HomeAway tweaks its rental commissions, adds traveler fee

This week HomeAway, the vacation rental platform, began rolling out a traveler fee to its US websites (HomeAway, VRBO, and VacationRentals.com), with a plan to introduce the fees globally later this year.

The fee on listings will vary, and will be between about 4% and 10% of the total value (not to exceed $499). For instance, for an owner renting in the range from $800 to $1,000, the fee will be about 9%.

Last year, when previewing the fee, the company said it expected the fee to average at about 6% of most transactions, which, if true, would be lower than what its major rivals, such as Airbnb, charge renters.

Chief executive Brian Sharples said in an email statement to Tnooz that the fee is intended to enable HomeAway to "invest in more marketing and product and services, and to cover some operational costs."

When a traveler who books or pays through HomeAway reaches the checkout screen, he or she will click "view details" in the "request to book" section, to the right of listings, to see the price breakdown.

Only properties that can be booked or paid for directly through HomeAway sites are immediately affected, which means nearly half of the company's inventory -- though the company wants to make full inventory online bookable by end of the year.

That latter plan is a cause of alarm for some.

In community forums for property owners, concern is being expressed among some that property owners will be penalized by having their listings "flushed" down to the lower ranks in search results if they choose not to use HomeAway's online system.

There are rumors of a plan by as soon as July to force owners who op-out of the online payment method to cancel their listings.

It will be interesting to see how significant this group of property owners is. If they depart and take their business from HomeAway, it might mean a bumpy path for the brand in the short-term.

As of today, some of the messaging on HomeAway-branded sites seems to push people into the online payment system exclusively:

To make things more palatable, HomeAway is reducing the cost for owners using pay-per-booking from 10% to 8% (which includes a credit-card processing fee) for bookings originating on HomeAway, VRBO and VacationRentals. Subscription customers will see pricing changes in April, the company says.

UPDATE: 7:45pm A HomeAway spokesperson clarified:

"Online booking (what we call OLB) and HomeAway Payments are not tethered together. We’re trying to be as flexible as possible for owners. "For example, if I'm an owner, as an owner I can adopt online booking and then tell HomeAway my preferred method of collecting payment, which might be an alternative to the HomeAway Payments system. "So, there could be an instance in which a traveler books online, and pays via a wire service – but that’s ok because we have the bank account info in our system and it is verified as authentic. "As long as the traveler isn’t going off of our platform, and we’re telling them that ‘yes, that method of payment is secure’ then they’ll be protected by our new guarantee. "So, it is our goal to reach 100% online booking adoption, and everyone will either use HomeAway Payments or an alternative, verified method of payment."

On the other side of the transaction, HomeAway is betting that the traveler fees will appeal to consumers as part of a broader marketing strategy of positioning its style of rental as safer and less uncertain than renting from a primarily peer-to-peer site like Airbnb. (Exhibit A: HomeAway's spiky new ads.)

In line with that, the company is rolling out new guarantees.

Sharples told Tnooz:

“We are revising our traveler guarantees to provide even more coverage, reducing prices for owners and managers, and changing the way we monetize our business. Now, travelers who book or pay directly through HomeAway’s sites will have the full amount of their booking protected against things like misrepresented or double-booked properties. Additionally, HomeAway’s 24/7 customer service team will book new accommodations for travelers who are stranded or discover a serious issue with the property."