on 06 November 2009
HomeAway is plotting the next phase of its quest for world domination with a gradual rebranding of its sites around the globe.
Sites such as the UK’s Holiday Rentals, which was acquired by HomeAway in 2007, have seen a makeover in recent weeks to push the HomeAway branding to the forefront.
Other sites are expected to follow suit in the coming months as HomeAway slowly pulls all the acquired brands under one corporate roof.
Supporting the rebranding campaign in Europe will be a ongoing marketing campaign, possibly including what may be its first foray into TV advertising outside of the US.
HomeAway is a tough talker and says the enormous growth potential in the holiday rentals space is not being realised by other players in the industry – especially the online travel agencies.
Petra Friedmann, ex-general manager for Opodo France who was recently installed as president for HomeAway in Europe, says the European marketplace alone is now worth around £25-30 billion in annual rental revenue.
In the UK it is estimated to be £2-£4 billion a year, while a PhoCusWright report in 2008 plotted the US market at roughly $24 billion.
Friedmann, parroting HomeAway CEO and holiday rental evangelist Brian Sharples, believes the marketplace is only at the beginning of a major increase in accessibility, innovation and – most perhaps interestingly – acceptance by others as a credible part of the industry.
Web traffic across HomeAway’s global brands increased by 48% between September 2008 and September 2009. Revenue growth for the company is so far running at around 35-40% for 2009.
Friedmann says OTAs are not capable of turning their attention to the holiday rental market because “it is a completely different job”.
This may, of course, be a smokescreen to dissuade those from eyeing the obvious booty on offer from taking it too seriously.
[Friedmann admits that during her time at Opodo her team "looked at the rentals market"]
Interestingly, Sharples told me in 2008 that there was nothing to stop HomeAway from introducing its own OTA-merchant model.
When asked how this is working out, Friedmann says:
“We are doing tests with some property management owners. There is still some work to do to make it an intelligent solution because it is so much more complex.”
There, once again, the boundaries between the two disciplines are being drawn – this is our domain, you stick with yours.
But it seems incredible to many that with travel technology, distribution switches and software able to run complex tour operating platforms and airline reservation and bookings systems, online travel agencies and others are unable or unwilling to tap into such a burgeoning market.
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It’s not about the technology…it’s about inventory ownership. At the heart of the merchant model is the ability to manage blocks of inventory and control their rates. Vacation home ownership is highly fragmented among mostly individual private owners. Control of that inventory rests with the property management companies who are bound by rental contracts with home owners. Those contracts typically have inflexible terms regarding availability and rates, leaving property management companies with their hands tied. Thus the boundaries between the two disciplines.
What I noticed is that in the coverage of this hot vacation rental market in Europe, no mention has ever been made of one player that has been a specialist in this business for decades – Interhome, with a presence in most major markets. Looks like they are flying low under everyones radar screen, or are they a non factor?
Holiday rentals are not as quick a sale as hotel rooms, flights and rental cars, and consumers looking for these rentals do a lot of looking and researching before booking. OTAs are built for speed and transaction, so it’s logical in a way that they wouldn’t be interested in the holiday rental segment.
But there’s a lot of money to be made in this segment and the OTAs have the infrastructure and technical know-how to distribute inventory, so it’s not logical in a way that they’ve let HomeAway and its competitors step into the breach. Expedia does own Flipkey via TripAdvisor, but there is no shared back-end between the companies; you could argue it’s a first step but a really small one.
What’s really fascinating about this segment (and other niche segments in the long tail) is that the agglomeration of content and creation of distribution channels HAS to be driven by companies like HomeAway, because the supplier base is fragmented in so many ways – culturally, geographically and financially.
The holiday rental industry prides itself on its unique and non-commoditized product, but this lack of commodity may not be in the owners’ interests in this case, as control of distribution is handed over to third parties.
Given the OTAs struggles with control of inventory in the other segments (witness the Choice-Expedia drama), it’s odd that they would let this eminently controllable segment slip away.
This is a topic close to my heart. Although we are a small, niche player, the vacation rental market is something we have invested in and we nurture an ever expanding collection of amazing properties.
I agree with all the issues outlined above – the booking pattern is different from hotels, the availability management is an issue because of the fragmented nature and ownership of the properties. In comparison to hotel bookings it’s all in the dark ages. Then factor in the customer concern about spending a lot more money than you would at a hotel and all the unanswered questions you might have when booking such a holiday – it all makes for a fantastic challenge and great opportunities.
We’ve built our new booking system to accommodate self catering properties – our first property will be trained and live within a week – wish us luck!!