Sharples of HomeAway: We have the vacation rental pipe for online travel agencies, but …
How soon will it be before major online travel agencies go after the vacation rental market in a really big way?
On the same day that media-company TripAdvisor announced partnerships with large vacation rental partners in Europe, using a listings and referral model, HomeAway CEO Brian Sharples said his company is ready with an inventory pipe for major online travel agencies, but a clash in business models is at play.
Sharples said HomeAway hopes to partner with OTAs over the next five years, but many of them view vacation rentals as cannibalizing their hotel sales.
“We stand there with a pipe,” Sharples said, adding, however, that the “models don’t line up.”
In that regard, Sharples said companies such as Expedia and Priceline may be used to earning 35% margins on merchant model hotel sales while vacation rental property owners might only be willing to pay 10%.
Still, it’s almost inevitable that major OTAs expand their role in vacation rentals, and although TripAdvisor is not an OTA, its vacation rental partnerships announced today symbolize that a larger OTA foothold in the vacation rental market may happen a lot sooner than the five-year timeline that Sharples cited.
The OTAs, after all, have been happy to dump the merchant model for the retail model, with its tighter margins in Europe and Asia, where necessary, and some undoubtedly will show enough model flexibility to bring vacation rentals on board.
Sharples comments came Nov. 16 during an appearance at the PhoCusWright conference in Hollywood, Fla.
The CEO of the newly public HomeAway expressed some Airbnb envy — saying he wishes HomeAway had thought of the peer-to-peer home rental market — but wonders if Airbnb is really worth a $1 billion valuation.
Expressing respect for Airbnb, Sharples noted that Airbnb “created a market out of thin air” and was in a position to create a new model in being very much involved as an intermediary in the rental transaction.
But, HomeAway had to play by the existing rules when it was created in 2005, Sharples said.
Unlike Airbnb, HomeAway runs a listings business, encourages communication between customers and property owners, who handle the transaction with consumers themselves, and it is still done largely offline.
Sharples said many vacation home owners still prefer to book offline and conceded that demand for online booking from customers “is not as big as you think.”
Still, HomeAway has been busy enabling online booking between property owners and travelers.
Sharples said some people don’t understand the differences between HomeAway and Airbnb.
He noted that HomeAway largely deals with properties which are sec0nd homes while Airbnb’s customers are renting out rooms in their primary residences.
Airbnb renters “find underwear in the drawers and someone else’s toothpaste in the bathroom,” Sharples said.
And, Airbnb still must answer the question about the viability of the peer-to-peer market, Sharples indicated, asking how many owners of primary residences really want to rent out their properties or rooms to travelers.
Meanwhile, HomeAway is still focused on getting bigger.
Sharples said HomeAway indeed is a technology company, “but technology isn’t necessarily what wins the game in this business.”
Speaking of scaling the business, Sharples said HomeAway has acquired most of the major players of interest in emerging markets, and there are few remaining companies who have gained enough traction to merit HomeAway scooping them up.
“We will continue to do it,” Sharples said, referring to acquisitions, “but you will see less of it.”
Dennis Schaal was North American editor for Tnooz.