Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

Pay-Per-Booking Advertising For Vacation Rentals? An Industry Thinks Twice

by Matt Landau on December 10, 2013 · 6 comments

  
Pay-Per-Booking Advertising

All vacation rental owners have been spoiled by listing sites.

They’ve gotten accustomed to seeing several hundred (if not thousand) percent ROI on annual subscription fees…

They’ve become picky – even lazy – when a reservation inquiry doesn’t perfectly fit into their calendars…

And they’ve gotten a taste for champagne really quick, happily forecasting future earnings based on this one inexpensive (and probably unrealistic) listing fee.

But times are changing in the vacation rental industry…

And the most visible shift is in the direction of a pay-per-booking model, where, whether they like it or not, property owners and managers will begin to pay a percentage of every single booking generated through the major platforms (as opposed to the one-time phonebook-style listing fee):

What Does This Mean?

It means that the nature of vacation rental marketing budgets will suddenly switch, from a fixed yearly amount, to a scaled number based on performance.

And for most successful owners/managers who rely on listing sites, this new model means profits will drop.

Significantly.

So today – with the pay-per-booking implementation actually happening before our very eyes, and with the seismic roars in opposition heard from all corners of the globe to prove it – I am going to let you in on where I think things are going next…

The pay-per-booking model enlisted by HomeAway, FlipKey, and AirBnB is based on one primary power play: that property owners and managers do not have the time and/or ability to book nights on their own.

Leveraging this dependence on their control of the marketplace, big listing sites, it would seem, are smart to make this change. As profit-oriented corporations, it will make them more money in the short term.

But scratch below and you’ll find a much less obvious yet far more influential set of longer-term ramifications in a 4-Part Sequence Of Events To Follow:

1) Like in any emerging market, vacation rental owners/managers will ultimately go where the demand is

This is to say that the moment a new method for generating inquiries arises, the restrictions and limitations of the pay-per-booking model will become irrelevant and obsolete simply because cheaper bookings can (or must?) be acquired elsewhere.

2) These new methods for generating bookings are not a fantasy

Already, owners and managers have begun to improve their own online reputations, dedicating more time and resources to self-sustainable online marketing. And new niche listing site competitors have started providing leads at a fraction of the cost (and in some cases free).

3) Under this new status quo, acceptable pricing and ease of use will be king

As more owners and managers access increasingly more ways to generate bookings, the new question becomes, where can they get the most affordable leads and where can they do so in the safest, most user-friendly way? In very much the same style that Steve Jobs changed a very chaotic landscape of digital music downloads with iTunes’ $0.99/song model, the winner in the vacation rental industry has the ability to manhandle the power structure, but only with the right policies in place.

4) When these disruptions fully materialize, it will be the company with the strongest brand loyalty that conquers all

The biggest of the listing sites aren’t going anywhere soon. But said in another way, in the embryonic vacation rental industry, the long term really matters. Making pricing flexible for proprietors of all sizes, responding to market feedback in a respectable way, and making customers happy: these time-tested business values will hardly be lost in the war for more bookings.

So, what does this suggest?

It suggests that the pay-per-booking model is predicated on a weakness.

And as industries evolve, weaknesses strengthen.

It could be a mistake of any given vacation rental company to neglect to realize that the sustainability of their success lies ultimately in the customer. The biggest challenge for major listing sites will be recalibrating users expectations while keeping that all-too-important loyalty fully in tact.
Photo Credit:aur2899

Email *
  



{ 6 comments… read them below or add one }

Mike Murphy December 10, 2013 at 12:22 pm

Are they also going to assume liability? Last week I had an inquiry from Flipkey and they got my tenants credit card info which really p… me off. They wound up renting but I did it through VRBO. Tried reaching Flipkey but they don’t respond and I don’t want them getting any info from my clients. Mike.

Reply

Matt December 11, 2013 at 7:46 am

Not sure about this one Mike. Maybe someone else can chime in…

Reply

Cat Emery April 8, 2014 at 4:35 pm

We quit using Flip key for res because of their booking issues and send everyone that wants to book online through our VRBO page.

Reply

Karin DiMauro December 10, 2013 at 1:23 pm

Well put, Matt. I think another factor the pay-per-booking model neglects to consider is that the experienced vacation rental owner likely has a number of repeat clients. Therefore, they can more easily ditch the listing site if marketing gets too expensive, taking their customers with them and then casting about to find the remaining clients needed to fill in extra dates.

I am a vacation rental owner and I know some others, including one owner who booked almost the entire summer on repeat clients alone. And we all do our own reservations. Unless you have a lot of properties – and I don’t believe very many typical vacation rental owners do at this point – it’s not all that time-consuming.

Thanks for an interesting post!

Reply

Matt December 11, 2013 at 7:42 am

Thanks Karin! I think ultimately it will be the company with a balance of the several models providing enough flexibility for owners and managers of all tastes/preferences that “wins” the race. The trick, as it would be, is not offending loyal subscribers in the testing phase!

Reply

Joshua Haarbrink December 23, 2013 at 5:24 pm

Definitely one of the strongest points that I notice is the growth of engagement on the part of owners/managers. With some adequate self-education, individuals – whether owners or employees – can pursue a variety of marketing efforts that will all have some level of impact on the overall success.

As you said, loyalty is definitely the key to long-term success. I think another factor is a listing provider’s ability to be flexible as a component in the owner/manager’s tool belt. Whether in-house or as a service provider, there are always new ways of generating leads and the climate changes frequently so no matter where you fit in within the lead-generating/servicing cycle, effectively managing a balanced combination of listing and marketing tools is critical to generating healthy growth.

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: