Service Fee Update

Posted by brian.sharples Feb 24, 2016

Since the launch of the new service fee on HomeAway, I have heard from many of our long-term customers via email. And I’ve been following posts on the subject on social media. Many of you share the same concerns, so it makes sense to respond on Community where all our customers can have the opportunity to read my answers to your questions. 


I want to let you know that I am listening to your concerns, and every HomeAway employee is committed to making you as successful as possible.


First, I understand that many of you would like more and clearer communication on changes coming to our sites.  Despite our attempts at communicating this change in advance, we fell short of your expectations.  I take full accountability to make sure we are better on this in the future.  Below, I want to explain our rationale for launching a service fee, and tell you a bit about how we plan to incorporate your feedback going forward.


Second, I want to acknowledge that we are in the middle of a huge shift for the industry.  The good news is that vacation rentals are now considered a mainstream travel option, but as a result travelers are demanding more from listing sites like HomeAway and VRBO.  Our research and experience shows that it is no longer enough for us to just operate an online classified listing site.  (I miss the good old days too – believe me.)  We know this because properties that are online bookable get chosen at almost double the rate of ones that are not.  And our most dissatisfied travelers are complaining louder than ever about listings with inaccurate calendars and offline payment methods that can’t be backed up with online receipts and solid financial protection from our company.


As a result we announced in late 2014 that we would ask all of our owners to make their properties bookable online by the end of 2016.  This doesn’t mean you can’t still communicate or negotiate with travelers prior to accepting a booking request, but it does mean that your properties need to be accurately quotable online, calendars need to be maintained, and we need to be able to process the booking through our systems in order to provide the financial guarantees travelers are demanding. 


To incentivize our owners to adopt online booking, we have increasingly been favoring online bookable properties in our sort algorithms.  It is no secret to any of our owners that a higher position in sort leads to more bookings. We are also rewarding listings in sort when they have higher conversion rates – because a listing that rejects most of its booking or inquiry requests is not a good experience for travelers. Most of the travelers who choose to stop using our sites say it’s because they are frustrated by not being able to find a property that is actually available.  This is offset by being able to book the property online so it increases the number of travelers who gravitate to HomeAway listings that are bookable online.  Worst case for our customers and HomeAway:  travelers leave our sites and go to sites where all properties are already required to be online bookable.


Our #1 goal at HomeAway is to drive more bookings to our owners and property managers.   Your success is our success, as it has always been in this business.  Every piece of evidence says that the right way to do this, given the demands of the “new” vacation rental consumer, is to do the following:


  • Provide transparent price and availability data so travelers can get accurate quotes online
  • Back up every transaction with a strong guarantee, instilling trust in new travelers who are unfamiliar with our industry and how it works
  • Invest heavily in brand and online marketing to compete with other travel alternatives such as hotels.  Now that vacation rentals are mainstream and the category is large, we need to work harder than ever to bring in more travelers
  • Protect the rights of owners to rent their homes on a short-term basis.  We are currently fighting battles in dozens of cities and investing millions of dollars to maintain your ability to rent out your home to guests.


So why did we launch a service fee? 

The biggest motivation was to better accomplish the things I’ve mentioned above.  Today, our subscription customers pay us roughly 3% of the revenue we generate for them while our major competitors charge 6-15% (mostly in service fees).  We’ve always been proud to be the lowest cost solution for renting your home.  But we simply can’t provide the level of marketing and service that today’s travelers expect without asking travelers to also pay a fee for the service we provide.


Many owners have asked me if our fee was motivated by greed.  The reality is that we’re re-investing the majority of this money into marketing to bring in more travelers (we nearly doubled marketing spend with the introduction of this fee) and to provide true financial guarantees that can protect and help travelers who have bad experiences from using our sites. And we’re also more than doubling our investment in government relations efforts to continue fighting for the rights of property owners all over the world.


With that said, let me address some of the other things I’ve heard in the letters and posts from our owners and managers:


“The new fee represents double-dipping because we’re charging both the owner and the traveler” – In our marketplace there are two people that benefit: travelers and owners.  Going forward, we are asking both sides to bear some of the cost for the service we provide, and research shows us that travelers do not see the fee as a barrier to booking.


“The combination of the new fee and what you already charge is too much” – We hear you on this.  With the launch of the service fee, we did take down the rates charged to our suppliers for our pay-per-booking listing product (and our subscribers are always welcome to choose that option).  In April we will announce a new long-term plan for subscribers that we believe is more balanced than what we have today.  This will be based on our research leading into the launch, the data we are observing from this launch, and also will include the feedback we’ve been receiving.


“Travelers won’t pay these fees and they will choke off bookings” – I can completely understand this fear, in fact, I had that worry, too.  So we did a lot of research and testing before launching this fee, which is already charged at even higher rates by our two largest competitors in the United States. We’ve processed tens of thousands of bookings in just the last few days with a service fee.  Early data tells us that the fee has not been a meaningful deterrent for travelers making a booking on our sites.  We will be carefully studying how these fees impact bookings at different pricing levels, and adjustments may be made in the coming weeks.  The booking data we’re seeing supports our belief that this fee will not have a meaningful negative impact for the vast majority of our customers.


“By simply calling it a ‘service fee’ on the site the travelers don’t know who is actually charging them.” – The community is right about this and we hear you.  We’ll be adding language to the sites to let travelers know the service fee is being paid to us, and will clearly spell out the extra guarantees that come along with booking online.


“I’m better off dropping online booking, even though it is what you asked me to do.” – Many of you are justifiably concerned that non-online bookable properties now look cheaper on the site.  And you may think switching back to the “old way” will make you more competitive.  I completely understand the point here, but it would not be the right move for your rental business, because the benefits of sort would completely outweigh any short-term benefit of opting out of online booking.  The fact is that all online bookable listings are advantaged in sort order. And our sort algorithms going forward will be incorporating booking history and booking conversion as a factor in determining search position.  Simply put – the more and higher frequency of online bookings you do, the better you’ll perform on our sites over the long term.


I hope this explanation was helpful, and I appreciate that many of you are nervous and still quite concerned.  I also want to acknowledge again that I could have done a better job of communicating our rationale up front. Please know I am listening to your concerns, and we will take them into account as we design our new pricing plan to be announced in April.  And rest assured that if we see a meaningful decline in bookings from the fee, we will make adjustments to get it right.  But at the moment bookings are flowing at a very good pace (consistent with booking volumes before launch of the fee), and I should also note that most of the calls made to customer service have been from owners, not the travelers paying the actual fee.


Please continue to write and provide input. Again I’m sorry I can’t answer everyone’s email personally.  But I will read them and come back in a few days with a post to answer other questions that are consistent from our community.  In the meantime I ask you to please bear with us through these changes and evaluate our service as you always have - based on the business we deliver to you over the next several months and years. 


Thank you,


Brian Sharples

Co-Founder and CEO

In February 2015, HomeAway celebrates its 10th anniversary. Thanks to you, the HomeAway vacation rental marketplace has become the world’s largest, with more than one million listings. In 2014 alone, HomeAway will host more than 800 million website visits and 7 billion page views. We remain totally committed to helping each visitor book the perfect vacation home with you, our valued owners and property managers.


As we look forward to the next two years, our top priority is to enable the listings on our sites with the online booking option. By “online booking option”, we mean that a listing has 1) an accurate calendar and rates table, 2) a booking-request button, 3) a commitment by owners and property managers to respond to reservation requests within 24 hours, and 4) a high acceptance rate of requests for available dates. If the vast majority of listings achieve this, then the traveler experience on HomeAway will compare favorably with the best travel sites on the internet.


This online booking feature is free for travelers and free for subscribers. Starting mid-2015, credit card acceptance will not be a requirement for online bookings; any safe form of payment will be supported. Travelers will continue to have the option to inquire first, by email or phone, and owners and managers may continue to arrange reservations and payments directly with travelers, just as you always have.


We hope owners and property managers will join us in making the vacation rental booking experience the best on the web. If we do, more travelers than ever will find and book the perfect vacation home, and together we’ll grow the industry for years to come.



Your questions – our answers


What does this mean for how owners and managers will interact with guests?

Think of an online booking as a reservation request, with a traveler commitment to pay, that owners and property managers can confirm with a single click. Travelers who use the booking-request button enjoy the speed and convenience of a streamlined reservation process. This does not mean inquiries are going away, and it does not mean transactions via HomeAway sites are required. Travelers may still send inquiries, as they do now. You will still have the option to communicate, book, and pay outside of our system, as you do today. Online booking is simply an additional option, alongside inquiries, that enables travelers to expedite reservation requests.


Will credit card acceptance be required for online booking? Will other forms of payment be allowed?

Credit card acceptance will not be a requirement for online booking. By mid-2015, online booking will work with payments that occur outside of HomeAway websites.

That means owners and property managers can confirm a booking request online and accept payment offline or using another website – for example, by check, bank transfer, or another payment processor. HomeAway will continue to encourage and reward credit card acceptance as the fastest and safest payment method. Most travelers strongly prefer listings that accept both credit cards and offline payments, and we recommend doing both to maximize bookings.


What does online booking cost an owner, property manager or traveler?

Online booking is a free feature of subscription listings. HomeAway does not and will not impose an incremental commission for online bookings on top of a subscription. Alternatively, for non-subscription listings using the pay-per-booking option, the commission is 10%, and this includes online booking. We understand that some owners and property managers are concerned that HomeAway is moving toward a commission-only model, but that is not the case. We remain 100% committed to the commission-free subscription model. Please be aware that owners and property managers who process credit card payments will incur fees, as determined by their payments providers (e.g., Yapstone or a credit card acquiring bank).


May I communicate with travelers before confirming online booking requests?

Property managers and owners will have 24 hours to communicate with travelers and accept or decline booking requests. To ensure a great traveler experience, HomeAway will track the percentage of accepted and rejected traveler requests, and advertisers will lose the booking-request button if requests for available dates are frequently declined. Know that we won’t penalize owners or property managers for turning away travelers that are a bad match for their properties.


Why is HomeAway placing so much emphasis on online booking?

Traveler expectations have evolved, and we need to evolve with them. Today’s shopper expects to buy or book on every site; yet less than half of vacation rental listings feature online booking. Listings that lack online booking burden travelers with an average of 7+ inquiries and 9+ days of exchanges per successful reservation. This results in many problems for travelers, including inaccurate calendars and rates, slow or no response from owners and property managers, and ambiguity about the booking and payment process. When travelers experience these problems, they often abandon vacation rentals entirely. Together, we need to change this.


When surveyed, 92% of vacation rental travelers say they want the option of online booking. Over time, HomeAway, owners and property managers could lose a meaningful number of guests if we don’t adapt to meet their needs.


Why should I adopt online booking now? Don’t I have two years?

The biggest advantage to adopting online booking now is more reservations: on average, listings with online booking generate 100% more in bookings than listings without the online booking option. Another advantage is search position, because online booking is a significant component of your listing quality score. Finally,

subscriptions with online booking will be eligible for distribution on third-party sites like Expedia as this functionality becomes available.

Introducing Mobile Hospitality Manager


Like many owners, I manage a vacation rental and hold down a full time job. I do my best to be proactive about sending information to my customers, but since I book 30-40 weekend stays each year, I have a lot to manage.


Not only do I manage all of the inquiries and booking requests, but I also send a series of emails to each guest with the address, door and gate codes, recommendations and house rules. On average I send five emails per booking. Whew! It’s a lot of work. But not anymore!


Today, HomeAway is releasing the branded version of the Mobile Hospitality Manager, formerly known as “GladOwner.”  We acquired Glad to Have You in March, and we’ve been working hard to get this tool to our customers as quickly as possible.


Mobile Hospitality Manager provides a great guest experience by presenting key information to my guests (directions, access instructions, all of the great info that I’ve gathered on my property and the surrounding area) automatically over the course of a stay.


My favorite part is that the system sends emails from me to my guests depending on the dates of the stay. For example, a few days before the guest arrives, they get my welcome email with tips and how to access the property. On check-out days, the system sends them a thank you with reminders about how to leave the house. Auto-magically!


This kind of automation saves me a huge amount of time and since every email can be customized, I can give my guests a great experience with a personal touch.


But the best part of solution is the mobile app which guests use. I have the usual “binder of info in my property, but the mobile app makes it easier for the traveler to carry all the info about the house and the destination in their pocket (how to use the espresso machine and the hot tub are my top requests!).  The guests use of the app has really reduced the amount of time I spend answering questions like “where is the pool cover key?” or “can you recommend a good winery?”


The feedback from my guests has been outstanding and many folks have been mentioning the app in their reviews.


There are a few hidden gems and details that are worth calling out that I’ve learned from using the app:


  1. The Mobile Hospitality Manager is manageable in the HomeAway mobile app
  2. HomeAway sends an invitation to the app for all ReservationManager and online bookings, but for other bookings (like that repeat guest or your best friend) you need to create a reservation on the calendar and make sure it has a valid email address so that your guest can receive the invitation.
  3. Make sure you put lockbox instructions, door codes, etc. into the app.
  4. The more info you put into the app, the better the experience for your guests. If you don’t add content, HomeAway auto populates the app with info from your listing and makes recommendations based on the location of your property.
  5. If you are already using Glad to Have You, then you can easily export your content for import into the new HomeAway Hospitality Manager.
  6. The app changes for the travelers over the course of a stay. For example, I might give my guest access to the application well in advance of a booking, but the app won’t provide the address and keycode info until 14 days before the stay. And on the day of arrival, the application presents “check-in instructions” and “find my rental” right at the guests’ fingertips. At checkout time, the check-out instructions appear at the top of the app’s view.
  7. You don’t have to guess what the traveler is seeing in the app; you can preview their experience at any time through the “My Guests” tab in the Manager.
  8. I use the “My Guests” view all the time - it tells me when travelers are arriving and what emails are being sent to them as well as the all-important “edit rental access” button and the switch which allows guests to see “access my rental,” “find my rental,” and “driving directions.”

With smartphone (Android and iOS) penetration somewhere between 70-80%, it’s a good bet that at least one of your guests has a smartphone.  And in a recent survey, more than 70% of travelers prefered to access information about their vacation rental stay from a mobile device. If multiple guests in the party, they can each access the app.  Think about your own travel experience: we all use our smartphones when travelling for maps and email - so now your house can have an app!


We are excited to put this into your hands, and so we’ll be rolling it out over the course of August for HomeAway and VRBO customers. Try a mock reservation for yourself to see how it works - we think you and your guests will love it!


Enjoy and as always, keep your ideas and feedback coming!


Tom Hale

HomeAway Chief Product Officer