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For security reasons and to address vacation rental owners going rogue and abandoning the site to escape credit card processing fees for online bookings, HomeAway quietly launched a new closed-loop communications system — and the company assembled a war room, ready for a backlash.
“I thought it was going to be a complete nightmare, to be honest,” HomeAway CEO Brian Sharples told those assembled at the Citi 2014 Internet, Media and Telecommunications Conference in Las Vegas January 7.
“I thought there would be a pretty big backlash,” Sharples said. “We assembled quite a war room when we launched this stuff.”
HomeAway last month quietly launched the new system, which has all communications between individual owners using online booking and their prospective guests running through internal servers, on the HomeAway.com site, and plans to roll out the system for its other U.S. sites such as VRBO and globally.
Sharples said the backlash didn’t materialize, and the war room was dismantled.
The new system has “gone fine,” Sharples said.
Oh, the Leakage
Individual owners using online booking pay 2.5% credit card processing fees, and the new communications system is designed to cut down on “leakage,” Sharples said, meaning owners and guests communicating directly offline so the owners can avoid fees. Unlike on rival Airbnb, HomeAway guests don’t pay any booking fees.
Such leakage is a big problem for vacation rental sites such as HomeAway, sister site VRBO and TripAdvisor’s Flipkey, for example.
Sharples said with the new communications system, HomeAway will be able to perform keyword analysis to kick owners off the site who are avoiding paying fees to HomeAway, and are cheating.
“Statistically we’ll know if someone is cheating us over a period of time, and if you cheat us, you’ll be off the site,” Sharples said.
The new system is mandatory for individual vacation rental owners using online booking, although it isn’t required for professional managers of vacation rental properties, Sharples said, as the latter have their own systems.
HomeAway similarly plans to plug some of the leakage at its newly acquired Stayz Group sites in Australia, which does about $25 million in revenue, including from online booking, Sharples said.
These Australia sites have an honor system, where owners voluntarily report their bookings, Sharples said, opening the way for lots of fudging. Still, the Australia sites average revenue of around $900 per listing while HomeAway averages around $400, he added.
Sharples said Jeffery Boyd, the now-former CEO of the Priceline Group, told him that leakage is even a problem in Europe for Priceline’s Booking.com unit, which clamps down on property owners seeking to game the system.
Phishing and Identity Theft
Sharples didn’t discuss it at the Citi conference, but the new communications system is also designed to cut down on a phishing epidemic, where owners’ email addresses get hijacked and guests end up communicating with scammers when they erroneously believe they are emailing or sending money to legitimate owners.
HomeAway.com advises owners about the new system: “Your inquiries and responses to those inquiries come from an anonymous HomeAway address (firstname.lastname@example.org). You can still email back and forth with your guests from your personal email account or from your owner dashboard.
“Your email address is removed from these messages to protect you from phishers who send inquiries just to get a response from you, at which time they ‘steal’ the email address and start communicating with travelers in an attempt to have the traveler send payments to them.”
In other developments, Sharples predicted that mobile will “never be at that level of criticality” for HomeAway as it is for sites such as Priceline and people using smartphones at the airport because when searching and booking vacation rentals, “you are much better off on a bigger device.”
HomeAway gets about 30% of its traffic from mobile devices, Sharples said, with about half of that from tablets, which convert lookers into bookers at similar rates as travelers on desktops.