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HomeAway CEO Brian Sharples concedes the company has to watch its back because Airbnb is trying to expand into vacation rentals and doesn’t have to worry about profits but he doesn’t see any competitor being able to sneak up quickly.
“I think the barriers to this business are much bigger than what people typically assume,” Sharples told attendees at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference in New York City June 1.
Referring to Airbnb, but not naming it, Sharples said Airbnb has been trying to ramp up vacation rentals for awhile but because the majority of HomeAway’s listings are second homes from individual owners — as opposed to property management companies — HomeAway offers much wider choice than rivals and has a “major competitive advantage.”
About 70 percent of Airbnb’s inventory is apartments or rooms, Sharples said, and the overlap between the two companies is smaller than most people think.
Booking.com in the last several years has been focused on adding vacation rentals through property management companies, which is only about 40 percent of the market, Sharples said, and only recently has ramped up efforts to attract inventory from individual owners.
TripAdvisor tried to go after rentals by owners but gave up, Sharples said.
He described generating listings from property management companies as the “low-hanging fruit.”
Attracting a huge amount of rentals by owners can’t be done merely through a targeted sales force or technology tools, Sharples said.
He said it takes time, and HomeAway acquired many businesses to build its network.
“It’s a different business,” Sharples said, referring to rentals by owner. “It is more difficult.”
“I don’t really see anybody being able to do it overnight,” he added.
Perhaps the distribution deal announced yesterday between the Priceline Group’s Kayak and HomeAway punctuates the fact that HomeAway provides a breadth of vacation rental inventory that Kayak sister site Booking.com can’t approach at this point. Kayak already had used some vacation rental listings from Booking.com.
Sharples said he’s “not terribly concerned” about competition from TripAdvisor and Booking.com until they can get traction with rentals by owner.
A former board member of Kayak, Sharples said he’s “really happy” about the deal with the “world’s biggest meta player.”
In other news, after a management shakeup, Sharples said HomeAway is evaluating ways to increase its “take rate.” He pointed out that Booking.com generally charges 15 percent commission, Airbnb gets 12-13 percent in fees from hosts and guests, while HomeAway generates fees of less than 5 percent.
HomeAway management is evaluating implementing increased pricing and adding new products and service for travelers to increase revenue.
Sharples didn’t cite specifics but flights, car rentals and tours would certainly be complementary to the vacation rental business. HomeAway already has done experimenting with flights from partners such as Expedia.
If HomeAway could up its take rate to 10 percent, Sharples said it could be a $1.2 billion revenue business.
With the expected changes, Sharples said he expects “dramatic changes” to HomeAway’s performance and it will all be “turbocharged” by requiring home owners to feature online booking by the end of 2016.