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MANAGING MISDIRECTION

The post about HomeAway (Roger Almaida) and search misdirection was fascinating and provides a weight of evidence that the online rental world is not always as it seems.

We had quick pop at this and had similarly odd and inconsistent results, but in reality this is of no surprise. We know that HomeAway has volume vs. traffic issues.  Recent analyst reports point to this as a hurdle to the company’s growth. The 25% increase recently implemented in subscriptions fees has also compounded the issue and all this has had a twofold effect:

Push to BIN as a questionable strategy

Question the value of subscriptions vs. other sites/media and commission bookings.

We have noticed that this seems to happen in high volume destinations, but we found in locations that have much fewer properties the Platinum listings remain in the same place on the site.  4,000 properties in one location is however hard to swallow and as hardly anybody moves past page 3, most subscribers are out of the picture without filter use.  But without use of, and rearrangement of listings through filters, the classic subscribers would not bother to subscribe due to lack of enquiries. And may be tempted to push to BIN only!

One thing that is not often mentioned is that the main page and listing pages drive to calendar usage. If it’s not available, then the list shrinks! At time of writing, Naples Area has 1150 properties for my trip on September 5th.

The problem for many of our potential guests is they often have flexible dates and it would be helpful to have one of those searches like airlines (are your dates flexible, 3 days either side). Not showing calendars by default doesn’t help.

Now there is the map to contend with. How this is presented is no doubt in trial. All I seem to get is BIN properties and none of ours in high density locations!  In Naples area there were only about 100 showing, the first 25 were all “Request to Book”.  In one area where we have 20 and nobody does BIN and we have the local majority online, they all show!  It’s worth watching this section!

TRAFFIC

How does a company face the conundrum of oversupply and insufficient traffic? Last year Skift published a comparative traffic report.

http://skift.com/2014/02/24/the-top-online-travel-booking-sites-for-january-2014/

HomeAway/VRBO was 19th with 15.9 m visits in January, but quoted this year in the 2015 1st Qrt. were 287m visits across their whole network. That’s about 3 visits for each property per day or about 1000 views per year. You can multiply this by the number of pages people visit (Skift says 7), so that’s 7000 views per guest across the whole network.

All a little theoretical, as this is nowhere near the real traffic:  their PPC ads, bounce rate drop off, owner logins, market & finance researchers, bots and a focus on hotspot destinations reduce these numbers substantially and if you aren’t on Platinum’s, expect less (maybe).

The message is simple, as long as inventory grows, traffic needs to grow. All the other sites (FlipKey, AirBnB, booking.com etc.) are accumulating the same inventory and so the “let’s be seen” game becomes harder and traffic is spread as each marketplace wants a bite of the booking cherry. It is increasingly more difficult to know what to do. It’s easier to negotiate however!

We gauge metrics on enquiries and conversions, which comes from traffic of course, but there is good traffic and bad traffic.

If you want some numbers, our best Platinum ads gave us over 300 enquiries and we average a 1:7 conversion and this property did very well. Our worst is plain embarrassing, but averages are 100, across the portfolio of Platinum’s.  It costs almost twice the price as of 5 years ago and conversions are down from 1:3. Margins are very thin and getting thinner and days stayed are reducing and costs increasing. The demands made on us by marketplaces, their continual tinkering and changes we never signed up to have also meant another member of staff to help administrate everything.

None of this is great news and companies will need to start increasing charges to guests. Always the end game we suspected anyway!

OWNERS VS MANAGERS VS MARKETPLACES

I have a lot of time for owners, we represent them after all!  However, when we see thousands of properties in one area it’s very hard to be seen, particularly as a single owner and even for a manager with a lot of properties.  This means we need to compete with owners and other managers.

The owner/manager filter is pretty well hidden and the hotelization means guests are less directed in their booking desires. Plus why make it obvious and irritate the companies that supply 50% of the inventory, bring in big inventory and pay big single bills and feed data dynamically?

The day that HomeAway opened the restrictive doors on the owner only sites, foretold a darker future.  VRBO and OwnersDirect allowed managers access to a previously untapped market. The domain names are all wrong of course and ethically, this seems deceptive.  But if one manager is on there, we all are! The very reason many of these sites worked was because they were “by Owner”.

Now forget exactly what you or we want (we are both in the same black hole, just on a different scale: you need 20 bookings, we need 10,000), accept that the single most important thing in this game is the guest and the investors, not managers or owners of the properties.  Has HomeAway or any of the others ever called for a chat about your property and how they would like to visit you and discuss potential improvements to assist enquiries and bookings?  Of course not, their PR covers bringing guests to your door even if they are the ones you really don’t accept and they want it for nothing! The door however is held open by them and they have the key: more like a prison in reality.

We all know they want people to search by dates and use filters and pay online and stop us communicating.  Which means guests will use and be directed to the usual price filters and we will be coming down to lowest common denominator, price and convenience. Pushing rentals as alternatives to hotels means shorter stays and free cancellations as well. It’s coming; apparently the market wants it and is certainly being told it can have it, although which came first is questionable!

Now study the top line filters: Price: Sleeps: Bedrooms: Booking: More Filters

Who would be happier with an Owner/Manager filter included? I bet owners would!

The main page is all about location, dates and guests but how many people actually enter HomeAway on the home page: how many renters have exact dates and how many calendars are really accurate?

So what is really important and often not mentioned is the sort function, which is always defaulted to “HomeAway sort”.  What exactly is that? It’s the equivalent of the highly secretive Coca Cola formula or Google ranking in the rental world.

IS AN OWNERS LIFE EASIER?

An owner’s life seems easier in many ways as they can focus on a single product, tailor it, modify it, blog, G+ it, search for new avenues and focus on niches. How I envy this. With hundreds of different properties in different destinations with wide ranging amenities and demands, the focus is diluted.

So what can managers do, in comparison to an owner? I can tell you what many in the industry are doing and it’s not good news for owners in many ways.

Groups: We are members of three new manager groups who are growing marketplaces based on inventory and a common goal. Single owner manager properties are not invited (sorry).  Technology drives this business and volume inventory, supported by non-profit subscription fees and group enthusiasm will add traction. The objective is to bring new brands and personal service and communication back to the industry. We are told by marketplaces, guests don’t want this. Strangely we seldom ever hear this from guests!

Split Inventory:  Many managers are feeding the BIN ethos with inventory which it is gladly gobbling up!  You may ask yourself why.  Imagine having 5000 properties and having to pay a subscription on each. It’s a lot of money! The marketplaces know we have been placing ads for years and enquirers get offered other property options off the back of these.  They may consider this “leakage”. We see it as placing an advert in the local paper for a property in the local store and if somebody comes in we sell them other or alternative products as well. There still needs to be a lot of advertising as it’s a competitive world.

This is becoming harder as prices rise and the system is slowly modified to a Booking.com business and hindered communication. So in the interim some managers are placing their remaining volume as BIN and if a booking arrives, that’s fine. It’s always going to be lower quality inventory and can still get referred from subscriptions elsewhere. We have also noticed a little “management” of price as well, to push people to the subscription properties and cover the commission if a booking happens on the less attractive inventory. Even on the price parity obsessed Booking.com!

Pressure out the small guys!  Adding volume of the “not so great” inventory pushes down competitor’s properties especially as BIN is shareholder gold (apparently). So another bonus!

Use more sites creatively!  Large similar looking, volumes of inventory also pushes guests, who like to look for deals, direct to search for the actual company. More good news.

Some managers adore the BIN business. If I had 100 great city apartments and cheap easy available labour, owners who allowed 1-2 night stays at high prices, then I could fire all the staff!  Who needs a phone?  Oh yes, that’s a hotel!

All we hear from account managers and the all-pervasive dashboard is switch on BIN!

Does it really work, this BIN? It depends on which site and where the properties are!

No doubt about it, AirBnB in cities with rooms and good value apts. works and most of the fee gets paid by the guest. Booking.com also works, but much fewer people like to give away 15%+ and this site is often used for “out of season” opportunities by managers and a booking “slip” will be punished.

Your Challenge

HomeAway however is not working well. We know managers who are trying it.  Ask HomeAway to publish Bookings vs. Quotes or traffic. See if you can get these numbers out of them!  If it’s so great then why no show how great it really is and how necessary it is becoming. Facts and Figures are better than rhetoric.

One thing is very apparent however and that is that people book on these other sites for two reasons: Trust and Convenience. We are often asked if a guest can book on VRBO after a conversation and correspondence with us (because that’s what they are told by HomeAway). Nope.  Then we tell them why.

The other booking sites have no other options of course and most managers use them all selectively to boost bookings, not rely on them and will modify prices and terms, block calendars and do all manner of “clever” things.

Niche volume. Managers often have the resources to create volume niches themselves and focus. Guests like a selection (hence the marketplace success). An owner can list on niche sites, but being found on search for this focus is harder. Managers are now working on their own local niches and networking heavily and sharing commissions. It’s better to tap into another managers guest base and hand over commission to an industry partner (guests don’t come back as often any more). Provided locations are split wisely it works.  25% of our bookings are “shared”. Once upon a time, we would never have countenanced this!

More web real estate: We have noticed growth in external owner satellite sites from managers, all being driven dynamically, this helps long tail keywords and competes for the PPC marketplace spend and dilutes the competition. Soon many managers will be running individual owners sites to add more confusion!

If you want to see how some parts of the world work differently then check out Denmark on HomeAway: 16,129 properties from managers and 379 from owners and 15,863 on “Book Online Now”. Fancy being an owner only in Denmark?

Now check out New Zealand, 7804 properties, all managers and 1 on “Book Online Now” (they do own “bookabach.com” though).  So 7% of the conversion of the world to BIN by 2016 comes from down under! That should be as major boots to the BIN curve.

If we were owners what would we do?

There is no golden bullet here and it depends where you are, the local competition and your property. Whatever you do, you MUST up your game and this means covering all parts of your business from web to payments, marketing, networking, blogging, social, photography promotions.  It’s definitely no “Field of Dreams”.

Google holds life and death over search ranking and is THE dominant force in the game. It has business partners who pay to join the party and ones it respects, who are invited. You need to be in the latter, but also to play a careful strategic game with any marketplace. Maybe use out of season promotions on other platforms and raise prices, but beware these online marketplaces take no prisoners; their customers are the guests not you! Use subscriptions widely. Ask your manager how may gold and platinum’s are in your area and ask for position guarantees. You won’t get the latter, but imagine placing a newspaper advert and the paper’s team saying, “your advert will be somewhere between page 1 and 1000 on any particular day, maybe. Is that ok?”

The very best idea is strength in numbers and connecting with creativity.  Associations with a genuinely believable mission statement, local community websites based on destination marketing will work, but needs enthusiasm and management.

Despite the game playing, owners and managers can help each other. Give your local managers a call and see if they are the sharing type.

The Masked Manager

The gloves are coming off, so drop by every first thursday of the month to hear what the masked manager has to say.