Home » The Masked Manager » The Masked Manager | Vacation Rental Opinion


This month The Masked Manager lets off steam and gives his vacation rental opinion about Homeaway.


We thought the discussion was particularly topical and although the industry is awash with comments and speculation, this is from the horse’s mouth, so to speak.

Original questions are in black. Carl Shepherd’s comments are in blue. The Masked Manager’s thoughts are in red.

Q: What effect (of these management changes) on owners?

Carl Shepherd, Homeaway

CS: Not that much. We do not have any reason to “advantage” bulk listings, but many of you simply will never believe this because some of you see an on-going effort to advantage professional managers over owners and PPB over subscriptions. But the fact is that is not true. (I can report that when I talk to PMs, many of them still complain that we advantage owners over them, so we must be doing something right.)

The masked manager

TMM: As a PM, this isn’t wholly true; it’s just dealt with by different teams. Owners are trapped in the admin system and beleaguered with negative messages about ranking, points, updates etc. Managers are still hassled about BIN, but work via channelled data and this means volume and keeping to the press promises.

Carl Shepherd, Homeaway

CS: We have been very clear that we intend to be 100% On Line Bookable by the end of 2016. Many people think that means instant bookable, but if we meant INSTANT we would say I N S T A N T. And we’re not. We’re saying online bookable, which means that the traveller will complete the transaction via our platform.

The masked manager

TMM: OK we have 24 hours to approve it. It’s still “Book Now” and mentally commits a guest to paying without full clarity. We KNOW potential guests are avoiding this option so far and head off to “more information please”.

Carl Shepherd, Homeaway

CS: Yes, we will sell subscriptions. Yes, we will continue to allow any subscriber to use Owner Reservation and take online payments through our platform. But we will also allow subscribers to take payments offline.

The masked manager

TMM: How kind, but not very helpful if it affects ranking. 80% of income is from listings with offline payment direct. So SURE, use this goodwill to change the way it works to our disadvantage.

Remember the operative word here is Goodwill.

Carl Shepherd, Homeaway

CS: I have to tell you though that IMHO those who cling to offline payments are putting themselves at a distinct disadvantage with travellers. I’m an old guy (more on that later) and I remember that people were very afraid to pay online 10 years ago. That is simply not true today: most people are afraid to pay OFF line. So if you’re going to insist that people pay you via snail mail with a check, eventually, you’re going to see less business because that scares people these days. Case in point:

My 30 year old son does NOT possess a physical check book. He has not written a check since his first week at Dartmouth. He does not carry cash. He does not wire money. If you want Connor Shepherd to rent from you, you better take credit cards or ACH and you better let him pay online. Because if you don’t he won’t inquire–he’ll just book from your neighbour who does. (And in a sign that he may be disowned, he’ll even rent from our competitors before he’ll wait for a response to inquiries. Just sayin’. (And he is a particularly delightful renter, by the way.)

The masked manager

TMM: Clearly his son is a book and hope type of guy! I bet he wouldn’t buy a second hand car from photos and a description only! Sure paying online is certainly the trend and more and more options are becoming available. Yapstone isn’t the only game in town! Apparently 50% of all Europeans pay by wire transfer for holidays! Credit cards are used much less than the US. That means correspondence of some description.

Carl Shepherd, Homeaway

CS: The bottom line is that y’all see this as something HomeAway is doing to you. We see it as writing on the wall: if our owners are to compete with the long term renter next door who has his primary home on Airbnb and is charging less and taking online payments, or with the PM next door who markets via Booking.com, we have to give them the tools to do it. It’s our responsibility to keep up with the times and keep you competitive. If you, after understanding the tools and the incredibly rapid changes happening in the VR world, don’t want to use the tools, you will still be able to not use them. And maybe that will work for you.

The masked manager

TMM: We know the world is changing, but look let’s be clear about this. Hundreds of thousands of owners and managers have been paying millions and millions of dollars to advertise and work without the wonderful new ranking tools, extranet communications, payment systems, daily calendar update demands and more.

The system worked, the personal service was appreciated by customers and owners and we were all in control of our destiny.

HomeAway isn’t AirBnB, (you keep saying this in your PR, is this now the target?) and booking.com is an even worse example. They have such huge resources and hotel history traction; you would expect them to succeed. But they freely admit it’s the resorts with reservations desks they want to book and growth is now slow and reputation in this segment appalling with many owners, managers and guests. Their rates are sliding as they attempt to get more fruit higher up the tree.

OK, we won’t use the tools, you will still take the subscription money and we will never be seen! And if we are, there will be messages to guests recommending booking other properties! Great deal!

Carl Shepherd, Homeaway

CS: But, IMHO, you will be significantly hurting your chances of competing in what truly is the fastest growing travel segment. It will always be your choice as to how you participate in the marketplace we operate. Over time, you may find that change is necessary to be as successful on HomeAway as you were in the past, but that is because the industry is changing, not just HomeAway.—

The masked manager

TMM: Finally we agree! It is growing due to the massive investments, the global economy and the sharing community! To be quite honest I wish it wasn’t. Why? Simply because the last few years have seen a massive increase in the most irritating ways:

a) Guests can’t book one night

b) The advertised price is not correct on these advertising sites

c) What is a security deposit it and why they shouldn’t take it as a personal insult

d) Why they can’t cancel the day before arrival and get their money back or pay on arrival

e) Why they can’t arrive and leave at midday

f) If they can add a few more guests free of charge

g) No you can’t have more discount

Perhaps BIN will remove all this hassle. Price by the night, no cancellation policies, no correspondence, arrive and leave when they want and have parties free of risk. I need some Millennium owners, like Carl’s son. He will surely understand! Or maybe buy a hotel, roll over and book it out on booking.com

Q: Is the subscription model ever going to go away?

Carl Shepherd, Homeaway

CS: There are no plans to make it go away. Let’s be logical: Subs account for the lion’s share of our revenue. What company would trash it’s biggest revenue stream? It’s simply crazy that people who understand business would think any company–much less a public company–would risk it’s major revenue stream. But hey, there are many folks on this board who swear that is true. None of them work for us, or are in a position to do anything but speculate, but that doesn’t keep them from pronouncing it as fait acompli.

The masked manager

TMM: Lions share is right! So instead of listening carefully to the customer who actually pays their salaries, they simply make directives that all owners and managers will fall in line with what the “market” wants. No doubt the market wants these marketplaces to bill them extra money and see a rise in prices.

“would risk it’s major revenue stream”. When the renewals drop on subs and they have (not performance) and new property acquisitions in the western world slow, perhaps there will be a review of this. The share analysts are not so “hot about HomeAway” at the moment!

Carl Shepherd, Homeaway

CS: Start of rant: When, and if, we were ever to even CONTEMPLATE changing that model, it would be unlawful for us not to announce it well in advance. We have public investors, people, we can’t just wake up and decide to trash a revenue stream. End of rant.—

The masked manager



Q: Is HA/VRBO subscription going to keep on rising? I hear more “I’m outa here” each year.

Carl Shepherd, Homeaway

CS: The average subscriber on HomeAway pays less than 4% of the gross bookings earned via HomeAway for those bookings. In financial circles, that is called the “take rate”. The “take rate” for Airbnb is 9-15%. The “take rate” for Booking.com is 18-25%. The take rate for FlipKey is similar to Airbnb. So HomeAway–even in the face of rising subscription prices–is still the lowest take rate in the travel industry. By far. Wall street dings us for that, but we believe it’s important to keep our prices as low as we can.

The most meaningful “increases” come from tiers. But again, the folks in our top tier still report that total take rate is under 4%. I can’t say that the price will not go up; I can say that renewal rate in the US is as high as it’s ever been, so one could posit that if people were not getting value, it would probably show up in non-renewals.

The masked manager

TMM: Now we know the correct terminology: The “take rate. We all know that owners and managers are seeing margin decrease, cost increase due to technology needs and increased taxation. The line in the sand is being reached and soon to be breached we suspect.

AirBnB charge the guest a lot, booking.com is sliding and 4%, this is based on full income no doubt, for which HA is probably 30% of bookings for many owners and managers. I make that 12% without a manager’s position where they get a percentage of the gross revenue. Q: Is there, or could there be, a process in the works to let those who totally hate “Book it now” opt out or opt to a slower “must answer” time frame? (Disclosure: I like BIN. About half of my bookings come through it, and I like the “less yakety-yak, sooner $$$”.)

Carl Shepherd, Homeaway

CS: This falls into one of those categories of yes, we could consider a slower must answer time. I doubt we will. Why? Because travellers want that time to be shorter, not longer, and they simply will book from someone else, and if those people who pay for their listings when they book (at a take rate of 10%, far higher than the average subscribers) are more responsive, they will take the traveller who, in the past, might have inquired on 10 properties hoping one would respond. The traveller has changed: we could ignore that, but then we’d be of no value to you owners whatsoever.

You pay us to understand this market, to make it fair, and to make sure you have a level playing field. That level playing field will require a “fully present” player. If owners would like the early 2000’s back, I can assure you of one thing…

The masked manager

TMM: Absolutely wrong. We pay you to send us interested advertisers. If they want an Instant Book Now (mentioned above), they can push off to Booking.com, AirBnB, Flipkey and end up with a potential nightmare holiday and a jamboree bag selection. 80% of revenue comes you’re your customers who pay subscriptions, you said it, it works, millions of bookings are made and the world is at peace. Instant Book, which apparently is not the case, but now is (as that’s what travellers want) will see a race to the bottom for everybody.

Carl Shepherd, Homeaway

CS: …It’s not gonna happen. We can all either compete in today’s world or choose not to, but we can’t ask Connor Shepherd to wait until tomorrow to hear from us or write a check and drop it in the mail. He won’t.

The masked manager

TMM: This is today’s world and 90% of rental bookings are still made direct with owners and managers. A growing number direct via online systems and a growing number of young people (we know we speak to them) wanting something they simply can’t afford. Connor can book on AirBnB and pay the premium. But when or if he has kids and he books that villa in Barbados and he wants to know the pool temperature of, and the time the chef prepares breakfast, and can he bring some friends in for dinner on Thursday night. That means communication. I can hear the word leakage now being muttered in board rooms!

Carl Shepherd, Homeaway

CS: Times change: the question is age old. Are we prepared to change with the times?

The masked manager TMM: Yes but are HomeAway? The owners and managers are changing and they are adopting payment systems, advertising further and wider, loading their prices, using websites with key domains and words, using social media, working with managers to expand opportunities and reduce the dependency on those marketplaces with an eye to removing any remaining margin.

You are driving people away, not drawing loyal custom in!

Carl Shepherd, Homeaway

CS: Over 400,000 listings on HomeAway are On Line Bookable today. Every listing on FlipKey is online bookable, as is every listing on Booking.com and Airbnb.

The masked manager

TMM: Yes but 80% of income comes from subscription listings, which means (removing ancillary income) 7% comes from 40% of properties. Perhaps 300,000 are on performance/commissions. I make that about $50-60 commission per property or less than 1 booking per year per property. This is pretty terrifying if enquiries are replaced by the “Book-it Button” and a much loved and admired group of websites and businesses slipping into the void. Not so sure about sheep, but sinking ships comes to mind.

As for Booking.com: Their 273,000 listings have risen quickly from the 150,000 launch but the low hanging fruit has been collected.

Carl Shepherd, Homeaway

CS: That’s YOUR competition, folks. We’re only trying to help you compete.

The masked manager

TMM: Wrong: That’s your competition Carl as you perceive it, ours appears to be HomeAway’s direction. The others are simply more channels to watch and compare to HomeAway on its relentless quest to be a travel brand. They are opportunities who have more brand awareness with travellers and the Millenniums clearly, if you want that market. If AirBnB is truly where you want to be then perhaps we should all move to AirBnB as it’s cheaper! Don’t forget Millenniums will change to “familiums” and “oldagiuniums”.

The Masked Manager

The gloves are coming off, so next month I’m going to show how some of the managers are using the systems and marketplaces to try and improve their market shares and bookings!

5 thoughts on “The Masked Manager | Vacation Rental Opinion

  1. Mike Mullen says:

    I refuse to use Flip Key. No direct guest communication, excessive fee for each rental, they hold my money often months before guests arrive.

    This to me, is the direction HA & VRBO is headed. Very scary.

    1. Alan Egan says:

      Hi Mike,

      Thanks for dropping by.

      I think you’re right.

      The direction is worrying.

  2. Wow! That was some interview. Shirts off and fists flying. I would have to call it a draw, but only just, with both sides landing significant punches.

    In the blue corner, with Carl, I would have to agree with his major point. My son drove across the US a year ago. He told me that he booked everything from his mobile phone online. The information provided, the photo and copy, was enough for him to make a decision. On the whole he was not spending more than 3-5 nights in any one accommodation, most of which were Vacation Homes. His generation are not for wasting time with lists of homes. More or less, the first one they see, in the area that they want to stop, will be the one they book. His attitude is: “If we make a bad choice, well, it’s only for a couple of days and if it’s really bad, we just move on”. I am more than twice his age and I feel the same. Travel is an adventure and if you have the occasional less-than-comfortable stay you at least have a tale to tell. TMM describes that as “book and hope” but there is plenty protection provided by consumer law and the use of a credit card to pay.
    Most people would far prefer to pay by credit card because they perceive a degree of safety in that because they can get a payment stopped and returned if a property is seriously mis-represented.

    In the red corner, with TMM, I would also have to agree that sites like Homeaway could do far more to explain the operating models of Holiday Homes. As an agency owner myself, we
    find that there are constant misunderstandings/niggles about:
    Minimum stays
    Security deposits
    Time of arrival and departure
    Maximum number of guests

    Taking, as an example, Homeaway’s Australian acquisition – which has holiday homes, motels, hotels and resorts listed in a dog’s breakfast of choices- it is hardly surprising that
    a customer might think that a holiday home should be able to offer 1 night stays, no security deposit, easy cancellations etc. The choice is so great and, as customers, they have been conditioned over many years to believe that they can get what they want.

    I believe that large holiday home listing sites could do a lot more online and offline to educate their customers in the differences between the operating modes of the different types of accommodation. They are pretty good at promoting space, privacy, kitchens etc but I do not think the public ever thinks much about the real differences between a 100 room hotel and a 5 bedroom house or in the case of AirBnB the difference between a whole house and a room in a house. For the customer it is just accommodation with different features. To be fair to Homeaway, I think they have done a lot more to explain that than the other VR organizations.

    The other issue is the screening of customers. I believe that the ability to screen a rogue over the phone or via email is extremely limited. Dishonest people are generally well practiced at it. The good new is that the really bad ones who cost a lot are a very small percentage. That is why the sharing economy is so successful – because most people play more or less fair. People who want to use a house for a party are the most common risk in our experience and they are nearly always locals. Consequently, I ask lots of questions of locals wanting to book.

    On these issues I think we have a draw. On the question of money paid and value received, the only winner in the end will be dictated by the market-place.
    On that Carl is perfectly rational and a clear winner. He points out more successfully and logically that he is running a business that is up against other giants and he has to be offering a service that can compete with them.

    AirBnB is the obvious pin-up star of the moment despite the fact that it charges the customer more.
    That is a very interesting phenomenon. I am guessing that because they began with sharing
    rooms in houses they attract a younger crowd who may not be so price conscious as older
    people with children and a mortgage.

    They got lot of publicity from things going wrong and responded with their insurance scheme. They have built a brand that is seen as more hip, more Silicon Valley and whether that has much to do with how good the service is may be debatable.

    Owners pay only 3% per booking and AirBnB handles the payment. Owners may be disgruntled about being paid after the booking has been used but it makes the customer feel much safer.
    This is what Homeaway is up against. What their owners and PMs think is of lesser consequence.

    The real fear for TMM, owners and PMs is how much they are going to have to pay these organizations. That is the gorilla question causing all the anxiety.

    With Homeaway and AirBnB having around 1 million listings each, it has become a very crowded market place to advertise in.

    For a long time a subscription was a great deal. Now, the business of being seen is highly competitive and so placement in top tiers is becoming expensive. Carl disputes this – reporting a 4% take rate for his top tier.

    I would tend to believe him. One of the reasons that we got traction as a small regional website is that we paid up big on another leading travel site at the time to have a top 4 listing. It seemed a very large payment at the time but it got our website noticed. It was absurdly cheap in hindsight..

    Running your own website is not without considerable cost (in time and effort mainly) but it has allowed us to offer a far more personal service using the phone allied with great product knowledge. The question of listing/commission costs does not worry me because I hardly use these major sites. Most of our owners still list on several sites but others are exclusively with us and have the same or better occupancy. Because we are a small site, we have no visibility issues within the site.
    It just amazes me that PMs with many more properties than we have should feel so threatened instead of looking for alternative strategies.
    Owners and PMs have allowed themselves to become enslaved financially and mentally. If they don’t like the service they are getting then they should get off their butts and do something about it. Organise themselves. Build their own websites. Use the internet instead of being used by it. Stop complaining and thinking that the way things are now is going to last forever. Anyone who places their business model in the hands of another business is asking for trouble.

  3. I think what many keep failing to understand is that there are many different types of renters out there. I can totally understand when Carl talks about his son wanting online instant payments, I think it would be silly for anyone to deny that there is a large section of the market out there with similar views.

    But, there is also a large audience of people who are looking for more than just a room for the night. These are the renters who want to know more about a property before booking and finding the perfect place is important to them.

    It comes down to positioning for the property owner / manager and the VR sites.

    Which audience segment are you trying to attract?

    I think it would be fair to say the HomeAway ‘appear’ to be trying to re-position themselves more to attract similar travelers to AirBnb with some of their changes. This is their choice and you can understanding their reasoning in some aspects of it however if there is still an audience wanting the more personalised service and there are still many property owners / managers still looking to offer this then there should (and in my opinion will ) be a new VR site to facilitate this.

    Trying to cater for everyone always ends up catering to no one.

  4. Thibault says:

    Thank you Masked Manager for unearthing this post and for writing your thoughts about it. This is so valuable!
    I agree with the previous comments: It is the way things are going, I’m afraid. I use Airbnb a lot and BIN can be great IF you finetune the options (instant booking for the same day, no instant booking for guests with no positive reviews, etc.).
    But Masked Manager has a point: What if HomeAway kept its model to differentiate itself from the others? Instead of running after them, it could develop another model where happy owners would stay.

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