• News
    • VRM Intel News
    • Latest News
    • Sponsor News
  • COVID-19
  • Marketing
  • Tech
  • OTAs
  • Customer Service
  • Business
  • Housekeeping
  • More
    • Education
      • Calendar of Events
      • Videos & Whitepapers
    • VRM Intel Live!
    • Reports Login
    • VRM Intel Magazine
    • Subscribe
    • Advertise
    • Authors
    • About Us
    • Contact Us
VRM Intel
  • News
    • Operations Technology Critical in 2021
    • Takeaways from Airbnb’s First Earnings Call as a Publicly Traded Company
    • Streamline Increases Software Prices for Some, Leading to Larger Questions Around Tech Strategies for VRMCs
    • Disaster and Business Continuity Planning in 2021
    • Vacation Rental Managers Maneuver Adjacent Growth: Carolina Retreats, Southern Vacation Rentals & Meredith Lodging
    • VRM Intel News
    • Latest News
    • Sponsor News
  • COVID-19
    • Operations Technology Critical in 2021
    • Disaster and Business Continuity Planning in 2021
    • Bounce into 2021 with Tools to Help Heal and Focus
    • 12 Steps To Reclaiming Your Spirit of Hospitality From The Grasp Of Cynicism
    • Marketers: Too Soon to Plan for 2022?
  • Marketing
    • One Size Doesn’t Fit All in Owner Acquisition
    • Marketers: Too Soon to Plan for 2022?
    • Fact or Fiction? Mythbusting Hot Vacation Rental Trends
    • Fast Growth at Homes & Villas by Marriott International
    • Expedia CEO Talks Vrbo: We ‘Removed Vrbo from Google’s Vacation Rental Meta Product’
  • Tech
    • Operations Technology Critical in 2021
    • Streamline Increases Software Prices for Some, Leading to Larger Questions Around Tech Strategies for VRMCs
    • Disaster and Business Continuity Planning in 2021
    • Fact or Fiction? Mythbusting Hot Vacation Rental Trends
    • Technology in 2021 and Beyond: Vacation Rental Tech Leaders Predict the Future
  • OTAs
    • Takeaways from Airbnb’s First Earnings Call as a Publicly Traded Company
    • Expedia CEO Talks Vrbo: We ‘Removed Vrbo from Google’s Vacation Rental Meta Product’
    • vacation rentals at the best price guaranteed
      Stays Group Vacation Rental Network Opens SoutheastStays
    • Vrbo Is Performing Better Than Airbnb for Vacation Rental Managers, But Direct Booking Still Number One Revenue Source . . . By A Lot
    • 4th Annual #BookDirect Guest Education Day Is February 3, 2021
  • Customer Service
    • Vacation Rental Managers Maneuver Adjacent Growth: Carolina Retreats, Southern Vacation Rentals & Meredith Lodging
    • Resort Collection Outsources Call Center to Jamaica
    • Bounce into 2021 with Tools to Help Heal and Focus
    • 12 Steps To Reclaiming Your Spirit of Hospitality From The Grasp Of Cynicism
    • Getaway Society Founders Are a Dynamic Duo
  • Business
    • Takeaways from Airbnb’s First Earnings Call as a Publicly Traded Company
    • Streamline Increases Software Prices for Some, Leading to Larger Questions Around Tech Strategies for VRMCs
    • Disaster and Business Continuity Planning in 2021
    • Vacation Rental Managers Maneuver Adjacent Growth: Carolina Retreats, Southern Vacation Rentals & Meredith Lodging
    • One Size Doesn’t Fit All in Owner Acquisition
  • Housekeeping
    • Operations Technology Critical in 2021
    • Founder of Newly Launched Kaiser Vacation Rentals Says, “Things Will Be Different … This Time”
    • Booking.com Affirms Commitment to Quality with Minimum Cleanliness Score Requirement
    • Q&A with Breezeway founder Jeremy Gall about company’s $8 million funding round and more
    • Gatlinburg-based Cabins For YOU acquires Chalet Village and is looking for more. Q&A with owner and founder Greg Plimpton
  • More
    • Education
      • Calendar of Events
      • Videos & Whitepapers
    • VRM Intel Live!
    • Reports Login
    • VRM Intel Magazine
    • Subscribe
    • Advertise
    • Authors
    • About Us
    • Contact Us
  • RSS

OTAs

Airbnb’s acquisition of a property management company leads to concerns among property managers and hosts about Airbnb’s intentions

Airbnb’s acquisition of a property management company leads to concerns among property managers and hosts about Airbnb’s intentions
mm
Amy Hinote
December 12, 2018

This week, Airbnb announced its acquisition of Luckey Homes, a property management company based in France. The news comes on the heels of Airbnb’s announcement a few weeks ago that it is looking at the home-building business through a new initiative called Backyard. Airbnb’s Backyard plans detail a specific intent to build “fully prefabricated homes.” The combination of announcements is causing both property managers and hosts who list their homes on Airbnb to question the company’s direction and motives.

Update: Airbnb clarified, “Backyard isn’t a home or a house, it’s an initiative from Samara to rethink the home from a systemic perspective. It’s in the prototyping and design phase, and the output or model is not yet confirmed. It is not confirmed if Airbnb will eventually sell homes or to whom they might be sold.”

As Airbnb moves toward an IPO in 2019, acquisitions are expected. However, acquisitions designed to compete directly with its core base of owners and property managers (PMs), whose home listings built the marketplace, are seemingly out-of-character for the company that touts its dedication to its community.

“As an Airbnb host, I think that’s crazy,” said one European Airbnb superhost. “I already feel there’s not much love left [from Airbnb], but once Airbnb starts buying PMs, good luck.”

Update: An Airbnb spokesperson provided the following statement about its acquisition of Luckey Homes:

“Property managers are an important part of our host community, and we’ll continue to invest in partnering with them to help grow their businesses. We’re working to build the right tools for the concierge services and property management ecosystems—to operate seamlessly through Airbnb and to provide the best experience to guests. Bringing in Luckey, and their expertise, as part of the Airbnb team increases our ability to test, learn more quickly, and build capabilities hosts need.”

According to Simon Lehmann, vacation rental industry expert, founder of AJL Consulting, and former president at Phocuswright, “This acquisition raises several questions. Urban PMs that depend on Airbnb-generated demand have to ask [themselves] the question about the future of their partnership. Does this acquisition cannibalize the marketplace, and if so, how? If I were an urban PM solely dependent on Airbnb for bookings, this would give me sleepless nights.”

Skift’s Deanna Ting reported on the acquisition, “Until now, Airbnb has largely acted as more of a platform by which professional property management companies and managers can market and distribute their listings . . . However, buying a concierge services provider/property management company like Luckey Homes suggests that, perhaps, Airbnb is considering a role that extends the company beyond simply being a marketplace, and more of an active provider of private accommodations.”

 

Turnkey’s John Banczak on Airbnb’s acquisition of Luckey Homes

We reached out to John Banczak, Turnkey Vacation Rentals co-founder and chairman, for his insight into Airbnb’s acquisition.

Are you surprised by this move?

John Banczak (JB): No, there is more money flowing through management companies than distributors like Airbnb or HomeAway. Management makes 2X the take rate of OTAs on 100 percent of the bookings. OTAs make half the take rate, only on the share they generate. To the degree “management” fits a certain mold, it was a matter of time before OTAs jumped in. What’s the mold? No inventory risk, management through technology (vs. armies of headcount), high take rate, scalable costs . . . Asset-light to use the over-used phrase. If it is no “harder” to provide management than just distribute, why not do both?

There are added benefits—by controlling the entire system, no one part is as likely to leave. You can deliver consistent hospitality without hoping someone else does it for you. The big question for your readers is likely what does this mean for small PMs around the world? Is Airbnb going to steal your business out from under you? If other OTAs follow suit, are the days of the small local PM over? I don’t think so. If I was a small PM providing bad service or charging a high commission I’d be nervous, but they should be already. It will always benefit OTAs to have a broad property selection, and local PMs with loyal owners will still get valuable distribution from these sites.

Will this make other PMs less likely to use OTAs to get business?

JB: Everyone wants more traffic to their own website. That won’t change. Dropping a distribution channel because they offer a service? It doesn’t make financial sense on either side. The fastest way for a PM to lose home owners is drop distribution channels. I would not want to be anywhere near Steve Milo right now, but I don’t expect any real fallout or loss of inventory for Airbnb.

OTAs have been providing more “management” style services for years, whether it is consumer awareness and marketing, payment processing, online reservation tools, tax remittance, damage policies, etc. Now they will schedule a housekeeper—why not?

Does it make Turnkey nervous?

JB: Not at all. We’ve built the better mousetrap. We’ve learned a lot and are years ahead with our platform. We’re fine-tuning an engine, not duct-taping wheels onto a prototype.

 

Does Airbnb understand property management?

Banczak’s point about “building a better mousetrap” is important. Providing consistent quality and management services for owners and guests is a very different undertaking than building a marketplace. Property management is a hands-on, service-based industry, and one in which Airbnb has little experience.

 

Trust is a Critical Component for a Vacation Rental Marketplace

The world of vacation rental marketplaces has not been a stable one for homeowners and property managers. TripAdvisor purchased market leader FlipKey and subsequently lost focus on technology and service leading to a substantial decline in both revenue and trust from its suppliers, leaving a hole that benefited Airbnb.

VRBO.com, once the go-to source for vacation rental reservations, sold to HomeAway, and then to Expedia. Under the Expedia umbrella, both managers and owners are reporting a substantial drop off of booking activity that even HomeAway’s most avid supporters are now openly discussing. (Tune into 32:00 in this video from the Phocuswright conference.)

What TripAdvisor, HomeAway—and now Airbnb—do not seem to fully grasp is that success in distributing vacation rentals is based on both bookings and trust.

When vacation home owners and managers trust and benefit from a marketplace, they choose to list their homes on the platform. And these listings are the sole reason that travelers use these sites . . . and the reason for the resulting high valuations of these companies. When a marketplace begins to erode that trust, inventory shifts to more trustworthy channels.

 

Takeaway and Beneficiaries

The overwhelming takeaway for managers and hosts? Do not put your eggs in one basket. Relying on one channel for bookings is both dangerous and irresponsible in a space that is rapidly changing.

The most likely beneficiaries of Airbnb’s move into property management and/or franchising of management services?

  1. HomeAway: Even though managers and owners are reporting a decline in bookings from HomeAway’s sites, HomeAway can now make a strong argument that at least it is not competing directly with vacation rental managers and owners. HomeAway could enter 2019 with a strong claim as the most trusted, consistent marketplace for vacation homes.
  2. Google: As Google is expected to launch the first iteration of its vacation rental booking platform in the first quarter of 2019, experts expect to see inventory move swiftly onto the Google marketplace, as managers already invest heavily in Google Adwords products. In addition, it’s price-compare feature will expose the guest fees being charged by other sites. Even though the take rate is expected to be high, Google has a history of transparency that resonates with inventory providers.
  3. A TBD Disruptor: Eroded trust in TripAdvisor, decreasing trust in an Expedia-owned HomeAway/VRBO, and concerns about Airbnb’s future as a long-term marketing partner are paving the way for a transparent guest-and-supply-friendly marketplace.

 

Potential Technology Play

It is possible that the acquisition of Luckey Homes is a technology play for Airbnb rather than an entry into property management.

According to Lehmann, “Interestingly, Luckey Homes built a proprietary property management software, which could be valuable to other urban property managers who currently use third-party technology. So maybe the focus [of the acquisition] is on technology and not actually on the property management piece.”

Lehmann added, “Is Airbnb becoming a property management company? I doubt it. It could just be a technology play to bring further value to its partners.”

Update: See comments below. 

 

As HomeAway evangelist, John Suzuki, famously preached: “Judge us not by our words, but our actions.”

As Airbnb moves toward its IPO, the vacation rental industry will be able to more adequately evaluate its intentions through its future acquisitions and new product launches than through its press releases.

Related ItemsacquisitionairbnbcompetitiveFeaturedgooglehome buildinghomeawayluckey homesproperty managementSimon Lehmanntripadvisortrustturnkeyvacation rental
View Comments (4)

4 Comments

Leave a Reply

Cancel reply

Your email address will not be published. Required fields are marked *

OTAs
December 12, 2018
mm
Amy Hinote @vrmintel

Amy Hinote is the founder and editor-in-chief of VRM Intel Magazine, which provides news, information and resources for the professionally managed vacation rental industry. With a background in finance and over 15 years in the vacation rental industry, Hinote has worked with property management companies, technology companies, intermediaries and investors, and provides insider information about the growing vacation rental industry. She also founded the data company, now known as Key Data Dashboard, which provides aggregated market intelligence and reporting for vacation rental managers. Hinote resides between Alabama's Gulf Coast and Evanston, Illinois.

Related ItemsacquisitionairbnbcompetitiveFeaturedgooglehome buildinghomeawayluckey homesproperty managementSimon Lehmanntripadvisortrustturnkeyvacation rental

More in OTAs

Takeaways from Airbnb’s First Earnings Call as a Publicly Traded Company

Amy HinoteFebruary 26, 2021
Read More

Expedia CEO Talks Vrbo: We ‘Removed Vrbo from Google’s Vacation Rental Meta Product’

Amy HinoteFebruary 11, 2021
Read More
vacation rentals at the best price guaranteed

Stays Group Vacation Rental Network Opens SoutheastStays

Vince PerezFebruary 3, 2021
Read More

Vrbo Is Performing Better Than Airbnb for Vacation Rental Managers, But Direct Booking Still Number One Revenue Source . . . By A Lot

Amy HinoteJanuary 24, 2021
Read More

4th Annual #BookDirect Guest Education Day Is February 3, 2021

Amy HinoteJanuary 24, 2021
Read More

Airbnb Goes Public. CEO Brian Chesky: “Travel is never going to look like it did in January”

Amy HinoteDecember 10, 2020
Read More
Scroll for more
Tap

Sponsor News

  • Disaster and Business Continuity Planning in 2021
    BusinessFebruary 25, 2021
  • Kasa and Minut partner to protect properties all over the U.S.
    Sponsor NewsFebruary 11, 2021
  • The Pace Report Is Dead
    Sponsor NewsFebruary 10, 2021
  • How 2020 Played Out: Analyzing Performance in 10 Key Vacation Rental Destinations
    BusinessFebruary 10, 2021
VRM Intel
Calendar of Events
Videos & Whitepapers
VRMintel Magazine
Subscribe
Advertise
About Us
Authors
Contact Us

Recent News

  • Operations Technology Critical in 2021
    COVID-19March 1, 2021
  • Takeaways from Airbnb’s First Earnings Call as a Publicly Traded Company
    BusinessFebruary 26, 2021
  • Streamline Increases Software Prices for Some, Leading to Larger Questions Around Tech Strategies for VRMCs
    BusinessFebruary 25, 2021
  • Disaster and Business Continuity Planning in 2021
    BusinessFebruary 25, 2021

View Current Issue

VRMintel Copyright © 2016-17 | Click HERE to Subscribe | Privacy Policy | Disclaimer | Copyright | Jobs | Facebook | Twitter | LinkedIn

Baltimore City Council Issues Final Vote to Pass Strict Short-Term Rental Limits
New Orleans Councilmember Palmer Proposes Vacation Rental Ban