Today marks a milestone for vacation rental company HomeAway, as the platform now features one million listings scattered across the globe.
No other company in the vacation rentals vertical has managed to reach this milestone, and after talking with HomeAway CEO Brian Sharples, the true target is still millions more. The executive interview follows the company's announcement infographic.
What's significant about this milestone?
One million is a pretty big number, and we’re very proud of it. Around this, we’ve never spent a whole lot of time what our listing number means, but we started looking at how we compare to other accommodation businesses. The conclusion we came to is that we are the largest accommodation business in the world now - we have more rooms [not listings, actually rooms in listings] than the top 4 hotel brands combined.
Scale is important, because in the end the consumer wants choice and it’s a global market. We have listings in just about every country in the world. This makes options for rentals more appealing in the past. With quantity, you can find exactly what you are looking for.
You launched this business in 2004. Did you think it would take this long to get to a million or are you surprised?
I don’t think we ever contemplated getting to a million in the first decade. In the initial research, we were focused on the 6 million places for rent in the US and Europe.
There isn’t great information in other areas, but if you add up other geographies, my guess is that there’s somewhere between 10 and 15 million properties. So as the company that had the ambition to be the market leader, we expected at some point to get to a million, And as market leader, we should wind up with between 30,40 to 50 percent market share - so hopefully we’ll do even better.
How will you accomplish this?
It’s hard to grow listings without throwing the market out of balance - so if you grow at 20-30%, you need to grow traffic at a similar rate. It turns out that just because of our size and scale, our growth rate actually declined a bit. And then we launched the pay-per-booking product for listings, and that has re-accelerated listings growth to that 30% range over the past few quarters.
Four Seasons recently stepped into the luxury vacation rental game. What are your thoughts on hotels entering the space?
I hope that hotels catch up, as a lot of people see our industry as competitive with hotels.
More and more, you’re finding fewer resort development that don’t have condos/villas alongside a hotel product. So that is the trend now. Four Seasons is the first to say that they would put up their own website to do that, and that brand has already been placed on HomeAway.
They are basically property managers for the properties they have - so just like other property managers, they have their own website but it isn’t enough to fill the pipeline. So they also advertise with the HomeAway network.
Four Seasons has a unique product when combining the privacy of a home with hotel services, such as dialing up room service to eat in your living room. The reality is that it is a niche market, and we may in the future have a subset of vacation rentals on resort properties on its own sub-domain on site.
How has Airbnb affected HomeAway's supply and demand?
We have five times the consumer traffic than Airbnb, so we are much bigger in demand globally than Airbnb. And it’s not just about getting traffic but converting traffic - so what we focus on is the combination of traffic and conversion.
The key metric for us is to track the income an owner gets from HomeAway. We look at unique shopper metrics, including bookings per listing. We do it market-by-market, and it’s quite complex as we are in 15,000 discrete markets. We manage supply-and-demand by market, so we manage the traffic growth for each specific market depending on listing growth. We can be really strategic with e-mail, CRM and SEM if we need traffic in that region.
Airbnb has gotten an enormous amount of attention since launching back in 2007 - not all of it positive, especially in the ongoing NYC and SF regulatory back-and-forth. How does Airbnb play into your strategy? Do you feel directly competitive?
There’s no question that until Airbnb came along, there wasn’t anywhere near the controversy there is now. It all started with Aribnb’s success in New York City, and a lot of that PR starting getting people to pay attention to whether this was legal or not, whether people were paying taxes or not.
Airbnb is a city success story, as they are covered in cities, whereas the core of our business is vacation, beach, mountain and true vacation destinations. And in those places, people have been renting short term for 50-60 years. All of that got figured out years ago, and they would never outlaw rentals as the economy depends on it. And that’s 90% of our business.
We never really pushed in the city markets as they were less vacation destinations, and as we were a whole home business. The majority of the rentals in cities were investors or second home owners. Airbnb came in with shared rooms and renting out primary homes that they lived in - and basically subletting properties that they were renting from other people.
Another thing is that Airbnb is a merchant - they sign people up, and take care of all of the transactions and money handling. They technically sell that rental to the consumer and then remit it to the owner later. We have an agent model - our owners deal directly with travelers, and even when they use our payment platform online, the platform sends it directly to the owner.
Airbnb qualifies as the merchant, while [with HomeAway] the actual seller has the merchant relationships. This is important because a city can go after Airbnb, as they are liable as the merchant of record. In the case of HomeAway, our owners are the merchants.
This is less problematic for HomeAway, as this places the liability on the property listing and not on the company. And this is one of the reasons we have less inventory in cities - it’s just not our business. We’re not going after New York City, for example, as its a questionable place to put a big part of the business, so we’re going after places that are mature with clearer regulations.
In light of the increasing interest in the home automation market, what technologies is HomeAway pursuing to facilitate the experience?
I’m really excited to our launch of our new mobile app for customers via our acquisition of GladToHaveYou. Our historical marketplace business means that we lose contact with customers in between rentals, and this new mobile app is really cool as this app will have every piece of information they need to manage their trip, such as maps, contact information, key codes, information on the rental, local attractions and restaurants - its a really wonderful thing and in our tests, travelers open it up an average of 15 times during a trip.
We’re trying to make vacation rentals as easy to book and stay in as hotels, and that’s a long path. It’s a 20 year journey, and we’re about halfway through.
We also want to make the experience very easy, and hotels have concierges and staff, so we’re going to be leveraging technology to do that. We’re going to really help consumers manage their stay and experience using technology moving forward.
This will also allow us to learn more about the likes and dislikes of our customers, and that helps us immensely. From a CRM perspective, we have a huge database of 35-40 million people that have used the site. We want to use predictive modeling to make correct assumptions about future trips from the information we have to generate [destination] ideas for customers planning these trips.
[For home automation], we already have an integration with some of the smart locks on the market via the HomeAway dashboard. There is a physical process that’s required to set these up, so this is a barrier. More and more, that is the future where all of these sorts of things will be managed online.
NB: Doorbell image courtesy Shutterstock.