HomeAway / VRBO Service Fee
Real Estate Professional · Atlanta, GA · Member since 2015 · 279 posts · 109 votes
Just saw the (pretty harsh) results from a survey about the new VRBO service fee, and I was curious to see what you all thought of this.
Has the new fee been affecting your vacation rental bookings? Are any of you planning on switching to Airbnb or another listing site?
I own Cabins in Gatlinburg Tennessee. For the past 5 years I received 80% of my rentals from Homeaway/VRBO. Last year I put our places on flipkey/trip advisor. At this time 95% of my rentals now come from flipkey/trip advisor.
When my 2 recent listings were going to expire on Homeaway, I paid to keep one and let the other expire. The expired one I put on their highway robbery program of them taking 10% of the rental for each rental. Of course I now receive only 150 page views a month on the one I paid for and 700 on the 10% listing! I raised my rates on the 10% listing and only had one rental at each property from Vrbo this month.
It is evident to me that Homeaway is money hungry. Why send inquiries to paid listings. They pocket that money and give them to the 10% listings.
One other point. I have always had good reviews and lots of them. The paid homeaway listing gets very few page views. The same property always comes up in the top 20 on flipkey or trip advisor searches.
We are currently putting together our own website for previous guests so they can skip the lousy booking fees.
We do not us airbb due to their policy of allowing a renter to back out 5 days before for a full refund.
Hope this factual information helps.
@Monika Haebich, I have noticed a decrease in inquiries. However, I believe the decrease is related to changes they've made to the overall inquiry process. I bill all of my guest through Square. So essentially, you can bypass the Fee by not using their system. Take advantage of the leads and keep moving forward.
I looked into VRBO as another avenue for my vacation/own home rentals but have been happy on AirBnb.
Really @Jeff Konig I'm not a fan of Airbnb. For 2 reasons:
1) Last year I grossed $50k in sales (from a small 850 sq ft home). Of the $50k, only about $2k came from Airbnb; they aren't the industry leader.
2) Airbnb gives the "short-term leasing" industry a bad name/reputation.They started only renting rooms, beds, or couches. They will never be able to shake that stigma because most of the people I encounter are only looking for a "steal". They're trendy because they've thrown a lot of marketing dollars behind their brand. The tenants often aren't easy to work with and the landlords are just there to make a buck. Very few are actually running their home/operation as a business.
Dexter- I have a few rental properties that with the exception of one which is housed at a Water Park in Wisconsin Dells, I manage the rest. Airbnb works for my personal home to offset expenses, I haven't explored VRBO too much but with people looking for a deal, for a few nights or a week, works for me at this time. If you have any other suggestions, please let me know! Thanks for your input.
I own Cabins in Gatlinburg Tennessee. For the past 5 years I received 80% of my rentals from Homeaway/VRBO. Last year I put our places on flipkey/trip advisor. At this time 95% of my rentals now come from flipkey/trip advisor.
When my 2 recent listings were going to expire on Homeaway, I paid to keep one and let the other expire. The expired one I put on their highway robbery program of them taking 10% of the rental for each rental. Of course I now receive only 150 page views a month on the one I paid for and 700 on the 10% listing! I raised my rates on the 10% listing and only had one rental at each property from Vrbo this month.
It is evident to me that Homeaway is money hungry. Why send inquiries to paid listings. They pocket that money and give them to the 10% listings.
One other point. I have always had good reviews and lots of them. The paid homeaway listing gets very few page views. The same property always comes up in the top 20 on flipkey or trip advisor searches.
We are currently putting together our own website for previous guests so they can skip the lousy booking fees.
We do not us airbb due to their policy of allowing a renter to back out 5 days before for a full refund.
Hope this factual information helps.
Dexter
That 50k in gross sales for an 850 foot house is very impressive. I wonder if you have blogged about this or would be willing to give some information the the site(s) and strategies you used, I have been thinking about doing this on some level but would love to hear from someone who is an expert and having success. Thanks!
Really @Jeff Konig I'm not a fan of Airbnb. For 2 reasons:
1) Last year I grossed $50k in sales (from a small 850 sq ft home). Of the $50k, only about $2k came from Airbnb; they aren't the industry leader.
2) Airbnb gives the "short-term leasing" industry a bad name/reputation.They started only renting rooms, beds, or couches. They will never be able to shake that stigma because most of the people I encounter are only looking for a "steal". They're trendy because they've thrown a lot of marketing dollars behind their brand. The tenants often aren't easy to work with and the landlords are just there to make a buck. Very few are actually running their home/operation as a business.
While you are certainly entitled to your opinion - and I won't take that away from you - Airbnb is indisputably the industry leader at this point. I grossed comparable revenues from our rentals last year, and from the five sites that I kept listings on, 90% of our traffic came through Airbnb. With that said, I agree with you that very few landlords are running their operation as a business, and this has been a focal point of many of my posts on the matter here on BP - managing a vacation rental, whether on Airbnb, VRBO, Homeaway, or any number of other sites, is a labor-intensive business on its own, not a passive investment.
As for the fees imposed by these various sites, Airbnb wins out again in my book - by charging only the credit card transaction fee to the host, you put the real power of advertising and marketing on the host. In other words, you can market your property as much or as little as you want, and pay the same fee overall to Airbnb.
I haven't seen any less inquiries or bookings due to the new VRBO/Homeaway service fee. I make sure to explain to guests that there is a service fee in the quote and explain what that is for. I've also reached out to past guests to let them know about the service fee and not one has said that they would not book through our VRBO listing and we've already had 4 guests that rebooked their next trip with us.
As for AirBnB vs VRBO, it really all comes down to your area when deciding on one of the listing sites. From my research, VRBO tends to have many more listings at "resort" type areas (think beach areas and ski areas) where as AirBnB has the larger part of "urban" listings. For our condo in Kihei, Maui, we list on VRBO as that's where the majority (by far!) of the owners in that area list their properties on. We just pay the regular $349 yearly subscription fee and that equates to less than 1% of our yearly rental income. The only other money VRBO gets from us is the credit card processing fees. We are about to close on another Kihei condo and will definitely be listing this condo on VRBO. With the area we are in, it makes no sense to list our property with anyone else.
Also, regarding the VRBO service fee, from my calculations, their guest fees should average less than those that AirBnB and FlipKey charge their guests. VRBO charges 4% - 9%, AirBnB charges 6% - 12% and FlipKey charges 5% - 10%. I'm not defending VRBO in any way, but just sharing what I discovered when going through these numbers so that I can shed some lite on these fees to our guests.
I LOVE Airbnb and have been really happy with it both as a host and as a guest. The fees on the hosting end are so minimal. Our space is only listed on airbnb and is booked pretty solid, so I haven't even bothered listing it with any other sites. I love that Airbnb gives you the option to stay on someone's couch or on a private island, with price ranges everywhere in between, and I think more and more guests are using the site because of that.
Oh man... lots of feedback. I'll respond to everyone.
@Jeff Konig Overall, there are many sites to use. I'd say start with a book called How To Rent Vacation Properties By Owner by Christine Karpinski. This is the book that got me started on a successful path.
@Robert R. I'd love to hear more about your success with FlipKey/Trip Advisor. I paid decent amount of money to list with them, and I've had little success or inquiries. I may be doing something wrong in terms of marketing. Most of my reviews are on HomeAway. Maybe I need to figure out a way to get those over to Trip Advisor to see if they will repost them.
@Robert Feol I have not blogged, but would love to. I'm passionate about the business model and have experience much success. I've added a new property, since it's active date of Jan 31st, I've booked 69 days and generated 15k in gross sales. That's only 6 weeks of the property being online. I mean... it's just really exciting stuff.
@David Hays I've just found Airbnb to be so restrictive. Lately, my listing price has been incorrect, on the back it's right, but when guest do the "Instant Booking", it under charges them. The communication is restricted - blocking all communication of address, phone numbers, and any references to a url or search engine name. That's no way to do good business, in my opinion. Clear concise communication is the core of good business... So when you restrict that, as an owner you impose on my ability to be efficient and as a potential guest, I'm limited to the information I can even gain on the property I'm purchasing all because the listing service wants to make sure the booking is made through there sight.
I'm not sure if you knew this David, but there's a software called LiveRez. It cost about $5,000 for start up and a monthly fee of about $250 - 350. By purchasing this software, you can bypass the restrictions. I've considered it, but since I'm not making much money through the site, I'm on the fence. I'm torn between using LiveRez (geared more towards Airbnb integration) or Escapia (geared more towards HomeAway integration).
Overall, the underline message here is that there is no ONE right way. There's no "silver bullet" to success. I do well here in Chicago. I'm raising funding to expand. Check out this link, there's an FAQ that may inspire some new ideas for you all: https://www.biggerpockets.com/forums/517/topics/286212-low-risk-opportunity---investors-in-the-hospitality-hotel-market
Looks like HomeAway may be facing a class action lawsuit about the new fees:
We've used VRBO as our only marketing avenue for our lakehouse rental for 4 seasons now - and we've completely sold out during each prime rental season so far. We use it strictly as a lead generation site, and a "reviews" site. We do all of our bookings outside of VRBO the "old school" way, though I like the square idea, and several renters have asked about Paypal. Given our bookings are still outside the site, yet the # and quality of our property reviews are better than competiing properties, I don't anticipate the new fees changing the number of inquiries/leads we get. If we see a substantial change for the 2017 summer season we'll reassess then.
I'm increasingly realizing the disconnect here, at least from where I'm coming from versus the perspective of many here...
I am a professional hospitality consultant, with a background in hotels and restaurants, and my work focuses on helping independent hotels, resorts, restaurants, and vacation rental companies around the world improve their operations. I built a very successful business of vacation/tourist rentals in Spain, and sold that business at the end of last year. I was able to do that because I recognized that vacation rentals are part of the hospitality industry, more than they are a part of the real estate industry, and that I needed to operate that business as a professional hospitality enterprise. What does this mean? It means active work, active management, not passive investment, and I fully realize that a lot of people on here are not meaning to start their own business, and are more interested in passive investments. This...this is the disconnect that I'm referring to.
The reason I make this point...well, if you think about it, I think you'll understand: hotels advertise on LOTS of websites, like Expedia, Booking.com, Travelocity, etc. These are referred to as "booking engines." These websites we're discussing here - HomeAway, Airbnb, VRBO - are exactly the same thing, with the minor exception that they have introduced a limited, consumer-level hospitality PMS (property management system). These websites are truly only a marketing tool, and they don't stop you from managing your own independent website and booking engine (or your own advertising), but what will make the difference is having your own PMS.
@Dexter Crawford this is what you're referring to with LiveRez, which yes, I do have some limited familiarity with. Have you actually requested a quote from them to get those numbers, though? That seems pretty excessive (especially a $5k setup cost!) for a small enterprise, but perhaps you have 50+ units you're managing? In any case, they are only one of many companies out there, so if you really want to go that route, I'd encourage you to shop around (feel free to PM me if you want some ideas).
@David Hays I'm definitely looking for a healthy balance between the real estate management and the hospitality aspect of the business. I will definitely PM you.
@Doug H., you could try these: LeisureLink (only for property management companies, not individual homeowners), Avantio, myBookingPal, Rentals United, and Rental Network Software
We are seeing a decrease in rentals with vrbo and the new fees. We have guests complaining about it a lot, it IS about an 8-10% fee for guests!! This is really a high fee, and is no doubt turning people away from vrbo. They are going to go to the free sites. I think we will all lose business on vrbo. I mean, vrbo takes $1600 a year in fees for our two properties, and now they are charging the guests that much money?? I looked it up, and vrbo made $369 million dollars in 2014, they aren't exactly hurting for money. We have told unhappy guests to complain to vrbo, I think also that owners should complain, if you feel so inclined. I have really seen a difference in company's policies, and how they can change when people speak up. We have complained, in detail. There is power in numbers!
In 2014 VRBO accounted for 80% of my business- this year it's not even 8% as everyone has switched to AirBnB. I paid a lot of money for the gold service too and simply a waste at this point.
The one thing I hate about AirBnB- they don't charge tax which means I need to include it in my price and then do the math.
Owners (and unhappy guests, too) should call or email homeaway or vrbo to voice their opinions about the new "fees". Page with the phone and email on it is: https://gethuman.com/contact/HomeAway-com
Thanks! It may make a difference!
I had a little blurb on my page to ask tenants to contact me directly if they don't want to book online thus getting around the service fee. They suspended my site wed. I called today but they couldn't do anything. Said it was a violation of the service agreement. I was supposedly sent an email but I never got it. Nice. Anyone else had this happen? I just paid for a feature listing. Now I'm sitting idol.
@Chuck Pappas oof rough. The thing with trying to avoid the service fee (assuming you don't get kicked off first) is that doing that will push your listing further down. VRBO uses conversion rates in their algorithms to determine "best match."
I'm back on now. Took the blurb out. I must not be the only one doing it because people often call or email asking me if there's a way to bypass that and go another route. It's a tough call to make. I personally would love to just get a booking and money sent right to me without the back and forth.
Robert R - you said you were going to put your properties on your own website. Did you do that? What did you use to create your website? Has it worked out well?