Skift Take

Vrbo is reiterating the message that the traveler's experience is key to building demand and a strong business.

Vrbo wants to protect consumers better by levying penalties on hosts who cancel reservations and raising eligibility standards for “premier hosts.”

Starting in October, Vrbo said, hosts in the U.S. will face cancellation fees determined by the total booking cost and the timing of the cancellation.

If the host cancels a booking 48 hours before the stay, they will be charged 50% of gross booking value — that’s the most harsh penalty. If it is canceled between 30 days to 48 hours prior, the penalty is 25%; prior to 30 days, the penalty is 10% with a minimum of $50. 

Hosts can get a waiver for unavoidable cancellations, such as those attributable to natural disasters. Vrbo confirmed that, for now, only hosts in the U.S. will face the penalties. 

“Ultimately this is about improving traveler experiences, we are taking a carrot and stick approach,” said Tim Rosolio, vice president of Partner Success, Vacation Rentals. “The carrot is the premium host badge, and the stick approach is the financial penalty. We have nothing in our 2024 plan to use this to make money, this is about proper incentives and disincentives are in place.”

The company already offers protection to travelers with its “Book with Confidence” guarantee, which arranges alternative accommodations for guests if a host cancels within 30 days of the stay.

The updates to eligibility requirements for the Premier Host program will start January 2024. The new requirements aim to make the program more exclusive, by only admitting hosts with an average overall rating of 4.4+, those whose initiated cancellation rate is less than 1%,  and those whose booking acceptance rates are 95% or higher. 

If we look at average daily rates as a metric — Vrbo hosts, which typically rent out larger properties in vacation destinations, are still able to charge a premium over Airbnb — as high as 35% premium in North America, and 38% premium in EMEA. 

Vrbo also sees more instant bookings. Unlike Airbnb, which has seen a fall in the percentage of properties available for instant booking, Vrbo is witnessing a rise in the proportion of properties that can be instantly booked, according to data from Skift Research. This aligns with Vrbo’s strategy to create a platform that closely resembles its sibling brand, Expedia.

These guest protection measures don’t address “junk” fees. Last month, a video posted by a comedian on social media app TikTok threw light on the sometimes-exorbitant “host fees,” charged on platforms including Vrbo and Airbnb. 

The video highlighted how a $172 per night charge could result in a total price of $972 for two nights — $108 in service fee, taxes and a $425 host fee. Vrbo confirmed to Skift  that the booking in question was a Vrbo transaction. “The receipt is verified by Vrbo,” a spokesperson said. “Host fees are set by the host and displayed separately to service fees when applicable.” Some of the custom fees hosts can set on Vrbo can include for air conditioning, linens, water and more.

Nevertheless, Vrbo said it strives to be as transparent as possible about pricing. For instance, it displays an inclusive pricing feature in the search so guests have a better idea of the total cost of a booking as well as the nightly rate. Each listing page also includes itemized costs with details on fees and taxes. The company also encourages hosts to consolidate their fees, so the guest has a better expectation of the total cost when they’re searching. 

“We want to provide the appropriate booking travel experience, and we show the full price at the time of booking,” Rosolio said. “Now if in fact travelers see the full price and book, we have 250 account managers that are providing hosts feedback on levers they can pull to raise bookings and one of them is reasonable fees in place. Industry should not head in the direction of the sticker shock experience.”

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Tags: cancellations, junk fees, short-term rentals, vrbo

Photo credit: A vacation rental listed on Vrbo in Scottsdale, Arizona. Source: Vrbo VRBO

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