Signs of HomeAway becoming more aggressive about Asia expansion are evident but there is much to do. Putting in place a new leadership team is just the beginning.
We will start with regular reports several times per week from Beijing and Singapore, and look for us to add cities around the world shortly. Gateway Beijing and Gateway Singapore, for example, signify that the reporters are writing from those cities although their coverage of the business of travel will meander to other locales in their regions. Read about the series here, and check out all the stories in the series here.
Prashant “PK” Kirtane, who is leading HomeAway’s expansion in Asia after HomeAway fully acquired his Singapore-based Travelmob in 2015, is feeling the startup rush all over again. With “significant” investment being pumped in, he’s charged up to build awareness of both the brand and the home rentals category in the region.
Speaking to Kirtane, it brings up recollections of the trailblazers in the Asian cruise industry 20 years ago when cruising wasn’t the mainstream vacation form it is today. But unlike cruising in its infancy in the region decades ago, home rentals in Asia, while seeing progress in some areas, is still muddied by fear and distrust.
Be it in modern cities like Singapore, or relaxed resorts such as Phuket,Thailand, the home, or vacation, rental category faces attempts by the traditional hotel sector to block its growth, the wrath of citizens who complain about noise and safety and, with legislatures scrambling to keep up, continued uncertainty over the legality of these types of short-term rental lodgings.
A Long-Term Proposition
But the soft-spoken Kirtane smiles and says Asia is critical to HomeAway’s future growth and HomeAway sees Asia as “a long-term story.” HomeAway acquired a majority stake in Travelmob in 2013, a year after the startup’s founding, then fully in October 2015. A month later in November 2015, Expedia acquired HomeAway, and Travelmob became HomeAway by Expedia.
“Last year was the first year we had significant investment come into the company,” says Kirtane, now vice president Asia of HomeAway. He would not cite actual figures, but says the investment is “six to seven times [more] than what we were spending during Travelmob days.”
A lot of it was in staff, which doubled in number, critically in the leadership structure but also in functional areas such as marketing, engineering and operations. HomeAway hired four senior leaders for Asia last year: a head of sales, Rob Green, formerly with Agoda, to increase occupancy across HomeAway properties while growing supply; a head of marketing, Judith Davidson, formerly with BBC Worldwide Asia, to drive marketing strategy; a head of business development and partnerships (emerging markets), Dennis van Noord, formerly with Booking.com, to develop new business through partnerships; and a country head for Japan, Natsuko Kimura, who launched the Expedia brand in Japan, Korea and Hong Kong.
The regional headquarters also moved into a new office in May to accommodate an expanding team.
Which comes first, supply or demand?
Building quality inventory comes first, Kirtane says, as there already is inbound demand for home rentals in Asia and being part of HomeAway and Expedia will only accelerate demand. As well, to build the domestic markets in Asia, which the company intends to do, there needs to be a geographically diverse breadth of supply.
“In the longterm the growth will come from the domestic markets,” Kirtane says. “The category is well-known in Europe and the U.S., and a lot of travelers love to go to Asian destinations, so there’s inbound demand and that’s where a lot of companies are focusing on. But I think to really build the category, we have to start with the domestic markets. For that, you need quality supply in the breadth of the destination. If you want to build the category in Taiwan for example, you need supply not just in Taipei but in the secondary destinations,” he says.
He would not detail the number of current listings and growth target by year-end. An unconfirmed figure puts Travelmob’s listings in Asia-Pacific at more than 30,000 since it launched in 2012.
Airbnb Got There First
Competitor Airbnb, which came to Asia first, reportedly said it could unlock more than 2 million listings across Asia in the long run, much of it from China, which is also now one of its fastest-growing outbound markets.
“To-date, there have been more than 3.5 million guest arrivals by Chinese travelers at Airbnb listings all over the world,” an Airbnb spokesperson says. “Outbound travel from China grew 500 per cent in 2015 alone [for Airbnb].”
But Kirtane stresses “quality” supply of entire homes, villas and apartments is what he’s after. “We’re not much into shared units but entire homes so we can provide that option to travellers globally, especially to families and friends travelling together in Asia. Our focus is on secondary or investment homes which the property manager or host has and wants to rent short-term. We’ve seen that working for us and we have significant demand for those types of properties,” he says.
Being part of HomeAway and Expedia enables him to leverage their huge user bases, increasingly demand potential, which in turn impacts positively on supply.
“A villa in Bali obviously gets indicated on all HomeAway emerging markets  and Asia sites ,” Kirtane says. “The property manager could be an Indonesian and uploads in Bahasa and rupiah but the property gets propagated on different sites in local languages in the respective currencies. It also gets integrated on the HomeAway network, which comprises a number of sister sites like VRBO. Having that whole integration done and providing that kind of seamless experience to customers and property managers is a big plus.”
Quality supply is also a key to building brand and category recognition, especially since HomeAway is still a young brand in Asia, he says. “The key for us is in the ratings and reviews we get. Everything is measured on how many travellers came to our site and were happy with us.”
Lauren Foye, a senior analyst at Juniper Research London, which studies space rentals in Asia, says trust indeed is critical. “Airbnb has now seen complaints emerge from its most recent expansion into China. A number of concerns have been raised with Chinese consumers unhappy at having bookings cancelled last minute, or finding accommodation to be sub-standard to what was advertised. In addition Airbnb faces stiff competition in China, a market which already has a strong domestic industry for shared space rentals. As such, the company will be wary of repeating Uber’s failure at entering a market which already has a strong domestic presence,” says Foye.
Organising the unorganised
Foye also notes the other big challenge relating to regulations. The sector has been successful in countries where there have been a surge in arrivals, such as Japan, but traditional providers see this as a threat. “We have already seen attempts by the hotel industry to sway government policy and legislation with the intent to reduce their impact,” Foye says.
Last year, for instance, Minpaku recommendations for home sharing, in part as a result of hotel industry pressure, could make many shared listings in Japan effectively illegal.
“However, faced with concerns surrounding accommodation for tourists during the 2020 Olympics, more recent proposals have seen an almost reversal with the Japanese government now proposing the legalisation of Minpaku lodgings, with restrictions on the number of days rental permitted per annum, as well as social responsibilities of owners. Yet the continued uncertainty around the legality of lodgings in Japan will be concerning for Airbnb [and HomeAway], which saw the country as one of their fastest growing markets in 2015,” Foye says.
HomeAway’s Kirtane says the company believes in regulations but they should be enforceable and fair. “We are working with the various government agencies to make them aware of our learnings and best practices and help them to regulate the market. For a new category, regulations generally will follow the industry. It will happen. Since we have experience in the past in other countries, it makes sense to work with governments on the issue of regulation,” he says.
The Pacific Asia Travel Association agrees the unorganised sector should be organised – but without killing it. CEO Mario Hardy says Asia is likely to see more development in the sector with Airbnb, HomeAway and regional and local brands such as Tujia in China and Travelio in Indonesia beating the drums on the category.
Says Hardy: “I certainly understand and agree with legislators that vacation rental companies needs to meet the health and safety regulations and either pay taxes or have the owners pay taxes. However, I think that trying to stop these organisations from operating is the wrong approach. There is clearly a market for it and to the hotel operators who fear the competition, I say start innovating and fight back through creativity.”
Based in Singapore, Raini Hamdi is a business journalist and has been covering the Asian travel trade and the hotel industry for more than 20 years.
Have a confidential tip for Skift? Get in touch
Photo credit: Prashant 'PK' Kirtane, vice president of HomeAway Asia, believes a key to growth will be growing domestic supply in each of its markets. HomeAway