Having had conversations with a number of guests and listening to their feedback we felt it was worthwhile highlighting why it is cheaper to book with us direct rather than through companies like HomeAway/VRBO/Owners Direct/Flipkey/Trip Advisor etc. We do advertise on these sites, which at the moment we need to do to generate enquiries until our home is more established. We also advertise on the likes of vr360homes.com and directvillasflorida.com and these companies just put the guests in contact with us (so in effect a direct booking) and there is no additional charge to the guest via these sites - we just pay an annual fee to advertise our home through them, although we also have to do this with the like of HomeAway and they still make additional charges to the guest!!
It is quite apparent that guests (not just with us) are unaware of some of the additional charges these companies make such as service or booking fees. Unfortunately some people think it is us that add on these charges - we don't receive anything for these additional costs, it goes straight to the company (often called OTA's - Online Travel Agencies). These can also add on a considerable amount to the cost of the booking. Try running a quote through our site and then through the likes of Owners Direct/HomeAway/VRBO (our home is property number 6806758 on these sites to make it easier to find) and you will see how much more they are charging you. These OTA's will tell you that this is to provide you with security should the homeowner not be genuine or cancel your booking and to be fair you may wish to pay this additional amount for that piece of mind, however we have never cancelled a booking and you can see by our guest reviews we are genuine people and more than happy to have either telephone calls or exchange emails to discuss our home, the community, local attractions etc. and offer any advice we can.
Literally just after we had written this, one of the vacation rental groups we subscribe to published an article which you can link to here, and a copy of it is below which describes this exact issue!
Amy Hinote is the founder of VRM Intel, which provides news, information and resources for the professionally managed vacation rental industry, and VRM Market Data, which provides competitive market data for the rapidly expanding industry. With a background in finance and marketing and over 12 years in the vacation rental industry, Hinote has worked with property management companies, suppliers, intermediaries and investors, and provides insider information about the growing vacation rental industry. Hinote resides just north of Chicago in Evanston, Illinois
Homeowners and managers are reporting that HomeAway has been quietly inching up the service fee, in some cases over 12%.
“Since price is an important factor in determining whether a traveler books a property, it’s natural to optimize and adjust the exact amount of the service fee,” stated HomeAway’s Community Forum. “This means the service fee amount will change from time-to-time, based on different factors…Communication with you is important to us – but we don’t communicate all of the tests we run due to the frequency of the tests we run.”
While HomeAway tests their optimal “service fee” for travelers, property managers and homeowners face consequential challenges. For example, guests do not understand the fee and frequently blame the manager or homeowner for the increased cost. The fee is often non-refundable, causing additional friction between the guest and manager/owner.
In addition, HomeAway is now requiring all of their listings to enable online booking.
According to Jason Sprenkle, co-owner at 360 Blue in the Florida panhandle:
“At this point you have to determine whether you should continue to invest in building the VRBO brand, or use those same funds to begin investing further in your own brand. That question will depend on the strength of your current brand, your market’s dependence on VRBO, and your relative market share.”
Diane Smith, owner at Bearfoot by Owner Luxury Rentals in Myrtle Beach added:
“We have over 20 properties listed on VRBO/HomeAway. We are losing bookings because of the Service Fee. We take credits cards through our office, and we try to explain to the potential travelers to book directly through us to avoid the service fees. Often they do, but then others think it is some sort of a scam. We fought the new service fee as did many other property managers but to no avail. Our rates are competitive and under some, but then the service fees drives them higher! Very annoying.”
The increase in fees also generates an overall price increase to the consumer which potentially drives travelers back to hotels and other lodging alternatives. As one homeowner wrote:
“Here is the rub as I see it with HA incessant testing of an ‘optimal’ service fee – When the fee is deemed excessive we lose a booking. When the fee is acceptable or low we MAY gain a booking we would probably have received prior to the fee. HA (Expedia) is running the test at very little or no cost to them but potentially a high cost to the people who make their business possible (at least in the vacation rental world). To me this is blatant greed and disregard for the owners of the ‘inventory.'”
EVOLUTION OF HOMEAWAY’S “SERVICE FEE”
In 2014, HomeAway was committed to not charging travelers a fee. “We are going to be free to travelers,” said Brian Sharples, co-founder and CEO of HomeAway, to shareholders in November of 2014. “TripAdvisor and Airbnb have chosen to charge big fees to travelers,” Sharples continued. “Well, we’re going to have a pretty sizeable marketing budget in the next few years. And we’re going to be letting everybody know, when you come to our platform, you don’t pay a fee, and we think that’s a big deal because if you look historically at the travel industry, those competitors who adopted no traveler fees first are the ones that ended up being the big winners in that business.”
In November 2015, when HomeAway announced that the company was being acquired by Expedia, Brian Sharples surprised its suppliers by revealing the addition of a traveler service fee, which would be based on a sliding scale and would begin rolling out in Q2 of 2016. Sharples said the fee was expected to “add an average of roughly 6% to most transactions that run through its online shopping cart.”
In March of 2016, HomeAway disclosed the amount it would be charging consumers. “The service fee is a fee charged to the traveler and is calculated on a sliding scale of 4% to 9% of the rental amount, excluding the deposit or taxes. The charge applies to the cost of the rental and will not exceed $499. The service fee helps cover the cost of running the HomeAway websites, including features such as 24/7 customer support and marketing efforts to ensure a quality experience on our sites for both travelers and owners.”
Last month, HomeAway changed its policy, increased the range of the fee, and began testing even higher percentages. According to HomeAway, “The service fee is between 5-12% for most bookings but can be above or below, based on the reservation.”