Tag Archives: Expedia

Expedia’s Purchase of Orbitz Approved – What This Means for Vacation Rentals

Photo by Alexas_Fotos
Photo by Alexas_Fotos

Many have seen this coming, and the writing has been on the wall for quite a while now. With hotels firmly in place, it’s just a matter of time before one of these companies (Expedia or Priceline) dominates the vacation rental market.

I think this is likely to play out one of a few ways;

  • One of these companies buys AirBnb. My money is on Priceline given recent comments by their CEO. AirBnb is a cash cow and they are better suited to the hotel model. (Mostly RBO and willing to rent for a single night.)
  • Expedia doubles down on TripAdvisor (they essentially own it) and tries to crack the vacation rental nut. They definitely have the cash, though they have had plenty of time to do it without any significant results. TripAdvisor seems to be focusing more on hotels, and will likely decide that’s where the money is for now. Particularly given their less than stellar recent financial results, they will likely decide they can’t risk putting too many eggs in the vacation rental basket.
  • One of the companies make a strategic investment in HomeAway. I doubt an acquisition is on the horizon, though it could happen. My money is on Priceline given that Expedia already owns TripAdvisor and as mentioned above, Priceline is chomping at the bit to get into vacation rentals. (It’s also possible that HomeAway becomes a viable contender to Expedia and Priceline, but I think that’s unlikely at this point.)

Of the three, my money is on the first scenario, though I would not be surprised to see the third one happen.

What this means is that more and more bookings are going to be made through OTAs and the standard is going to be the “Book It Now” model. (I predict that by 2020 the majority of listings will be this way.)

What does this mean for vacation rental managers?

  • Diversify revenue streams – the majority of revenue for vr managers has historically come from rent. With OTAs and listing sites taking anywhere from 10%-30%, other revenue streams will become critical. This will include everything from additional charges to concierge services and damage waivers. (Companies like Discover Sunriver are doing some really innovative stuff with their loyalty programs. Check it out here.)
  • Yield Management – this is already an important part of revenue management, and it will become more and more critical as time goes on. The days of having two pricing structures (high season and low season) are almost gone. If you aren’t capitalizing on the nuances of supply and demand then you are falling farther and farther behind. (Read more on Yield Management strategies here.)
  • Direct marketing – Use the OTA’s and marketing sites to get new customers through the front door, then use direct marketing to past guests to keep them company back. This is going to become critical for survival. (Read here and here for more idea on this.)
  • Automate, automate, automate – Streamlined processes are going to be key to reducing costs. This doesn’t mean sacrificing that personal touch that differentiates vacation rentals from hotels. This means automating processes like check-in/out, keyless entry, auto-correspondence and credit card processing, etc. It won’t be cost effective to employ someone to manually send out guest correspondence and process credit cards for example.

The good news is that this is still just the beginning of the transition, so there is plenty of time to start making changes and gradually transition. You can start now upgrading units to keyless entry and remote climate control. Start now building a loyalty program and direct marketing campaigns. Explore new ways of driving revenue through additional services, referrals, and programs.

Travel & Tech News You Can’t Miss – May 8th 2015

Travel & Tech News
Travel & Tech News

Disappointing news this week about vacation rentals’ performance on Expedia. Here’s the kicker to the whole story, “I think vacation rentals are an important market,” Expedia Inc. CEO Dara Khosrowshahi told financial analysts during the company’s first quarter of 2015 earnings call last week. “It’s an important product in many, many markets. As to whether it’s important for Expedia to be in, that remains to be determined.

Some of this is just growing pains for our industry, and some of this is failure to find that middle ground that will allow the square peg to fit into the round hole. Expedia wants quite a bit of control over the inventory, pricing and payments for vacation rentals (like they have with hotels) and many vacation rental companies can’t give up that much control. Particularly with a 15%-20% commission attached.

Everyone involved has their work cut out for them. Ultimately it has to be easy for the guests to book, lucrative enough for Expedia to make the right investment, and allow the vacation rentals companies (or owners) to continue to provide the personal touch that makes vacation rentals unique.

Did you survive “Mobilegeddon“? If your website isn’t mobile friendly, then you likely suffered in your Google search rankings as of April 21st.

Even if you still get the majority of your bookings over the phone or e-mail, 20% of searches are done on a mobile device, and it was recently reported that 25% of all digital transactions in the US were generated from a mobile device.

Speaking of mobile transactions, I have often said that virtual wallets and online currency are going to become the norm in the not too distant future. So it was interesting to read that Google Wallet funds are now FDIC insured.

There is still a ways to go before this becomes mainstream, but the writing is on the wall. Here’s something to think about; will your business be ready when this becomes the preferred method of payment?

The airlines are trying to be the first to integrate mobile payments into their guest experience. Here’s an article on how a few of them are making this happen. JetBlue will let you make in-flight purchases through their app on your iOS device ,and KLM is experimenting with booking flights on Facebook and Twitter.

Lots of change coming. Are you ready for it?

Until next week…

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