06/05/2016

Changes in the Vacation Rental Universe

ourhouseaerialHere at SeaCat’sRest, we have been renting our attached apartment since 2007. It has been fun to share guest’s holiday time; wowing them with our accommodations and settings and seeing the beauty of the Maine coast through their eyes. Lately there have been scary changes to how we reach out to travelers. Most of the free listing services have been bought up by H*meaway and VRB* (put an “o” where the * is), and now they are undergoing big changes. The reason is Airb#b (replace the # with an “n”). All this spelling nonsense is to avoid trouble with the three services when they search the web for their names.

The Airb#b model is to serve as middleman and keep the communication between host and traveler anonymous until they can get 6-12% from the traveler and 3% from the host. They do provide the service of managing a calendar and sending reminders, but they are paid very well for this. H*meaway and VRB* made their money through host subscriptions fees, starting at $350/ year and going up for higher placement on their search results pages. Once Airb#b became a “hit”, with a market valuation 5 times higher than the other two combined, the other two (really one company now) scrambled to copy them. At first, we were told we H*meaway hosts would no longer be able to contact travelers directly and we would need to let them handle the money. In other words, they would become just like Airb#b. Many complained and threatened to pull their listings. As things now stand, we still have the option of an annual subscription (now $400) and free contact with travelers, but we are competing with other hosts who pay nothing up front for the Airb#b type experience. Of course, the travelers are paying their fee, and in most cases it is much more over a year than what the host paid for a subscription. In my case, a subscription to H*meaway costs about 3% of my gross income from guests referred through them in a typical year. Airb#b costs me 3% per booking plus 6-12% from the traveler for a total of 9-15% of every dollar spent on a stay. So instead of $400/year it should add up to about $1,200-$2,000/year from my perspective as a property owner. I can’t help thinkĀ  the pendulum will swing back toward the subscription model when guests wake up to what Airb#b is getting away with.

I decided to try signing up with Airb#b as an alternative to succumbing to the changes at H*meaway, figuring that they know what they’re doing with this model, and this way I can see how it works before rewarding H*meaway for what I feel is a wrong move. I still have a subscription with H*meaway.

It has been interesting to see the differences in travelers. Airb#b people are younger, more likely to be foreign and stay a shorter number of days. I have to wait 24 hours after their arrival before I see any money, and it comes directly from Airb#b into my Paypal account. No more awkward mention of outstanding balance, running to the bank, losing checks or dealing with a fat wad of cash. Also, the biggest reason that Airb#b works is that both host and guests are subject to an almost mandatory review, from zero to 5 stars. That way if there is a problem on either side, there will be future consequences. On the down side, I had to reduce my price since 6-12% of the guest’s money is already gone. Also, I have to figure my lodgings tax backwards, taking the amount I receive and finding an amount I can add 9% to to get it.

There are horror stories about bad Airb#b hosts and guests on the web, but I tend to think that those bad actors will rapidly fade away. The support team from Airb#b is reportedly mostly absent; if something goes wrong you’re on your own, or so I’ve heard. If you can’t find an answer to your problem in an FAQ you can’t just call an 800 number. This is where H*meaway has them beat.

Airb#b has the reputation of having hosts who only offer a couch in their home. I saw one nearby who rented out a shed (no heat or plumbing) and another who rented a tenting spot in a vacant lot! I’m not sure SeaCat’s Rest “fits in” with the Airb#b culture, but we are expecting our second Airb#b guest today and time will tell.

No matter how you find us, we will continue to offer our ocean side apartment and the experience will be the same. But given the response to our listing with Airb#b we may have fewer nights available. We may have to build a shed for us to live in.

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