Airbnb Gains From Dissatisfaction With HomeAway’s Changing Business Model

Some vacation rental managers with 250 or fewer properties who offer their properties on HomeAway sites are dissatisfied with the company’s relatively new and optional pay-per-booking business model and are turning to Airbnb, which is making market share gains.

That’s among the findings of a Blueshift Research report, “AWAY Growing with Large Property Managers; Airbnb Coming On.” (AWAY is HomeAway’s stock symbol.)

HomeAway traditionally has let vacation rental owners and managers list their properties for annual subscription fees and there was no extra charge for bookings. While HomeAway retains that option, earlier this year it introduced a pay-per-booking model that enables vacation rental owners and managers to list their properties for free, but they pay HomeAway a 10% commission per booking.

The Blueshift report, based on interviews with property managers and analysts, found that managers with at least 1,000 properties are migrating over to the pay-per-booking model and are generally satisfied with the results.

“One source completed its trial and plans to increase the number of properties available to HomeAway from 4,500 to 50,000,” Blueshift stated. “Another source said PPB (pay-per booking) has helped increase revenue by about 10% since it started using the program in August. Yet another said it receives 5% to 10% of its third-party bookings from HomeAway after only a short time using PPB.”

But Blueshift found that managers with a smaller number of vacation rentals believe that pay-per booking “is too expensive” compared with the subscription plans “even when paying for higher page rankings.”

These owners and managers of 250 or fewer properties indicated they thought HomeAway was “turning away from smaller volume properties as it models itself after online travel agencies … ”

The Result?

“Airbnb Inc. is gaining momentum among owners/managers with fewer properties and four sources said it is eroding HomeAway’s share,” Blueshift stated. “They believe Airbnb has better social integration, customer support, is a better business model for the guest and owner, does well in cities, and is getting more listings from property managers.”

Airbnb charges hosts 3% in fees and guests a 6% to 12% fee per stay.

The Blueshift report revolved around the question, “Is HomeAway’s pay-per-booking feature enough to fend off increasing competition?” and researchers queried a limited number of sources.

Still, when asked about Airbnb’s gains and the sentiments of property managers, HomeAway CEO Brian Sharples didn’t offer much to take issue with the Blueshift report.

“There’s no question that Airbnb has been growing share in city markets as their strategy of renting primary apartments allows them to target inventory that isn’t necessarily attractive to HomeAway travelers,” Sharples tells Skift. “However, their global penetration of traditional vacation rental markets is still fairly low.”

Sharples concedes that business models for HomeAway’s customers aren’t one size fits all.

“Pay-per-booking isn’t for all customers,” Sharples said. “That’s why we will continue to maintain both a subscription and commission option. The subscription product is still the best value for the majority of our suppliers, and internally we’re indifferent about whether a customer chooses to pay an annual fee or as a percentage of revenue.”

Booking.com a Viable Option

While property managers with a smaller number of holdings may be looking to Airbnb as an alternative, property managers with larger portfolios aren’t much interested in Airbnb, but are turning to Booking.com.

Booking.com, the largest company within the Priceline Group portfolio, is strong in Europe and is seen “as an attractive partner with its reach, mix and global reputation,” the Blueshift report states.