAway is starting slowly with this integration, but believes the recently rolled out program will contribute to an overall 15% growth in listings in 2013, and will accelerate listings growth in years to come. HomeAway believes that pay-per booking will also increase the number of conversions — turning lookers into bookers — on the site.

“The accelerated rate of listing growth at HomeAway over the next few quarters is going to be mostly because of pay-per-booking,” CEO Brian Sharples said yesterday during the company’s third quarter earnings call.

Performance

“I think is going to get to a place where the have-nots are going to start feeling like they’ve got to jump on board because consumers will be able to do things like, ‘I only want to look at listings that accept secure payments.’People aren’t going to want to be left out,” Sharples said.

HomeAway’s initial plan is to display pay-per booking properties at the bottom of search results pages, and to study how they will impact the subscription listings used by individual owners.

Sharples said that the company over the next year will “manage” how those pay-per booking properties are displayed, and it will get “better” every year. The company expects pay-per booking properties to perform about only 1/10th well as subscription properties in the beginning because these commission-based properties will intentionally be very low in the search results.

HomeAway is going to study different ways to display the pay-per-booking properties and will study the impact of moving them higher in search results or perhaps designating them in ways different than subscription listings.

You can expect the existing resentment between individual property owners and professional managers to increase when the professionals start to steal he thunder of the individual owners.

That’s the refereeing that HomeAway will have to handle over the next few years as professionally managed properies assert themselves on HomeAway in even stronger ways.

The pay-per booking model has been introduced on HomeAway.com, and officials said sister site VRBO.com should be operational with the optional pay-per-booking model by January.

Sharples said the rollout of pay-per booking on HomeAway.com has “gone very smoothly.” HomeAway hopes it can navigate the tension between professional managers and individual owners in a smooth manner, as well.

Other News

In other developments, Sharples said HomeAway’s new partnership with Expedia Inc., slated to begin in 2014, will begin with a relatively small number of properties, 12,000.

Sharples said the pilot is a test with how it can work with online travel agencies, and Expedia, in particular.

HomeAway for years wanted to work with online travel agencies, Sharples said, but online travel agencies were fearful that adding vacation rentals would impact hotel relationships.