Vacation rental property managers make a commitment to book properties for their owners. They achieve this through marketing which can encompass many things. Here, we’ll take a deep dive into understanding VRBO, an OTA (online travel agency). It’s important to know that VRBO is owned by HomeAway which was recently purchased by Expedia. As you seek to understand VRBO, pay attention to the parent company Expedia and what they are trying to accomplish with their new acquisition.
The Expedia acquisition has brought about a revolving door of change. For up-to-the-minute interpretation of the most recent changes, click here to listen to our webinar from December 20, 2017. The presentation portion of this webinar is about 32 minutes, the rest is Question and Answer.
What is VRBO?
It’s an easy to search online listing management tool for vacation rental properties. They promise global reach, secure online booking, customer support and a payment platform. For the traveler, they provide reviews from both travelers and hosts, care-free booking guarantee and secure messaging.
Basically, they invest in a platform and advertising to drive travelers to their website. They allow you to list with them and charge you for the exposure. The charges come in the form of pricing and fees.
VRBO Pay Per Booking vs Subscription Pricing
Pay Per Booking offers no up-front fees and charges 10% of all pre-tax booking dollars. Note that total includes line items for services such as cleaning fees.
Subscription Pricing is an annual fee. In 2017 the annual fee is $399 per property. As of January 12, 2018, that fee will increase to $499 per month.
How to Protect Yourself From Increasing VRBO Pricing
- Renew your listings early (before Jan 12, 2018) to lock in your current rate for one year.
- You can buy subscriptions now for properties you plan to bring on board in the near future. Note: the clock starts ticking when you buy the subscription, not when you complete the listing.
- Pass the expense onto the property owner
- Create a line item for this expense and phrase it as a “marketing fee for listing”
- By using the term “marketing fee” you give yourself flexibility for future marketing. If you opt to drop the VRBO listing, that marketing fee is now available for you to do your own brand marketing.
- Drop your VRBO listings
- If you opt for this, you’ll need to invest in your own marketing. Reallocate funding from VRBO to your own branding
- If you show prospective home-owners your marketing plan is more comprehensive than just listing on an OTA, you will have a competitive advantage
We already discussed the Pay Per Booking fee. In addition to that, VRBO is launching “Match Back” on March 15, 2018 for any new or existing listings. Match Back is a fee charged via credit card for any booking believed to have originated on VRBO, but booked directly on a third party payment management system (PMS). As it turns out, HomeAway owns two popular PMS solutions: Escapia and V12.
While we don’t have complete clarity on the details, it appears that VRBO with “match” based on email address and similar search dates. You may wonder how VRBO has a person’s email address if they are just doing a search. An email address isn’t required for a search. BUT if that person has ever booked through VRBO in the past, the new search would be linked to the email address provided in the past.
This is very important to understand. VRBO will be looking at your bookings, determining if they think the booking originated on their platform and simply charge you 10% of the pre-tax booking fee. This has alarmed many in the Vacation Rental Management industry. You’ll want to take some time to understand what these fees mean for you and what the price tag might be.
How to Avoid VRBO Service Fee
Seek First To Understand
Your HomeAway account manager can currently run a report for you that shows the bookings that would qualify for Match Back if it were in place today. That will help you understand the size of the impact.
- Send the guest back to VRBO for booking
- It saves you from unexpected fees in the future
- The challenge is, how do you know which people to send back?
- Ask guests to provide a different email address that they didn’t use on VRBO
- Might not be a scalable solution if you manage a lot of properties
- May feel strange to the guest, especially in the age of hackers and phony websites.
- We don’t strongly recommend this option, but it could be worth testing
- Switch PMS software.
- Our preliminary research suggests that HomeAway can only charge you on match-back on the software they own (Escapia and V12).
- Some people have heard that they can search all PMS software, but as of December 20, 2017, we haven’t been able to verify that.
Seeking Options Beyond VRBO? Q4Launch Can Help!
Q4Launch has perfected a marketing strategy for Vacation Rental Managers that allows VR’s to reduce their dependency on OTA’s such as HomeAway’s VRBO. Do you want to build your own brand, drive direct traffic to your website and convert visitors into booking guests? If the answer is yes, it’s time to partner with Q4Launch for your website design and marketing strategy services.