When he talks about HomeAway’s lead in vacation rentals and Booking.com’s edge in the retail-hotel business in Europe and Asia, Expedia Inc.’s Dara Khosrowshahi offers a similar refrain.
“We don’t think it is a winner-take-all kind of issue,” Khosrowshahi says, in acknowledging HomeAway’s market clout and Expedia’s uphill battle to get vacation-rental owners to list their properties with a second brand, Expedia’s TripAdvisor.
Khosrowshahi uses similar verbiage when he acknowledges that Expedia’s international hotel business is not displaying Priceline-like growth.
“I don’t think it’s a winner-take-all market,” Khosrowshahi says, referring to the global hotel business.
Khosrowshahi’s comments came at the J.P.  Morgan Global Technology, Media and Telecom Conference in Boston May 18.
In vacation rentals, Khosrowshahi notes that Expedia is building its base, is trying to increase traffic both in the U.S. and internationally, and needs to ensure that vacation-rental property owners receive an ample amount of consumer leads.
With its leadership position, HomeAway working at a higher level and is focusing on expanding its international business, he says.
Khosrowshahi is optimistic about TripAdvisor’s prospects in vacation rentals because it is such a huge market and still is in its infancy regarding online distribution.
He thinks there is ample room for several players to succeed and believes TripAdvisor’s global footprint and page views should make it a worthy competitor in vacation rentals.
Regarding the global hotel business, Khosrowshahi says Expedia is gaining marketshare in Europe, Asia and South America  but isn’t keeping pace with Priceline and its Booking.com unit.
Venere is Expedia’s answer to Booking.com.
Khosrowshahi says Venere now has 23,000 hotels using the agency model — as opposed to the prepay hotel-merchant model — in Europe and elsewhere and by the end of 2010 it will be in a relatively good inventory position.
The next stage will be for Venere to work on the inventory quality — a factor that sometimes gets short shrift — including enhancing inventory availability in short booking windows, he adds.
Venere also will focus on search-engine and affilliate marketing, “things Booking.com does so well,” Khosrowshahi says.
When it comes to the global hotel and vacation-rental markets, Khosrowshahi would probably find himself disagreeing with baseball great Yogi Berra, who famously said, “It gets late early out there.”
Khosrowshahi believes that despite the seeming lateness, it’s still pretty early.
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- Expedia sending the big hitters to the Eternal City
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Interesting inside information on changes in travel industry thanks.
The VR aspect of all these providers is in its infancy. That said, Tripadvisor also has a large lead gained through its Flipkey.com product and its relationship with the vacation rental management segment of the market.
Flipkey and Homeaway show up consistently at Vacation Rental Manager Association tradeshows (national, easter and western) and are usually seen at important regional shows like Florida VRM Association, Central Florida VRM Assocation and North Carolina VRM Association.
I have never seen Expedia (or anyone else) at one of these industry conferences nor have I ever heard about Expedia reaching out to a vacation rental manager.
The Expedia’s of the world may indeed miss the VR opportunity completely because their model doesn’t fit the typical vacation rental by owner or vacation rental manager. Three broad themes these OTA’s don’t “get” are:
A) Vacation rentals can’t be pigeonholed into queen/king/non-smoking like hotel rooms… .they are homes with a unique set of amenities and their own address. At best, they are condos within a larger resort.
B) Vacation rentals are largely not technologically equipped for online distribution channels that send reservations directly through automated channels. They often have online booking, but, they don’t have mechanisms to flow inventory into Expedia and receive reservations in return.
C) Vacation rentals usually are not willing to pay fat OTA fees nor offer net-rate pricing. Homeaway and Tripadvisor find ways to charge for annual listing fees, per-email and per-phone call feeds. (Or, use flipkey reviews as a powerful trojan horse) Many Vacation Rental by Owners don’t even take credit cards!
Just because the vacation rental market is shockingly big and growing doesn’t mean that the OTAs are going to capture mindshare. It may not be winner take all, but will be loser take nothing!
Expedia: Come to some VRMA conferences! Learn what makes this market unique! Call me, I can give you some advice on what VRs are thinking and some ideas on how to cater to their specific needs.
Anyone who treats VRs like hotel rooms is doomed to stay in the loser take nothing category.
Trent: You say TripAdvisor is a leading player in vacation rentals through its FlipKey product. Well, Expedia owns TripAdvisor. So, what’s the problem? I don’t think Expedia/TripAdvisor/FlipKey are treating vacation rentals like hotel rooms.
Dennis,
True, but note that you can’t find vacation rentals on Expedia (at least without looking hard) and you can’t book vacation rentals on Tripadvisor. All you can do is contact the owner. True, Tripadvisor/Flipkey are not treating them like hotels but instead like review driven listings. They charge per “contact.”
Vacation Homes have a giant market share in premier beach and mountain locations that is untapped by the OTAs. I can plan my vacation to any major city on Expedia, but Expedia doesn’t help me get that beach home. Homeaway (and Tripadvisor) on the other hand…
So, what is the problem? it is that Expedia, Priceline, Orbitz, Hotels.com, etc want to package rooms/flights/cars and drive online reservations — the vacation home resists that business model. You know that Expedia would LOVE to have bookable vacation homes in their repertoire. The problem is that they won’t be successful until they treat VRs as a special category (like hotel, car, air AND VRs).
Of course I could be wrong… maybe the Expedias of the world don’t care that they can’t include VRs in their fold. Maybe they are happy to have them relegated to secondary websites where they are treated like advertisers instead of like bookable commodities. In that case, there is no problem.
Also, I don’t expect Expedia to call me.
Trent is right. In a market where the Expedias and hotels.coms report losses (a 5% average?), the vacation rental market is exploding. In my 10 year existence in the VR market I see things that I have never seen before. Because of our business model, we check availability calendars daily from a few dozen PMCs and a few hundred private owners and all come back (and say) the same thing: 2009 was record breaking and 2010 will outgrow 2009 for certain.
The problem extends to other organizations as well, such as the official visitors bureaus etc. These organizations also treat the VR market as the little brother despite the fact that (for Orlando) 40% of the visitors will stay in a VR (incl Time Share) vs hotels.
The awareness is kept low as there are no numbers/studies that report this phenomenon, simply because the money for these studies sit with the hotel powerhouses. The VR market is not organized and cannot produce results for that reason. FlipKey is yet another step in the right direction, so is the VRMA. Not if but when the VR market acts like one entity, the hotel market is in trouble. Ignoring the VR market is a mistake, an expensive one.
If the debate is who is the biggest in terms of online visibility today – it’s Homeaway hands down. As the largest VR listing service in the sector they are in an advantageous position to continue to lead the VR sector in visibility as a listing or “lead” service based on the massive inventory, and staggering volume of property inquiries (“leads”) passing thorough their sites. However, in terms of market leaders, companies like Expedia/TripAdvisor/FlipKey, have a clear advantage over Homeaway for a number of more important reasons.
For one, Expedia/TripAdvisor/FlipKey already has ties to the lucrative travel agent channel. Should E/T/F discover a way to tap into that channel – they would own the VR market. The ability to put inventory in the buy path of travel agents is more desirable to the VR market than listing with a listing portal. Also, Expedia/TripAdvisor/FlipKey, and true software as a service (SaaS) providers like ww.PMS.com, give VR professionals tools that address the more pressing sector issues.
Second, Homeaway only addresses visibility which is not a high priority for most VR operators. A current poll of VR professionals suggests that visibility is a least compelling offer due to the unique relationship between the vacationer and VR. The poll went on to suggest that unlike the hotel space, most VR vacationers have a close and personal bond with the property, property owner, and/or manager. It also pointed out that repeat business from, or by way of tenured clients is more desirable than unqualified new business leads.
With the finite number of destination locations, limit of managed inventory at the VR user level, and seasonality of the VR marketplace to name a few, automated business processes that facilitate dynamic pricing, and automated “drip” marketing ranks highest with VR professionals – none of which Homeaway offers. The poll counted measureable improvements to core business processes (other than marketing/advertising) as most desirable to VR professionals. Key gains in management (reporting, accountability, and access), automation (distribution, real-time booking, credit card processing, accounting), and flexibility (API driven integration, and standard “turn-key” solutions) is more important than being part of a large listing portal. In short I would put my money on companies like Expedia/TripAdvisor/FlipKey, and true software as a service (SaaS) providers like ww.PMS.com, etc., that have more compelling benefits, as it better addresses the needs of the VR professional.
Although I do agree with all – I most agree with Ethel’s perspective. Too much importance has been placed on the status of “lead aggregator” as a measure of leadership in the VR marketplace. Homeaway doesn’t own the inventory. As a VR professional they would be much more relevant to this sector if they provided a “booking” as opposed to a “lead” to their clients. If the industry issues for most operators in the VR space haven’t been met I would assume that the “leads” provided by lead aggregators such as Homeaway would only exacerbate their existing problems.
A market leader should be one who actually owns the inventory, and/or provides solutions or services within the VR sector, as evidenced by the adoption of such products/services by a significant majority of the VR sector.
HUGE NEWS was released today that impacts this whole discussion: VRMA is developing a “Vacation Rental Switch.”
This could solve (at least for professionally managed VRs) the technology problem behind distribution.
Read more at:
http://newsletter.blizzardinternet.com/vrma-announces-vacation-rental-switch-rfp/2010/05/27/
I heard the news VRMA is developing a “Vacation Rental Switch.”
These are exciting times for the VR sector! However, I do caution against the treat of an oligopoly rather than a monopoly within the sector. The concentration of market share to 3, or 4 of the largest firms in this sector may, in some situations, employ restrictive trade practices (collusion, market sharing, etc.) that have a profound influence on prices, and competition, while it restricts production, innovation, etc. in much the same way as a monopoly. Firms often collude in an attempt to stabilize unstable markets, so as to reduce the risks inherent in these markets for investment and product development.
In other situations, competition between property managers can be fierce, with relatively low prices and even lower production. The competition can be greater since PM’s are only regionally based, and compete directly with each other. As in the airline, and hotel business (and unlike the car rental business) I see a proliferation of groups that provide “GDS,” “IDX,” “Switch,” and/or inventory distribution services, where those gate-keepers, with their standards, don’t allow everyone to play nice with one another. I predict a proliferation of “switch” or “IDX”, better known as inventory distribution exchange services providers.
Booking.com is faster in retrieving data than others
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