There’s a funny thing going on in the vacation rental business: Industry leader HomeAway, which is strongest in rentals from individual owners, is scurrying to add professionally managed properties, and Booking.com, which is strongest in professionally managed properties, is attempting to ramp up its roster of vacation rentals from individual owners.
HomeAway CEO Brian Sharples, speaking during his company’s fourth quarter earnings call Tuesday, essentially advised Booking.com and other online travel companies trying to add vacation rentals by owner that is a “very difficult” endeavor, adding that HomeAway has a huge competitive advantage in the area.
Booking.com and its Villas.com vacation rental site offer a total of 247,000 vacation rentals.
Asked about Villas.com, Sharples of HomeAway said adding vacation rentals by owner is a tough thing to do, requires a lot of customer service, and is much more complex than signing up professionally managed properties, which is often done by hooking up to global distribution systems and other booking systems.
TripAdvisor, Sharples said, attempted to add lots of vacation rentals by owner a few years ago, and he implied that TripAdvisor wasn’t overly successful in the effort.
A ‘Dead Start’
HomeAway, meanwhile, has increased the percentage of professionally managed properties on its global sites from 28 percent of listings in the third quarter of 2013 to 40 percent of listings in the third quarter of 2014 as it pushes a commission-based business model to supplement its annual subscription fee tack.
Asked why Villas.com’s rate of adding vacation rentals in Europe appears to be growing faster than HomeAway’s, Sharples said, “Villas.com is starting from virtually a dead start” in terms of traffic and scale.
He added that it is easy to grow fast under those circumstances.
Sharples said Booking.com and Airbnb are definitely present as competitors in Europe but typically on a country by country basis they are not HomeAway’s chief competitors. On a country-specific basis, HomeAway’s competitors are often companies you never heard of, he added.
HomeAway is “gunning against” a lot of other companies, such as Leboncoin.fr in France, for example, Sharples said.
Sharples noted that HomeAway’s new marketing campaign will begin in the UK, France and Germany in the second quarter, adding that HomeAway is doing fine in Europe but wants to do better.
Convergence But Only Up to a Point
While HomeAway and Booking.com seem to be tilting toward convergence over the long term regarding their mix of vacation rentals by owner versus professionally managed properties, there are still very important differences.
Sharples said HomeAway increased its portfolio of “online bookable” listings 165 percent in 2014 to 377,000 out of 1.04 million, and the goal is to make all properties on HomeAway sites online bookable by the end of 2016.
But “online bookable” to HomeAway means that the vacation rental owner still gets a 24-hour window to vet the guest and send a confirmation.
Booking.com and its Villas.com site, on the other hand, tout the fact that their vacation rentals can be reserved via “Instant Booking: All bookings are confirmed instantly. No waiting, no back-and-forth emails, no confusion.”
However, many vacation rental owners want that 24-hour cushion, and that’s a desire that may get in the way of Booking.com’s goals.
On the other hand, HomeAway is likely to play hardball with vacation rental owners who don’t make their properties online bookable.
Sharples said some owners who don’t keep their avalability calendars updated are “lazy” and they “may not be on our site someday.”