If you could make your own property listing service...

11 Replies

Hello all! I hope everyone is having a nice holiday rest.

Going over my rentals for the season, it struck me that the major listing services (like VRBO, HomeAway, AirBnB, etc) are getting way too comfortable after having near control of the market for so long. Guests pay more, while Hosts receive less, because these services all insist on taking a sizable cut of the action. Service fees, booking fees, commissions, whatever name they use, everyone seems to be charging some sort of middle-man fee that causes a serious discrepancy between the costs Guests pay and the money Hosts receive.

I’m posting here to try and get some feedback on an idea I’ve had kicking around for a while to try and solve the problem.

Basically, I’m aiming to establish a listing service that only charges an annual listing fee to the Host. No per-transaction cuts, no interference in communication, no games with mystery fees. Hosting a website is expensive, but not NEARLY so expensive as to warrant the kind of fees that are currently being charged.

To help guide me, I’d like to have a discussion on what problems you have with existing listing services, how you might imagine resolving them, what it might take to convince you to try a new service, and what features from existing services you feel are “must-haves” for any new service you’d consider using. In other words, I want to know how to best design your dream listing service.

I know that’s kind of a big subject, and I have a lot of ideas of my own, but I’d to hear other people’s before I get going. Thanks!

@Beverly Daves If you’re going to compete with AirBnB, a 2.1 billion dollar company, you might want to start with a profile picture ;)

All kidding aside, instead of worrying about how much they're making just worry about how much you're making and if the numbers don't work..... don't STR.

@Beverly Daves If you’re going to compete with AirBnB, a 2.1 billion dollar company, you might want to start with a profile picture ;)

All kidding aside, instead of worrying about how much they're making just worry about how much you're making and if the numbers don't work..... don't STR.

The people I rent my STRs to are not on vacation.  They are all blue collar skilled labor working contract jobs at a refinery.  When the job is over (2 weeks to 6 months) they go back home.  

If they have never been in this town before, the first thing they do is check into a motel and pay for a week.  They'll see me the next day to gain access into the refinery, and that's when I tell them about my STRs.  I hear this phrase all the time:  "I wish I would have known about this yesterday".  

What service can you provide that would inform potential renters coming to my market about my 23 STRs with 82 beds?

@Beverly Daves There are already sites that work under precisely the model you're proposing.  Here's what AirBNB/VRBO provide to me, a host, that those sites don't, that I find particularly valuable:

- Easy interface that I didn't have to build myself

- Credit card processing

- Customer service representation, guarantees, and "insurance" that, while definitely less than perfect, provides an element of support and a sense of safety to both guests and hosts

- Most importantly, a monstrous marketing presence and household name recognition

These are costs that far outstrip simply running a website that acts as a way for guests and hosts to connect.  There's a place for that, but make sure you know exactly what niche you're trying to carve out and what ways you would (and would not) be competing with the major OTAs.

To answer your original question, the most important things to me are the marketing and the credit card processing.  

@Beverly Daves I concur with @Julie McCoy  marketing and CC processing is BIG, but a few other things would be great:  Only recently did HA/VRBO provide visibility to "post stay" per night rates, Airbnb does still not disclose this one the nights are booked.  I also like the HA/VRBO pricing tool MarketMaker, but Airbnb only works to convince hosts to drive their price to $0 because they only get paid, when we get a booking (so I like your idea - though it does exist elsewhere already, they just lack the marketing budgets).  Both tools don't have any real reporting capability, so it would be nice to have historical data performance as well as true futuristic pricing so I can get away from my spreadsheet tracking.  It would also be nice to have real empirical pre-booking pricing data, a project I know is being worked on by a few independents.  Integrated cleaning schedules and communication automation would be nice as well.  The review process for both OTA's is faulty, that needs to be rectified.  

Originally posted by @Michael Greenberg :

@Beverly Daves I concur with @Julie McCoy marketing and CC processing is BIG, but a few other things would be great:  Only recently did HA/VRBO provide visibility to "post stay" per night rates, Airbnb does still not disclose this one the nights are booked.  I also like the HA/VRBO pricing tool MarketMaker, but Airbnb only works to convince hosts to drive their price to $0 because they only get paid, when we get a booking (so I like your idea - though it does exist elsewhere already, they just lack the marketing budgets).  Both tools don't have any real reporting capability, so it would be nice to have historical data performance as well as true futuristic pricing so I can get away from my spreadsheet tracking.  It would also be nice to have real empirical pre-booking pricing data, a project I know is being worked on by a few independents.  Integrated cleaning schedules and communication automation would be nice as well.  The review process for both OTA's is faulty, that needs to be rectified.  

 Oooh yes, backward-looking pricing!  I can't stand it when I can't figure out the specific nightly rates guests booked at, and I shouldn't have to keep screenshots of my calendars in order to do this.

But basically, everything Michael said.  These are tools I associate with third-party apps, but the only reason those apps exist is because the OTAs don't provide that functionality.  Automated messaging is the most important thing to me for day-to-day operations, but yes it'd be amazing to have really good reporting tools/pricing data.

The one thing I differ on is the review process - I like AirBNB's model.  Blind reviews are crucial, as is a time limit, and the ability to leave specific comments (I can't stand that VRBO is a strict star model - sure it's easier, but there's no room for nuance and as a host I get almost no worthwhile information on a guest from it).  

Originally posted by @Julie McCoy :
Originally posted by @Michael Greenberg:

@Beverly Daves I concur with @Julie McCoy marketing and CC processing is BIG, but a few other things would be great:  Only recently did HA/VRBO provide visibility to "post stay" per night rates, Airbnb does still not disclose this one the nights are booked.  I also like the HA/VRBO pricing tool MarketMaker, but Airbnb only works to convince hosts to drive their price to $0 because they only get paid, when we get a booking (so I like your idea - though it does exist elsewhere already, they just lack the marketing budgets).  Both tools don't have any real reporting capability, so it would be nice to have historical data performance as well as true futuristic pricing so I can get away from my spreadsheet tracking.  It would also be nice to have real empirical pre-booking pricing data, a project I know is being worked on by a few independents.  Integrated cleaning schedules and communication automation would be nice as well.  The review process for both OTA's is faulty, that needs to be rectified.  

 Oooh yes, backward-looking pricing!  I can't stand it when I can't figure out the specific nightly rates guests booked at, and I shouldn't have to keep screenshots of my calendars in order to do this.

But basically, everything Michael said.  These are tools I associate with third-party apps, but the only reason those apps exist is because the OTAs don't provide that functionality.  Automated messaging is the most important thing to me for day-to-day operations, but yes it'd be amazing to have really good reporting tools/pricing data.

The one thing I differ on is the review process - I like AirBNB's model.  Blind reviews are crucial, as is a time limit, and the ability to leave specific comments (I can't stand that VRBO is a strict star model - sure it's easier, but there's no room for nuance and as a host I get almost no worthwhile information on a guest from it).  

I don't have answers on "how" to improve the review process and I too like the "blind" process as well Julie, I just think there's room for significant improvement (I'm really helpful in this area huh? :-)   Maybe it's the "star" ratings on both OTA's and somehow we should be measured beyond the questions they ask.  Clear as mud.

@Paul Sandhu   I think I hear your problem but I'm not sure what sort of solution would work... It sounds like your guests simply aren't considering STRs as part of their accommodations search, right? The only solution that comes to mind would be to try and increase global awareness of STRs via an advertising campaign, possibly directed towards non-vacation travelers. I'm not sure how well that would perform in improving your specific situation, though, or if the costs would be prohibitive. How would you try to let them know, if you had free reign?


@Julie McCoy and @Michael Greenberg

Thank you both for these responses, this is exactly the sort of feedback I was hoping for!

I'm aware that there are sites that work under the business model, but they don't seem to be growing or really making a difference-- which is why I figured that it takes more to be successful than just being low-cost. Setting up an easy interface and something to handle credit card processing definitely seems doable. There are all sorts of ecommerce tools and resources out there, so while I'll need to do some research to figure out which approach is the best for this specific use case, I'm inclined to believe that can be done. Guarantees and insurance, I’m not sure about... I'd need to come back to that after looking for a processing platform, to see what sort of offers I could make financially viable. Is there any specific protection that is particularly important to you, or is it just the peace of mind that the whole suite offers?

Customer service, marketing, and name presence are the real problems from that initial spread, in my mind. Customer service is just a money issue-- Particularly just starting out, people will have questions, both about the service, and the interface... If I can turn this into a proper business plan to pitch to investors, it would be fairly easy to dedicate some funds for customer service, but it puts a damper on any attempt at self-starting. Which is fair, I guess. I never really expected this to be a cheap or easy project.

Marketing and name presence are substantially more problematic from what I can see, because at the end of the day, HA/VRBO & Airbnb have spent a lot of time and money to develop it, and I can't really expect to have anything that can compare to that in a reasonable time frame. Do you think there's anything that can be done there? Advertising and time is an idea, but I don't think it's likely to make much headway on it's own.

As far as "post-stay" price visibility goes, I'm pretty sure that should be easy to provide from a programming perspective, so that's definitely something that can be done. Though, I have to confess that I don't have much personal experience with MarketMaker or third-party apps, so I'm not sure how to evaluate your feedback there. In the opening stages, do you think it would be worthwhile for a small OTA to dedicate resources to competing with the existing 3rd party apps? I worry that if I try to compete in too many directions, I'll wind up with a service that technically competes in all fields without actually being very competitive, if that makes sense.

I hear that you like the blind review process, and can definitely work to take some inspiration from Airbnb's setup, but can I ask what specifically bothers you about the star ratings? I know that they aren't helpful as a metric-- trying to regress a complex situation down to a numeric score usually isn't helpful-- but in what ways specifically do they fall short? Do they primarily bother you when reviewing, or when reading reviews? The review process is central, so improving it would be great, but, like Michael, I'm not entirely sure where to start.

@Beverly Daves I feel like the issue is that things like credit card processing and customer service (and marketing!) are ongoing expenses and likely to require ongoing revenue to support, vs. being able to run on annual flat fees that remain reasonable.  It's not that the systems are complex in and of themselves, but they're not flat expenses.  

Further, you'd need some significant capital to start up - I'm not going to pay a fee to list on an unproven site, so any big launch is going to have to come with incentives for hosts (e.g. free listing for a year, or a guaranteed number of bookings, etc) which means your starting capital is going to have to come from another source, at a time when you'll need a large marketing budget to launch. This means investors, and investors need a return on investment, and that means the site has to have a revenue stream that is likely deeper/more consistent than annual listing fees.

Personally, I'm not opposed to paying a commission on my bookings.  I get a lot of value out of the OTAs and the ~3% I pay doesn't bother me.  What DOES bother me is the much higher percentage the guests pay, which depresses the prices I can charge.  I'd rather pay a somewhat higher percentage (say, 5%) in exchange for their being no booking fee for the guests, but I'll be able to raise my prices ~10% and it's a win-win.  

It's a complex thing because you need to gain the trust of both the host and the guest as an entity (and more or less at the same time), find a good marketing hook (e.g. "no booking fees") to pull customers away from AirBNB/VRBO etc, and be able to deliver a simple, seamless experience.  The technology is the "easy" part (not that any of this is easy); creating consumer awareness and confidence is definitely the challenge.

@Julie McCoy   Thanks for your response. I can see you have really thought this through.

For what it’s worth, I was planning to pass on the exact fees our credit card service provider charged us to each host. That’s the only way I can see any service like this operating.

I can see your point about customer service costs, but there might be fewer problems for customer service to deal with in a more open and transparent platform. The original VRBO charged only a flat fee and managed to handle customer service and other expenses until Home Away bought them out.

I hear you about the service fees to the guests and agree completely. That was the big bomb that Expedia dropped when they bought Home Away and VRBO. I especially hate reading travel blogs advising renters to ask the host to lower their rates to make up for the additional 12% in service fees!

I definitely understand not wanting to pay for an unproven service. I don't think anybody would, honestly. I do wonder where you'd draw the line, though-- after all, there has to be a point where a new service transitions from "This is likely a waste of my time" to "This might actually be worth something." Is it about getting a certain number of active users? Surviving for a period of time? Having a given volume of listings or bookings?

Thanks again for all your comments and clear thinking.