Friday, July 29, 2011

Homeaway Exploring Revenue Sharing

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The dominant model in the vacation rentals industry continues to be that owners pay a fixed fee for an annual listing on a vacation rentals site, which generates bookings (usually via email or phone ) that are then paid for by check (particularly in the US), bank transfer or even cash.

In a bid to slowly transition to online booking, HomeAway has introduced ReservationManager on HomeAway.com and VRBO .

Currently, with ReservationManager, vacation rental owners pay 2.5 percent fees for Visa, MasterCard and Discover card processing and 1 percent fees for eCheck processing. This is a relatively inexpensive way to allow vacation rental owners to accept credit cards, making it a lot easier and more convenient for the renter to pay.

However, Homeaway are looking at taking this further.

HomeAway CEO, Brian Sharples say recently that new business models are under discussion which may see some vacation rental owners paying a percentage of revenue for using ReservationManager. He indicated that a revenue-based model might be especially appropriate for vacation rental owners who may wish to advertise their properties for several weeks only, rather than paying for full annual listings.

I think this is certainly an interesting innovation, particularly to sell late availability weeks: I can get most of my bookings through the traditional listings (possibly on lower cost sites than Homeaway) and then use the revenue sharing approach for any unsold weeks.

It remains to be seen how Homeaway will roll out this option and whether there will be restrictions to avoid "cherry picking", but it's another example of Homeaway leading the way in the vacation rentals industry.

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