September 23, 2016
The Death Knell for Airbnb Hosts & Vacation Rental Self-Managers
Hear that? It might just be the death knell for Airbnb/vacation rental self-management.
No matter how you cut it, this was a rough week for those who believe owner-managed vacation rentals are the future of the short-term accommodation space. How can I say that, you ask? Let’s read the tea leaves together.
“Find a Superhost” & Airbnb
To begin, Airbnb quietly rolled out its “Find a Superhost” page. This may not seem like a big deal at first glance, but think about what it implies for a second. First of all, Airbnb—the same company that built its brand as one that helps retirees rent out their spare room in order to keep the house they could no longer afford—is finally admitting that a good number of people don’t want to do all of the work it takes to manage an Airbnb.
No matter how slick the site, the time consuming and often dirty work of managing an Airbnb is simply too much for the vast majority of people.
No harm there, you might think. But that is just the start.
Airbnb is also not-so-subtly acknowledging that guests actually prefer a more professional and businesslike service. With 46% of guests not confident that they’ll get what they anticipate when renting directly from an owner and 95% of guests able to think of at least one reason they would choose to rent from a management company over the owner, it makes sense that Airbnb would finally acknowledge the value of professional management.
Why have the Superhost badge otherwise? If people didn’t actually prefer this more professional service, why go out of your way to highlight it and encourage the less professional self-managing Airbnb hosts on your site to work with them instead?
Sure, they use the euphemism “experienced,” but we all know what that really means. A Superhost is a small business. An experienced Superhost looking to add properties? That is an aspiring mini-hotelier, and in the vacation rental world, we call them vacation rental managers. They are businesses, they do this for a living, and they do it well.
Welcome to the fold Airbnb.
But surely if I am one of the few who prefer to host/self-manage on Airbnb, there is still a place for me, right? Not necessarily.
Airbnb does not make its money from the number of listings it has. Instead, it takes a cut of the bookings. The higher the price and the more nights booked, the more money Airbnb makes.
Will Airbnb make more from an amateurish listing, when the owner is working a full time job, cannot be as responsive, and only rents about half the time that is available? Or will Airbnb make more from the professional manager—I’m sorry— Superhost, who is now doing this full time and can rate optimize and max out the calendar?
And if Airbnb makes more from one of those types of “hosts” than the other, might they be tempted to provide preferred placement to listings managed by one type of host versus the other? Maybe even going so far as to create a new category, badge icon, and filtering feature to highlight and select just such people, and maybe even encourage the lower performing people to instead just work with their top performing ones?
Option 2: VRBO
At this point, the other main option for the amateur vacation host is to go to VRBO. After all, “rent by owner” is in the name.
That, however, is where things get REALLY bad.
This week happens to be when HomeAway, owner of VRBO and itself owned by Expedia, hosts RezFest for the professional managers who use its software. It is a great gathering where the industry gets together to hear what the company has planned for the future.
Now, before I say what happened, it is probably worth noting that since its acquisition by Expedia, HomeAway has not been shy in saying it is moving to having all of its listings online bookable in the near future and very deliberately shifting to a revenue model that is no longer based on listing fees, but rather on booking fees taken as a percentage of the entire booking.
Sound familiar? And like with Airbnb, which listings do you think will make HomeAway (Expedia) more money? The one from the amateur renting a few weeks a year, or the Conrad Hilton to be who is looking to build a rental empire?
Fortunately you don’t have to guess. As Brian Sharples, Co-Founder and CEO of HomeAway said while on stage this week in Orlando:
“You have a huge advantage as a professional manager against your competitors [self-managers] with the new best match algorithm.”
So go ahead, switch from Airbnb to VRBO. You are just as likely, or rather as unlikely, to show at the top of search results and get bookings.
Option 3: Independent listing sites
Okay, so the two big dogs are not on the homeowners’ side anymore. Time to find a new listing site. This, however, is where it gets even worse.
You see, the same day Sharples let it be known that managers would get preferred placement, Airbnb raised another round of financing. $850 million at a $30 billion valuation.
So what? Sure Airbnb and Expedia have deep pockets, but a competitor serving hosts still has a chance, right?
Before making assumptions, it’s probably worth checking where that round of financing came from….Google. Yes, Google. The same Google that launched a new app on Monday that aims to “revolutionize” how you vacation.
Who will Google make sure shows up at the top of search results when people are looking to book a place to stay? And once you visit the site they place up top, who do you think is going to show up at the top of the search results on that site?
So yes, with new features and product launches and with hundreds of millions of dollars of investment pouring into the space, it may have been a monster week for the short-term rental space as an industry.
But please, spare a thought for those self-managing hosts who no longer stand a chance. After all, they are the ones that helped get us here in the first place.