Community: Message List - Do VRBO Exposure Levels (of different prices) Really Work?

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 16:58:41 GMT

susan>> When you go to buy anything most anywhere in America

susan>> including services, the price is set and you are charged

This is only one business model and it is far from universal. Even in the Owner Vacation Rental industry there are many different models. For example AlluraDirect.com charges a set fee based on the area where your vacation home is. OwnerDirect.com charges a set (& very reasonable) base fee of $100 for the basic advertising service and then we clients pay per performance at 10% of the booking cost.

Think of other online businesses such as eBay (who charge the fees directly proportional to the selling-price [actual value] of the goods). eBay provides all clients the exact same service but we pay different fees depending, directly, on our ROI.

PayPal, similarly, charges based on the transaction amount.

Even software costs vary depending upon the size of the customer (a large company will pay much more to deploy an Oracle database than a small company will -- even when you factor in per-capita costs).

Services in North America are most-definitely regional and often negotiable (e.g. lawn care costs in an affluent city will be more than lawn care costs in other areas). The service is identical. Admittedly, these are regional cost differentials so they don't speak directly to ROI -- but they do demonstrate that Service costs are not set even for identical services.

Retail space rental costs for stores will vary depending upon the expected ROI (exorbitant rent in a busy downtown shopping mall vs. less rent for the exact same sq. footage and facilities in a rural setting).

Myself, I really don't understand the reasoning that states we should all pay the same, despite the huge disparity in ROI, simply because it is seen as status-quo (which, as I've demonstrated, it is not).

Of course I agree that this has nothing to do with your income or financial situation -- we are strictly talking ROI for advertising dollars spent on HA/VRBO in which case those are not a factor.

I think if VRBO/HA don't provide some equity to smaller property owners, they will eventually see us move elsewhere and costs for the remaining properties will go up.

A few years ago, I did an informal study on VRBO for my rental area. Exactly zero 1-bedroom properties had purchased additional photos while 100% of 5+ bedroom properties had purchased an up-sell. One day perhaps I'll re-do this exercise to see the breakdown of properties who have bought into the ridiculous new tier system.

Regards,

[ Pay per geography ]

ref: http://www.alluradirect.com/vacation-rentals.cfm

[ Per per performance ]

ref: http://www.ownerdirect.com/Documents/PayPerformance

[ eBay -- pay per value of good sold ]

ref: http://pages.ebay.ca/help/sell/fvf.html

[ PayPal -- transaction based fees]

ref: https://www.paypal.com/ca/cgi-bin/webscr?cmd=_display-receiving-fees-outside

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 16:00:37 GMT

Well, I did say I wasn't an economist. Thanks for the clarification. As to pricing, see my listing, VRBO # 278906. Less than weekly is 1/5 of weekly cost per night plus $75. cleaning.

Here's my reasoning on everybody paying the same price:

When you go to buy anything most anywhere in America including services, the price is set and you are charged the price-except vehicles, real estate and a few other negotiable items. Most often, It doesn't matter what your income or financial situation is. I don't see VRBO as being any different. They are charging a set price for a set service.

Susan

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 13:15:20 GMT

>>just out of curiosity, how much do you charge per night

It depends upon the season. You're right that the math doesn't quite work for 8 weeks (I guess I did it quickly). Assuming fully-loaded 7-night weeks, I would need 4-5 weeks to make the same $2800. (fully-loaded weeks are also not as easy in my area -- so, realistically, I'd need about 8 rentals -- which is how I arrived at the original figure).

Nit-picking the math aside, the point stands. 5 is still 250% times longer to get the exact same ROI on my investment.

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 13:00:35 GMT

Stayattremblant, just out of curiosity, how much do you charge per night in order to "earn $2800 in 8 weeks"?

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 11:23:20 GMT

>>aren't there many factors that determine ROI?

The "I" that you are referring to is an entirely different "I". In this case it is the Investment in advertising; specifically the Investment in advertising at VRBO / HA. You are correct that a vacation rental owner's overall ROI on their property will need to consider hundreds of "I"'s and "R"s but this discussion is limited to the "I" made in advertising at HA/VRBO.

If I get no bookings from HA/VRBO for my $, then my "R" is zero for my investment in HA/VRBO. This does not mean that my overall ROI from owning and renting my vacation rental is zero (assuming I get bookings via other sources).

So, no, other factors should not be taken into consideration when determining listing cost in my opinion. The criteria of the price charged by the Homeowner to rent their property might not be perfect but it is a whole lot better than the current de-facto standard which is to charge everyone the same price regardless of the potential payback.

>> I dasagree with the idea of VRBO customers paying different

>> prices for their listing with cost based on rent charge.

Out of curiosity, why do you disagree? Is there another suggestion that would level the playing field for smaller properties?

Regards,

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 10:53:12 GMT

I dasagree with the idea of VRBO customers paying different prices for their listing with cost based on rent charge.

I do have a question. If this idea were to be taken seriously, shouldn't other factors be taken into consideration to determine listing cost such as the price paid to buy the VR, HOA or condo fee if applicable, taxes, etc? I'm not an accountant or economist (obviously)

but aren't there many factors that determine ROI? Thanks to anyone who can clarify this for me.

Susan

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Mon, 16 Apr 2012 02:43:48 GMT

Sorry but the sample size just isn't large enough to draw any conclusion whatsoever that "Level 1" had any impact in this case.

Also, not all of us have properties that make $2800 in 2 weeks but all of us have to pay $250 for the upgrade. In other words, my ROI will be about a very small percentage of what your ROI is. You may have made your money back 11x with a 2-week rental but I would need to rent 8 weeks (over and above what a lower tier would have rented) in order to make the same.

This is just another example of how HA is unfair to the small property and we pay, proportionally, much more than the larger properties.

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Sat, 14 Apr 2012 15:09:40 GMT

For the record, I am just on my first week of testing with VRBO Level 1.

I got a total of one inquiry (for a period of 14 days) which the guest booked at full price ($2800 total bill). How grand!

Now, is it just me, or would anyone else now consider the entire cost of that upgrade ($250) entirely worthwhile? Sure I may have gotten that particular reservation without the upgrade (it's possible). But on my own little schedule of return on that marketing investment, I made my money back in 1 week 11x over. I wish more property owners would look at their marketing costs this way (instead of claiming they don't have any money for advertising). I wrote this article "Costs vs. Investments: The Mindset That Generates Bookings" and firmly believe that the moment you have to spend money to see results.

http://www.vacationrentalmarketingblog.com

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Tue, 10 Apr 2012 18:18:14 GMT

My VRBO lisitng is about to expire. I'm going back to the lowest tier, and will let everyone know what happens. Currently I 'm getting more actual bookings from my flipkey site, though more inquiries from VRBO. All inquiries get the same response from me.

Time (in responding) is money, so we shall see..

Debj

Re: Do VRBO Exposure Levels (of different prices) Really Work?

community-no-reply@homeaway.com — Tue, 10 Apr 2012 15:10:07 GMT

I am running a test right now to show the difference between Tier 12 and Tier 1, the most obvious disparity. The sales page predicted I'd see 107% more inquiries so I should have some numbers within a few months...