The domination of Airbnb

Looking back over the last few years since I wrote the first Holiday Rental Mastery stories, it is clear that several things have changed radically.

Airbnb domination

Airbnb, the big Gorilla has continued to rampage in the vacation rental market. Back in 2015 I admired its simplicity and its 6 layers of trust. Others thought it would peter out. I predicted it would dominate the VR market, and it has.

At the time it was downplayed by the Homeaway/ Stayz folks who claimed they dominated the market and that Airbnb was a temporary surge driven by millennial adventurers.

Fast forward to 2018, and reversal is complete. Airbnb is still growing at a jaw-dropping rate – the 100% growth year on year in Australia is typical around the world in recent years but it is slowing. It has long left Homeaway behind. Here is a curve of its exponential global growth, averaging 40%+ globally in recent years.

Global listings growth Airbnb / HA

Global listings growth Airbnb / Homeaway

Drift to the Airbnb model.

The second change is competitors are drifting towards the Airbnb model.

I’ve just come back from the Sydney 2018 Rezfest conference hosted by Homeaway. It was a good look under the hood at the new Homeaway model. The old subscription/ commission hybrid is gone. The new global model with traveller fee is very close to a copy of Airbnb.

Tripadvisor has also drifted to a copy of the Airbnb model of low commission and high traveller fee.

Although the Homeaway software is still clunky compared to Airbnb, it is improving fast and may catch back up a bit in the next year or so – as you would expect when the resources of the Expedia giant parent are set onto the task. One example is the win/ loss card system, which helps owners understand their competitiveness for each booking won or lost.

In a future post I will compare the big four OTAs that dominate the vacation rental industry. Airbnb, Homeaway, Booking.com and Tripadvisor.

What does big company domination mean for VR owners?

The explosive growth of Airbnb and to a lesser extent Homeaway means that in many markets the number of competitors has doubled or tripled! Vacation rental properties that once dominated their markets are less booked, with lower occupancy.

The relentless drive by Airbnb to decrease prices and thereby grow the number of interested renters has pushed prices and margins down generally.  Your fabulous VR can be flattened into just another commodity in a market controlled by the big Online Travel Agencies.

So what can Vacation Rental owners do?

Small owners have the advantage of customer intimacy that the big companies can only ever dream of. Our Sea Zen and other VRs like it are proof to show that you can survive in a hard market and even thrive.

Your customer intimacy advantage

What do I mean by customer intimacy?  We can speak with our guests after booking.  If we are on site we can physically meet them, help them, and become a real person with a real if fleeting relationship.  During their stay we may, without intruding, ask if there is anything we can do to help their stay.

After they stay we can ask for their opinion about their stay, even suggest they refer us to friends.  We can also tell them that as a past guest they will get a special direct booking discount, and get our informative newsletter.   What large travel company can do any of this? We truly have an unfair advantage of intimacy!

Small owners can also use several strategies to succeed by:

  • Standing out from their competitors to get more bookings
  • Taking advantage of that guest intimacy via a newsletter and loyalty scheme to get their past guests to return.
  • Optimising their listings with the big companies
  • Using their own website to get more bookings

In coming newsletter articles, we will zero in on ways you can succeed in this tough environment.  The next post will be on Standing Out

Rex Brown
Holiday Rental Mastery
Helping Vacation Rental owners get ahead of the competition.

PS if you think a colleague can benefit from this, please share with them

{ 3 comments… add one }

  • Debe Brassey June 7, 2018, 5:19 pm

    Thanks for all your tips and for sharing your knowledge and experiences.
    Debe

    Reply
  • Fleur von Mengersen-Wells June 7, 2018, 6:37 pm

    Great to hear from you again Rex. I enjoyed meeting you again at Rezfest.
    Fleur

    Reply
    • Rex Brown June 7, 2018, 8:01 pm

      It’s good being part of a growing movement of active owners, a lot to share.

      Reply

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