HomeAway’s expansion has largely been driven by acquisitions. Yeoh Siew Hoon catches up with Carl Shepherd, co-founder & chief strategy and development officer of the world’s largest vacations rental site, to find out more about its plans for Asia.

Q: What’s the state of the overall vacation rental market in the US and Europe currently? What kind of growth is it seeing?

The vacation rental industry primarily consists of second-home owners and small vacation rental management companies (overseeing 10 or fewer properties). As evident by HomeAway’s year-over-year paid listing increase of 11% and the 22.1% increase in website visits, the market continues to grow. However, awareness remains the biggest obstacle to consideration among travelers.

Q: Where is demand coming from and what kind of content is most in demand?

The typical owner on HomeAway is generally married and over 46 years old (a “baby boomer”). The traveler booking a vacation rental is typically female, age 45-64, with 1 to 2 children and they are booking, on average, a week long stay at a 2 bedroom, 2 bathroom rental for approximately US$1,500. Currently we have more demand than supply for destinations in South-east Asia. Demand for select cities follows the profile one would find for international travel from Europe and the US: the best known destinations attract the most interest.

Q: Can you also share content split – in US, Europe, Asia?

We don’t disclose the content percentages by region because travel is a global industry; a property in England is equally attractive to an American, German, or Brazilian if that family is traveling to the UK. As a proxy, we can note that about 40% of our revenue originates outside the United States, although this metric can be impacted by swings in the exchange rates from time to time. Revenues from Asia would be a small percentage, as we are only now beginning our work in those markets.

Q: What are HomeAway’s plans for Asia, other than opening an office in Bangkok?

HomeAway’s mission is to make every holiday rental in the world available to every potential holiday rental traveler in the world. As such, our first goal for our Asia operation is to generate supply for the more than 44 million monthly visitors to our website, and to have high quality options for them when they want to travel to South-east Asia.

As for the office in Bangkok, the initial team is sales based: charged with finding the best vacation rental supply and to generate high quality listings for distribution to the US, EU, SA and Oceania. We also plan to partner with the nascent but growing STR industry in Asia, and have already found a productive relationship with travelmob.

We are also pleased with our partnership with Tujia in China. We are already seeing bookings by Chinese into homes in South-east Asia, the US and Europe, and we look forward to having Tujia’s inventory on HomeAway. (It has also signed a partnership agreement with Tripvillas, which gives it access to more than 2,000 holiday homes across APAC.)

Q: What’s the over-riding vision for HomeAway in Asia – to take vacation rentals mainstream? How would you define that, and how long would this take?

HomeAway’s over-riding vision is global and it is that vacation rentals supplant hotels as the preferred choice for family and group travel worldwide. With this lofty vision comes the understanding it will take the vision will take years to achieve.

Q: How do you intend to tackle the cultural issue that generally, people in Asia don’t like to stay in people’s homes or that they don’t like other people to stay in their homes?

We are not sure that the cultural issue is as firmly rooted as one might have supposed even two years ago; the recent success of companies like travelmob, tujia, and roomarama, and even to some extent Airbnb are proving that Asians grasp the concept.roomorama

Additionally, there is already a great deal of inventory managed by professional managers in SE Asian travel markets. Over time, we will need to drive demand from inside the region, but we have many options for serving internal Asian demand for Asian properties, as our partnership with travelmob illustrates.

Q: Do you think the market needs education – in terms of what vacation rental is and how different is this from social stay sites such as AirBnb, 9flats or wimdu?

Yes, there is a great opportunity to increase awareness about vacation rentals through education, but education needs are different based on the market. For example; in the US the need focuses around building awareness around the industry and highlighting the benefits of vacation rentals for families and groups that have never stayed in a vacation rental before, or at least don’t realize they have.

Media and those less familiar with HomeAway’s business will sometimes mistakenly identify AirBnB (and their clones) as direct competition. However, the businesses are actually very different. HomeAway’s inventory is second homes in vacation markets whereas the aforementioned companies’ inventory are primary homes located in major metropolitan areas. Plus HomeAway’s primary customers are not individuals searching for a hotel replacement for a weekend, but instead are families and groups, with an average stay of seven days.

Overall, vacation rentals are not commonly thought of when travelers consider their lodging options. A recent PhoCusWright survey of the industry cites awareness as the biggest barrier to growth of the industry. We recognize that the process is further along in the US and EU, but our experience in markets like Brazil illustrates when the option is made available, the public responds to the value, space, and privacy afforded by vacation rentals.

Q: What are the challenges you think you will face coming into Asia?

We very much respect the cultural differences, and believe this challenge is particularly acute in Asia. Americans, Europeans, Australians and South Americans share a core cultural background, and there is no doubt that this commonality has lowered the hurdles in establishing growing businesses in those countries. We feel that finding the right partners and the right management team will be our best defense against being perceived as clueless Americans.

The next known challenge is building demand within Asia. As you note, there is not a culture of traveling this way, so that demand may take a while to build. However, history shows that Asians are fast to adopt new business models on the internet, so we don’t view this as a long term challenge.

Q: You mentioned you’ve done 16 acquisitions since start-up, so Homeaway is an acquisition story.

It’s true that in our early years, HomeAway acquired local market leaders in markets where the vacation/holiday rental industry was well established. Like any other online marketplace, the goal was to develop the largest possible network of buyers and sellers in the shortest amount of time.

In more recent years we have focused on building out a common infrastructure and technology platform that can scale to new geographies. This has resulted in the creation of the world’s leading marketplace for holiday rentals. We are only just beginning to make this inventory available to Asian travelers and property owners, but the combination of the worldwide network and a scalable platform will ultimately benefit our Asian customers.

Q: Why didn’t you just acquire Tujia then instead of just taking an investment?

We believe that the unique political and cultural environment in China is best served by a local team, creating a local product, matching local laws and customs. We believe that American companies trying to “become Chinese” is a failed concept, and we find partnering with Tujia to be far more consistent with our mission.

Q: So acquisitions would be a natural way to grow in Asia?

We are constantly evaluating acquisition opportunities, and companies in Asia are no different in that regard. Our business model generates significant free cash flow and enables us to react accordingly when opportunities arise.

Source : http://webintravel.com

Advertisements