Homeowners and managers are reporting that HomeAway has been quietly inching up the service fee, in some cases over 12%.
“Since price is an important factor in determining whether a traveler books a property, it’s natural to optimize and adjust the exact amount of the service fee,” stated HomeAway’s Community Forum. “This means the service fee amount will change from time-to-time, based on different factors…Communication with you is important to us – but we don’t communicate all of the tests we run due to the frequency of the tests we run.”
While HomeAway tests their optimal “service fee” for travelers, property managers and homeowners face consequential challenges. For example, guests do not understand the fee and frequently blame the manager or homeowner for the increased cost. The fee is often non-refundable, causing additional friction between the guest and manager/owner.
In addition, HomeAway is now requiring all of their listings to enable online booking.
According to Jason Sprenkle, co-owner at 360 Blue in the Florida panhandle:
“At this point you have to determine whether you should continue to invest in building the VRBO brand, or use those same funds to begin investing further in your own brand. That question will depend on the strength of your current brand, your market’s dependence on VRBO, and your relative market share.”
Diane Smith, owner at Bearfoot by Owner Luxury Rentals in Myrtle Beach added:
“We have over 20 properties listed on VRBO/HomeAway. We are losing bookings because of the Service Fee. We take credits cards through our office, and we try to explain to the potential travelers to book directly through us to avoid the service fees. Often they do, but then others think it is some sort of a scam. We fought the new service fee as did many other property managers but to no avail. Our rates are competitive and under some, but then the service fees drives them higher! Very annoying.”
The increase in fees also generates an overall price increase to the consumer which potentially drives travelers back to hotels and other lodging alternatives. As one homeowner wrote:
“Here is the rub as I see it with HA incessant testing of an ‘optimal’ service fee – When the fee is deemed excessive we lose a booking. When the fee is acceptable or low we MAY gain a booking we would probably have received prior to the fee. HA (Expedia) is running the test at very little or no cost to them but potentially a high cost to the people who make their business possible (at least in the vacation rental world). To me this is blatant greed and disregard for the owners of the ‘inventory.'”
Evolution of HomeAway’s “Service Fee”
In 2014, HomeAway was committed to not charging travelers a fee. “We are going to be free to travelers,” said Brian Sharples, co-founder and CEO of HomeAway, to shareholders in November of 2014. “TripAdvisor and Airbnb have chosen to charge big fees to travelers,” Sharples continued. “Well, we’re going to have a pretty sizeable marketing budget in the next few years. And we’re going to be letting everybody know, when you come to our platform, you don’t pay a fee, and we think that’s a big deal because if you look historically at the travel industry, those competitors who adopted no traveler fees first are the ones that ended up being the big winners in that business.”
In November 2015, when HomeAway announced that the company was being acquired by Expedia, Brian Sharples surprised its suppliers by revealing the addition of a traveler service fee, which would be based on a sliding scale and would begin rolling out in Q2 of 2016. Sharples said the fee was expected to “add an average of roughly 6% to most transactions that run through its online shopping cart.”
In March of 2016, HomeAway disclosed the amount it would be charging consumers. “The service fee is a fee charged to the traveler and is calculated on a sliding scale of 4% to 9% of the rental amount, excluding the deposit or taxes. The charge applies to the cost of the rental and will not exceed $499. The service fee helps cover the cost of running the HomeAway websites, including features such as 24/7 customer support and marketing efforts to ensure a quality experience on our sites for both travelers and owners.”
Last month, HomeAway changed its policy, increased the range of the fee, and began testing even higher percentages. According to HomeAway, “The service fee is between 5-12% for most bookings but can be above or below, based on the reservation.”
In addition, HomeAway is now requiring all listings on their channels to enable online booking. On March 28, 2017, HomeAway sent the following message to property managers and owners who list on their sites:
Dear HomeAway Partners,
For some time, online booking enrollment has been a requirement for new and pay-per-booking listings, and our Partners are already benefitting from the value and convenience it offers. As part of an effort to help boost your earning potential and create a more consistent site experience, online booking will now be required to renew all subscriptions.
As the vacation rental industry continues to become increasingly competitive, it’s more important than ever for property owners and managers to keep up with new developments. During the past few years, one clear trend has been dominating the industry: Travelers prefer having the option to book online. My support team hears this every day, often from first-time vacation rental travelers that HomeAway continues to draw.
Throughout my six years at HomeAway, we have managed many product and industry changes together. Based on our shared growth and your feedback during that time, we’ve expanded to 24/7 support (including all holidays) and walked thousands of Partners through the details of both adding online booking and managing it day-to-day. We are talking to you about how to adjust your listing to be successful in best match, and helping you view your listing from the lens of the conversations we have with travelers. I’ve spoken with many of you personally; my team and I are here to support you during your online booking transition.
While HomeAway works to meet our shared travelers’ preferences, we want to make sure you’ve got plenty of flexibility and control over how you manage your bookings. When you enroll in online booking, we’ll ask you to choose the option that works best for you: 24-Hour Review or Instant Booking. You can read more about online booking here.
Regardless of which online booking option you choose, you’ll still have the same control over your rates, your property availability, and the ability to contact your guests. You’ll also have the benefit of recent enhancements to your house rules concerning items like pets, events, smoking, etc.
If you currently have a subscription listing and don’t have online booking, you can add it by logging into your dashboard and view your listing:
If you choose to wait until your next renewal date, we’ll send an email containing more information about your options closer to that time.
Thank you for using HomeAway to manage your vacation rental business. We’re looking forward to another year of working together.
At your service,
Vice President, Customer Experience, Americas