HomeAway dramatically revamps subscription pricing for US owners

It was only in February that HomeAway implemented a changed pricing structure, a move that came after the company’s acquisition by Expedia Inc last year.

Today the companies announced additional changes, which are a significant switch from how HomeAway has operated for many years.

Starting the July 11 for US homeowners, HomeAway will stop selling its five-tier model, where the costliest tier came with a higher appearance in sort position in renter search.

On an conference call with investors today, Expedia Inc chief executive Dara Khosrowshahi explained:

“Today we announce significant changes at HomeAway, as we continue to accelerate its transition of the platform from advertising to transactions.

In the US we’re moving to a simple subscription model of $349 annually for listings that are online bookable, and $499 for those that aren’t.

This will allow us to begin to optimize the sort and the properties that consumers see by matching their unique travel preferences with the right listings, while driving booking volume for owner and manager communities.”

HomeAway said its move to one annual subscription will occur gradually over the next year and that it will still offer a pay-per-booking option for 8%, down from 10%, of every booking.

There will be no change to the traveler fee introduced two months ago.

The traveler fee raised many complaints from a vocal number of vacation property owners. Tnooz’s story on the topic, for instance, drew 350 comments, most of them claiming that the fee had resulted in a decline in bookings that hurt property owner businesses.

Some like-minded owners even attempted to lodge a class action suit over the related commercial changes.

But these angry consumers may be in the minority.

Expedia Inc said today it has not yet seen any significant loss in its HomeAway volume in the first three months of the year. (The fee change was introduced in February.)

Khosrowshahi said that HomeAway’s transactional booking growth is up 170%, year-over-year, on a booked basis (meaning the cash for future reservations hasn’t yet come in yet). He said conversion rates have held up well and subscription growth has held up well, too.

Today’s decision to take away premium tiers of subscriptions will cause a decline in revenue, he said. That loss will have to be replaced with a growth in transactions.

Toward that goal, Khosrowshahi said money raised by the fees will partly be used to make a significant investment in building out a more robust variable marketing platform model.

The overall model Khosrowshahi hopes to apply is similar to its Accelerator experiment in its Expedia brands with hotels. The company wants to make it inexpensive for suppliers to provide inventory, and then it wants to offer tools for suppliers to pay extra to have their listings rise to the top of consumer search rankings, within certain quality constraints.

HomeAway’s material on the fee change is here.

Earlier: HomeAway tweaks its rental commissions, adds traveler fee

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Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill had roles as a reporter and editor-in-chief at Tnooz between July 2012 and January 2017.

 

Comments

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  1. Mary

    I have rented in the Melbourne/Vero Beach area for many years, not so sure I will now with the added fee from HA. Between the taxes, fees, etc. it is becoming too expensive for the value.

     
  2. Markus

    HomeAway isn’t a listing-site for vacation rental owners but an Online Travel Agency. It is logical, that they need to force the “former advertisers” to use the Online Booking – as getting more revenue per single booking is the companies future. Sooner or later they even replace the subscribing fee with a pure comission based system. But first all owners shall use the online booking.

     
  3. Neno

    I really dont see the logic behind this.

    Otas are really pushing it.

    Neno

     
  4. Sam

    VRBO is enraging owners and changing the business model after we have already invested heavily in time, money and commitment to their site. It’s a calculated gamble to take a bigger share of the money. From a macro-economic level, higher prices lead to lower demand so this will have an impact. Owners should figure out a better alternative to rent their properties. Renters will follow the inventory.

    The new plan is a scam. Usually you pay for a service rather than pay to not use a service. The new subscription prices mean owners must pay an extra $150 per year to not use the Online Booking service. HomeAway / VRBO want to push owners to use Online Booking so they can make sure they collect the extra 9% service fee. In case the $150 isn’t enough to force owners to use Online Bookings, they will also make Online Booking a key factor in ranking search results. Clearly they want that 9% service fee. In their email to owners, VRBO states “your position in search results will be based on our best match system … the most important factor in best match is the number of online bookings processed through our site.” For a potential guest, best match should be based on location, number of bedrooms, ratings, etc. Using online bookings as a factor is only to bully owners into using their online booking service so that they can collect that extra 9% service fee. This is not the end of HomeAway / VRBO taking more of the revenue. To take more money in the future, the company “wants to offer tools for suppliers to pay extra to have their listings rise to the top of consumer search rankings.” In other words, they still plan to rank listings by how much money they make off the property.

     
  5. Peg

    More price gouging from Expedia via HomeAway/VRBO. No doubt bookings are down and I’m looking to take my listing elsewhere.

     
 
 

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