Archives for posts with tag: holiday rental

Travellers can save up to 57%, by choosing a holiday rental in certain Asian destinations compared to an equivalent stay in a three-star hotel.

The conclusion was part of a cost comparison by TripAdvisor of more than 630,000 properties, worldwide. It showed that families and groups travelling for a week or more can save substantially by choosing a holiday rental.TripAdvisor

The study looked at the average cost of accommodation for a week’s stay in a two-bedroom holiday rental, as well as a week’s stay in two bedrooms in a three-star hotel, in international destinations popular with Singaporean travellers during the year-end peak holiday season.

Travellers, specifically those in need of multiple bedrooms for an extended stay, can save up to 57% by choosing a holiday rental.

For travellers planning a trip in Asia Pacific, the greatest savings can be found in Goa, Tokyo and Penang, where a one-week stay in a two-bedroom rental property comes in 57%, 41% and 30% cheaper respectively than the same stay in two three-star hotel rooms.

Travellers heading further afield could expect similar savings in popular North American and European destinations, with two bedroom rental properties coming in up to 39% cheaper than two hotel rooms.

“Holiday rentals are a great option, especially for families, or larger groups going away for a week or more who don’t mind forgoing certain hotel conveniences, such as housekeeping, room service and a concierge, in exchange for a more affordable stay,” commented Jean Ow-Yeong, TripAdvisor spokesperson.

“The end-of-year peak travel season is a notoriously expensive time to travel, but, our study showed, that choosing a holiday rental could make things much more affordable.”

The survey was based on holiday rental and hotel costs in popular destinations from 1 November 2014 to 31 December 2014.

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Shifting of the sand in the vacation rental marketplace with confirmation that HouseTrip is scrapping all listings of private rooms from its database


HouseTrip informed hosts of the “important change” to its service via a recent letter in which it said as part of a new focus on couples and families it would be “removing all private bedrooms from our website” and in future only allow entire properties to be listed.

The letter adds: “During this time we will be taking away search functionality for private bedrooms in shared accommodation, and removing them from our search results so they can no longer found by prospective guests.

” Existing bookings or upcoming check-ins will not be affected by the change, HouseTrip adds. HouseTrip says it is currently running at a 95%-5% ratio in favour of complete apartments to shared spaces, so it does not anticipate any major erosion of its overall product spread.

An official says: “We want to be known for providing the best range of complete properties available for short-term rent. And we feel that this clarification of our offering is the best way to do it.” Including shared spaces in its portfolio was found to have “muddied the waters”, the official says. “The feedback we have received from many travellers is ‘yes, I want to get tips and advice from an owner. yes, I want the personal touch. Yes, I may even want to feel like a local.

But when the info is given and the key swapped, I want the apartment to become my space and I don’t necessarily want to become best friends or swap Facebook details with the landlord’.”

The company denies the move is anything to do with recent regulatory or taxation shenanigans affecting the likes of Airbnb or Wimdu which have a focus on shared spaces.

Nevertheless, issues such as these are clearly triggering a fair degree of strategic soul searching for a number of brands as they look to anticipate where around the world they may face hurdles over their ability to operate (or those of their product hosts).

Airbnb, for example, recently celebrated (and potentially breathed a huge sigh of relief) a regulatory win in France when a legislation was introduced allowing home owners to rent out rooms without seeking permission from local authorities.

Its head of global public policy, David Hantman, says some 83% of its hosts in the French capital Paris share their primary residence – in other words, let out a room OR only have the property available for a limited period of time.

HouseTrip’s move possibly illustrates how the main players in the rental/sharing economy are re-positioning themselves as providers of product in one particular area (shared vs complete rental).

A source who until recently worked within one of the main global players in the sharing economy says there is a wider trend emerging: “After seeing good traction and interest in the mass audience, the involved companies are trying to get out of a niche and attack a more established market, providing an experience closer to what hotel customers are used to.

“The peer economy is a nice thing, but there are reasons why hotels and other kind of accommodation facilities need to comply to specific rules… and the private accommodation market is probably trying to anticipate the regulatory movements so that they will be more ready when the time will come.”



Yesterday news reports revealed that Airbnb was raising $400-$500 million dollars from TPG Capital Management LP at a $10 billion valuation.Airbnb

Unlike many darlings of the startup scene, Airbnb has plenty of revenue coming in. But is there enough to justify a value that puts it above the market caps of Hyatt, Accor, Wyndham, InterContinental Hotel Group, and Choice Hotels, not to mention the public and profitable HomeAway?

A few years ago comparing a vacation or short-term rental company to a hotel brand would have been downright silly. At their extremes, rental sites were electronic bulletin boards while hotels were brick and mortar establishments with lots of employees and dependencies.

But as hotels have moved towards asset-light, brand-centric models where they eschew real estate holdings in favor of managing properties for owners, and companies like Airbnb are eyeing a suite of services that encompass the entire travel experience, the comparison is not so insane.

In an asset-light strategy, hotel brands make money from management contracts and a double-digit share of gross revenues. Airbnb collects fees from the host and the user, and HomeAway offers a mix of plans, from the more traditional subscription to a percentage of each booking. In the end, they all offer the promise of a night’s sleep with a varying array of comforts and amenities. And users discover and book them in much the same way.

What’s a Room or a Listing Worth?

Brand Number of rooms/listings valuation Value of room
Hyatt 147,388   $8.42 billion                            $57,128
Starwood 346,063   $14.97 billion                 $43,258
Hilton 678,630   $21.86 billion                        $32,211
Airbnb(adj)330,000   $10 billion                   $30,303
Marriott 675,623   $16.15 billion                    $23,903
Accor 455,985   $8.55 billion                           $18,759
Airbnb 550,000   $10 billion                            $18,181
Wyndham 600,000   $9.3 billion                    $15,500
InterCont 686,873   $7.93 billion                   $11,545
Choice 500,000   $2.71 billion                        $5,420
HomeAway 890,000   $3.87 billion              $4,348

Who’s on Top

Using some third-grade math, we put a value on each room and listing for the major public hotel companies, as well as Airbnb and competitor HomeAway. Admittedly, there is a bit of comparing apples to oranges here. But understanding which fruit is what helps explain the transition that’s happening.

The number of available rooms held by the hotel chains are disclosed publicly, and they tend to range from single rooms to suites and even to some vacation rentals (at Wyndham and Marriott in particular).

What the Sharing Economy Means to the Future of Travel
Read more about what Airbnb and the sharing economy mean to the future of travel.
A “listing” on a rental website could be for a multi-room house or a bed in a shared room (although that is incredibly rare). They also are not constant. The volume of listings fluctuate by season (summer rentals), opportunity (a big event in town), and need (the host needs to make some extra cash). They may also only be available a few days a week — and can disappear overnight. This is changing, though, as HomeAway and Airbnb are more about professional landlords than one-off hosts.

HomeAway’s number of listings is revealed in public disclosures. The number of Airbnb’s rooms is somewhat of a mystery.The latest number it has shared with media is 550,000 listings. When Skift looked at the New York market, we saw a wide discrepancy — our numbers were 40% less than Airbnb’s numbers — between what it stated on the website and what our data dive revealed. Because of that, we’ve provided both an adjusted number based on a ‘Skift discount’ and one based on Airbnb’s numbers.homeAway

HomeAway has more overnight options than anyone else has rooms or listings, but it’s at the bottom of the pile when it comes to the value of these listings in comparison to its market cap. As HomeAway moves more property managers from a subscription model to a per-night transaction fee, expect this value to increase.

On the flip side, Hyatt does not have the largest market cap (it’s smaller than the Airbnb valuation), but its rooms are worth more than any of its competitors. Starwood and Hilton also appear at the top, with Marriott and Accor sandwiched between the two Airbnb values. Choice Hotels, with its voluminous yet low-budget offerings like Days Inn, brings up the bottom for hotel brands.



Speed and innovation usually characterize successful and growing companies, but when it comes to the prospect of starting to offer HomeAway’s vacation rentals on, Expedia Inc. is noncommittal and taking it all extremely slow and easyhomeAwayexpedia

The two parties announced a partnership last October, and today, during Expedia Inc.’s fourth quarter earnings call, CEO Dara Khosrowshahi said the company has just started to experiment with HomeAway’s vacation rentals, but won’t gather enough data about it until the second half of 2014.

Expedia will study how adding vacation rentals to its accommodation mix impacts conversions, and will expand the offering to the extent that consumers show they are interested, Khosrowshahi said.

Khosrowshahi said the company’s emphasis will continue to be in growing its hotel business, although it is optimistic about the HomeAway partnership, which is in the early stages of testing.

“But it is really too soon to call” how the partnership will take shape, Khosrowshahi said.

Expedia clearly sees hotels as where its biggest margins are. And vacation homes certainly have far fewer rooms than hotels.

Still, Expedia wants to compete with, which offers a broad range of lodging offerings, but Expedia is making no commitments at this stage about what its vacation rental offering will look like.

Expedia officials were very bullish about the performance of its Trivago business, which saw its revenue grow more than 85% in 2013, contributing about 4 percentage points to Expedia’s revenue growth for the year.

With the Trivago acquisition paying off and fueling Expedia’s growth, Khosrowshahi said Expedia will continue to look to grow through acquisition, and will be “opportunistic” about such opportunities.

In response to an analyst’s question, Khosrowshahi declined to discuss Google’s punishment of Expedia for SEO bad practices. “We are not going to comment on speculative articles about our Google trends,” Khosrowshahi said, adding that Expedia’s traffic from Google organic and paid search is growing annually.

He therefore didn’t address the impact of Google’s punishment so far in the first quarter of 2014, with some analysts pointing to Expedia’s SEO presence taking at least a 25% hit.

Khosrowshahi said Expedia constantly audits its SEO practices to make sure they are industry-leading, although that’s a dubious premise given recent events.


Expedia implemented its partnership with Travelocity, providing the back-end to its U.S. site in December, and will have up and running on the Expedia platform in the first half of the year, Khosrowshahi said. The implementation had no significant impact on Expedia’s financial results in the fourth quarter.

CFO Mark Okerstrom said there are a lot of question marks about how the Travelocity partnership will work out. He said Expedia doesn’t know what the conversion rates will be on Travelocity websites as they operate under Expedia’s power as it is an unknown how consumers will react to seeing something different on the Travelocity sites.

In addition, the success of the partnership depends on how much marketing spend Travelocity will put into the effort, and that is “outside our control,” Okerstrom said.

“There is a whole lot of uncertainty about that,” Okerstrom said.

Travelocity’s parent, Sabre, after all, is trying to pull off an IPO and clean up the bottom line so it’s unclear what priority it will give to the Travelocity-Expedia partnership.

Expedia Traveler Preference

Officials said nearly 45,000 hotels have implemented the Expedia Traveler Preference program, which enables them to offer Expedia consumers the options of prepaying for hotels using the merchant model, or paying at the hotel, which brings reduced commission to Expedia.

Okerstrom says the program removed two barriers to the growth of Expedia’s hotel business: hoteliers who didn’t want to work with Expedia because they didn’t want to participate in Expedia’s merchant model program, and consumers who were only interested in paying at the hotel.

Said Okerstrom: ETP “is a very positive catalyst for our business.”

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Results of an industry-wide survey on holiday rental homes reveal an industry worth over $100m a year to local economies in the form of rates, maintenance and renovations.


The survey, conducted at the end of last year by Bookabach, Holiday Houses and Bachcare, aimed to create a body of data that could be used to assist local councils make decisions around tourism and visitor accommodation. Bookabach general manager Peter Miles explains, “MANZ (the Motel Association of New Zealand) have been actively lobbying district councils around the country to place restrictions on the holiday rental industry.

We came together as a concerned industry group to do this survey so we could provide councils with the information they need to understand the negative impact of increased regulation of holiday rental.”

Bookabach, Holiday Houses and Bachcare collectively list approximately 90% of the NZ holiday rental market, an estimated 10,000 actively rented properties. “We also wanted to be able to directly address some of the criticisms raised by Councils and MANZ related to health and safety,” says Miles.

The results were finalised just as Thames Coromandel District Council were accepting submissions on their proposed District Plan, which includes revisions that would place greater restrictions on holiday rentals. The group says that the proposed restrictions would make holiday rentals less affordable and they’ve made a joint submission to Council including results of the survey.

The survey attracted over 2,000 responses from holiday rental owners, 85% with free-standing baches and holiday homes (85%). The remaining 15% was made up of apartments, flats/duplexes and townhouses.

The survey data re-enforces the importance of holiday rental income to help support the lifestyle decision of owning a bach. “Nobody makes a killing from renting their holiday house out,” explains Holiday Houses general manager Andrew McKaskell. “What this survey proves is that rental income helps maintain and improve these properties over time. And, it helps owners justify having a second property they hardly use.”

The typical holiday rental is occupied for 25 nights a year by their owners and family members, and rented out an average of 60 nights a year. Owners received between $4,000 and $16,000 a year in rental with an average of $12,513. When asked about how important this income was to them, 73% of respondents agreed (56% strongly) that without holiday rental income they could not afford to keep or maintain a bach. 79% agreed (61% strongly) that without it they could not afford to renovate or improve their properties.

The group point out that the money spent on maintenance, improvements and rates goes back into the local community – and this amounts to over $100m per year.

According to the survey, holiday rental owners on average spend $2,500 a year on rates; $3,113 a year on maintenance; and have spent $30,587 in the past 5 years on improvements and renovations. “Holiday rental maintains and improves the housing stock in many remote regions – and supports local trades people,” explains Bachcare founder and general manager Leslie Preston. “In addition to this there is the direct benefit of the domestic tourism spend – which we haven’t attempted to quantify in this survey”.

The survey also examined current compliance levels in fire, health and safety regulations.

Preston explains that one of the ‘level playing field’ arguments put forward by MANZ is that baches and holiday homes do not have to meet the fire, health and safety requirements that motels do. Preston says, “This is simply nonsense since houses are houses not motels. A holiday home needs to meet the standards as they relate to a house.” 90% of respondents said their properties had smoke detectors within 3 metres of entrances to sleeping areas – which was the current building requirement.

The group concludes that while the Kiwi dream of owning a piece of paradise is alive and well, it is at risk from over-regulation. Holiday rentals are valuable to local economies.

Unless renting out a holiday house remains an economically viable option, fewer Kiwis will be able to support owning a bach – and be forced to sell. The group says this would put downward pressure on house prices in an already depressed market with less demand if new purchases are unable to rent.

Summary of key survey results

The survey was sent to the holiday rental owners listed on Bookabach and Trade Me’s Holiday Houses and managed by Bachcare and received 2,047 responses.

1) About the properties and economics of Holiday Rental and holiday rental ownership:

– The median property was a $440,000, 3-bedroom free-standing bach or holiday
home accommodating 7 people.

– 58% of properties were owned individually or by groups of owners. 31% were
owned in a family trust.

– An average of $2,505 per year was spent on rates and $3,113 on property

– Owners had invested on average $30,587 on improvements and renovations in the
past five years with exterior and interior painting being the most common, followed

by re-carpeting, a new bathroom, adding a deck, new kitchen and adding a heat-
pump or central heating and insulation.

2) Fire, health and safety:

– Holiday rentals had an incident rate of 0.015% incidents a night. There were 126 recorded accidents or incidents reported by guests staying in properties over the past 5 years out of a total of approx 850,000 nights stay.

– 90% of properties had smoke alarms within 3 metres of every doorway to a sleeping area

– 51% of owner checked smoke alarms every 3 to 6 months, 27% every year and 14%
every visit.

– 75% of owners agreed (55% strongly) that they saw themselves as part of the wider tourism industry.

– 69% of respondents were not familiar with the work performed by their Regional Tourism Organisation (RTO).

– 73% didn’t feel they benefited from the work of their local RTO.

– Only 10% of owners felt they should contribute to RTO funding above and beyond

owners of non-holiday rental properties.

– 82% agreed (67% strongly) that if they had to go through a formal resource consent process they would re-think renting out their holiday home.


Delhi-based Oravel Stays Pvt Ltd, the company behind the online short-stay accommodation portal, has received an undisclosed amount in funding from Lightspeed Venture Partners, according to Medianama report, citing Oravel’s founder and CEO Ritesh Agarwal.ORAVEL

This funding comes a little over a year after the firm secured funding from a consortium of investors, including startup accelerator Venture Nursery, Everest Flavours’ MD and active angel investor Anand Ladsariya and Nirvana Venture Advisors co-founder Amit Patni.

Founded by Ritesh Agarwal when he was just 16, Oravel connects home owners and property managers with travellers who seek clean, comfortable, affordable places or holiday rental homes. The portal has currently listed more than 3,000 boutique guest homes, inns, bed and breakfasts, serviced apartments, holiday rental and palaces, across multiple locations. The portal is free-to-use for travellers and also features listing reviews. Oravel was incubated at Venture Nursery in 2012

Last May, Agarwal had won 20 Under 20 Thiel Fellowship for 2013. The fellowship, which picks 20 individuals who are aged under 20, provides $100,000 each to the selected ones besides mentorship from a host of entrepreneurs, investors and thought leaders including PayPal co-founder Peter Thiel, Napster founder Sean Parker and Tesla Motors founder Elon Musk.

Late last year, Lightspeed had invested $550,000 in New Delhi-based Phone Warrior Pvt Ltd which offers a mobile spam control app.

There are few tourism-related industries which are so heavily dependent on the internet as the vacation rental industry. As an emerging market itself, vacation rentals began online. The internet created the platform and connectivity needed for the exchange of goods and services which were, by nature, not standardized. Every vacation rental home, luxury villa, condo and private resort is different. It requires a user-friendly, media-heavy platform to be able to market them.vacation rental

The progenitor platform was, of course—VRBO (Vacation Rentals By Owner), an offshoot of FSBO (For Sale By Owner). Soon, thereafter, followed a number of other sites with similar ideas: Homeaway, Cyber Rentals, MAQ Beach, etc. But with a non-standardized good such as vacation rentals, a standardized platform is needed. The emerging leaders, Homeaway and Flipkey, began to buy up all of the competition and set the stage for a global, internet oligopoly.

This is the trend: As vacation rentals become more and more mainstream around the world, standardized online platforms will dominate the market. The smaller, subsidiary rental sites are either absorbed, or overshadowed as Homeaway and Flipkey become common household names.

These online platforms also support the multimedia needed to show off vacation rental properties. The sheer multitude of options in places such as Costa Rica is daunting to many customers. Potential renters can sort the properties based on their basic criteria—but from there, it is a game of who’s got the catchiest thumbnail. People often spend only a few seconds skimming over each of the available properties, and if there is no eye candy to draw them in, the listing may not even get a ‘click’. These days, it’s not uncommon for a luxury vacation villa to have its own website, professional photos, aerial photos, a promotional video and 360-degree virtual tour.

With the heightening competition, and the fact that VRBO’s aren’t necessarily “by owner” anymore, more and more property owners are electing to hire a vacation rental agency to manage their properties. For absentee owners, this is a necessity—but it also makes sense for owners who live nearby but prefer to relieve themselves of the hassles of running a vacation rental.

Consumers are also becoming more and more demanding, as competition forces property owners and agencies alike to up the ante when it comes to services. No longer are renters content with a back-woods “for rent by owner” property with three broken lights and no hair dryer. They require the same amenities and services which they otherwise would have gotten at a hotel of commensurate quality.

With the standardization of modern-day online platforms, local vacation rental and property management agencies are well equipped to turn a back-woods “for rent by owner” property into a professionally-run vacation villa.


The stocks of most major hotel chains were good investments in 2013, increasing by an average of 27% through the year. Hilton’s record-breaking IPO further exposed investors’ confidence in the sector and in its ability to develop into the future.

However, there is increasing competition. The strongest growth in the travel sector is not found among hotel chains–it is found online. Here is a look at one of the fastest-growing web-based aspects of the travel sector.

Vacation rentals

Online bookings of residential properties have increased and are taking the travel sector by storm. Such bookings may include properties rented by owner or via a vacation-rental management company, VRMC. Regardless, this specialty industry now represents 24% of all online bookings, double 2007’s levels.homeaway

In 2008, fewer than one in every two VRMCs offered properties via a web-based interface. At the close of 2012, that number jumped to seven out of 10. As more and more VRMCs list properties online, and individual vacation homeowners see the benefits of listing their properties, this specialized industry will grow.

Market research company PhoCusWright estimates online vacation rentals will make up 30% of the U.S. travel market by year-end — a sharper growth rate than previously experienced.

Start-up turned leader

One company that will lead this growth is HomeAway , an industry leader in matching homeowners with vacationers. It experienced an increase in stock price of nearly 80% in 2013. Since 2010, third-quarter total revenue, and revenue from rentals, has risen year over year. From 2012-2013, total revenue rose 23%; a 108% increase from 2010.

An excellent opportunity to join this travel revolution may be on the horizon. HomeAway registered for a secondary public offering with the intent of using “proceeds…for…purposes, which may include acquisitions…of, or investment in, products, services, technologies or other businesses.”

While current shareholder’s could see a secondary offering as a dilution of earnings, HomeAway’s history should stave off a huge drop in share price. Since its inception, HomeAway has developed an aggressive history of turning new capital into earnings through frequent and expensive acquisitions.

HomeAway’s Competitors

HomeAway is not the only company in the vacation-rental business, nor is it the only acquisition-hungry company. filed Form 8-K with the SEC late last year, informing investors of a material event surrounding its subsidiary

The event is that vacation rentals now make up 22% of’s inventory. As implied by the language in Priceline’s statement, and its analysis of how vacation rentals may influence its finances, this percentage will only rise.

Differing strategies

Priceline now offers vacation rentals through its portfolio of sites; but it also sells hotels, airfare, and rental cars. Priceline operates with a one-stop shopping strategy.priceline

A official indicated the company’s “goal is to be the place…where travelrs can find the right place to stay at whatever budget…no matter where they…wish to travel.” Also mentioned was that current vacation rental listings on the site are only offered in strategically determined locations — where demand for vacation rentals was seen. These rentals, unlike, are only supplied by VRMCs, not individual owners.

HomeAway, on the other hand, focuses solely on vacation rentals. Vacation rentals pose unique challenges by having fewer available rooms per property than hotels and usually lower rates. However, HomeAway has found it profitable to offer its users a massive property database that it continually expands by acquiring similar start-ups all over the globe.

When it comes down to the numbers, HomeAway dot-com offers 570,000 vacation rentals. When considering the entire portfolio of HomeAway-operated websites, that number jumps to more than 773,000 rentals throughout 171 countries. offers slightly less than 90,000 vacation rental properties.

HomeAway’s acquisition strategy is designed to expand its online offerings and make it a more specialized online travel agency. Priceline’s acquisition strategy is designed to expand its online offerings and make it a more diverse company that can meet the needs of any traveler.

Whichever the method, both companies have demonstrated a willingness to do what it takes to stay ahead of the competition — to stay ahead of each other — and to be leaders on the growing online sales front.

Continuing into the future

Watch for HomeAway’s secondary public offering and to see which region of the world it adds to its vacation-rental database through acquisitions.

Watch for Priceline to continue to identify markets where there is a demand for vacation rentals.

Also, look for Priceline to show an interest in purchasing HomeAway itself as a means of expanding its offerings. Priceline is not a stranger to acquisitions; itself joined the Priceline portfolio in 2005 through an acquisition.

Source : and

HomeAway has trekked into the big leagues of travel booking by betting that an investor’s waterfront villa, a retiree’s ski condo or a family’s spare summer house can trump a hotel as a great place to stay.

A vacation rentals marketplace, HomeAway (AWAY) is now the fifth largest company by market cap in IBD’s Leisure-Travel Booking industry group, after giant (PCLN), TripAdvisor (TRIP), Expedia (EXPE) and (CTRP). HomeAway stock traveled north 86% in 2013 and is up another 2% this year.


With about $330 million in annual revenue, HomeAway remains a distance from the biggest online travel players. But co-founder and CEO Brian Sharples isn’t afraid to take calculated risks to grow the company, which has made 22 acquisitions in the last eight years.

HomeAway bought Australia-based Stayz Group on Dec. 2 for $198 million. Sharples, while in Australia to consolidate the Stayz purchase, talked with IBD about the prospects for his company and the online travel market in 2014.

IBD: How is the Stayz integration coming?

Sharples: We’re really pleased. We had a company here in Melbourne already that was No. 2 in the market. We’re now the clear leader in this region. We expect to leverage that with our other Asia-Pacific assets, for example our businesses in Singapore and New Zealand. And we opened in China early in 2013.stayz

It’s very much like in 2006-07 when we acquired assets in Europe and spent time building that into a pan-European business.

IBD: How big is the market opportunity for vacation travel?

Sharples: We have 800,000 vacation rental listings, and there are 7 million to 10 million … rentals available (globally). Our share is still quite low. It can get a lot better.

We have a very young company, founded in 2005 (July 2011 IPO). We’re the leader in the category, but it’s still a very early inning.

IBD: What macro trends will shape the rental industry this year?

Sharples: In general, vacation rental suppliers are impacted by the strength of second-home real estate markets. In times of low sales and tight credit, many owners turn to rentals as a source of extra income. In times where markets are more robust, we see more new construction and sales of vacation homes, and therefore the potential pool of supply grows. In 2014 we expect supply to expand as real estate markets stabilize.

IBD: What others issues are affecting the industry?

Sharples: Travelers are impacted by their own assessment of economic conditions, as well as things like the cost of airfare. We expect to see solid growth in travel next year as the economy improves, and also expect competition among airlines to keep the cost of travel reasonable.

IBD: What sets HomeAway apart from your competitors?

Sharples: The biggest advantage we have, and biggest barrier to entry for others, is we’re the market leader.

The most-reviewed HomeAway luxury rental is Casa de Frutas in Costa Rica. It sleeps 8 for $4,500-$6,000 a week, has a butler, and monkeys visit.

The most-reviewed HomeAway luxury rental is Casa de Frutas in Costa Rica. It sleeps 8 for $4,500-$6,000 a week, has a butler, and monkeys visit. Casa de Frutas in Costa Rica

This is a classic marketplace business. We market directly to consumers, both for the supply and demand part of that.

What sets anyone apart is scale. You feel better off in a market that has scale. We have many multiples (of rentals) of anyone else in the world, and several times the consumer traffic.

IBD: Do you plan to expand into any new markets?

Sharples: We’re hard at work to expand in South America.

We have a very strong position in Brazil, the biggest vacation site in South America. We’re No. 1 there. We’re also building a base in Argentina.

And we’re looking at Eastern Europe. We haven’t had much activity there but there’s quite a bit of vacation volume rentals, for example in Russia and Turkey.

IBD: What is HomeAway’s acquisition strategy?

Sharples: Mainly what we do is look for leaders in new geographies. We look for profitable businesses first of all. Next we look for high quality rentals.

We’re going country by country around the world, and in discussions with many companies.

In Spain we decided to go it on our own. That’s been hugely successful for us. We’re the leading (online travel) company in Spain.

There were companies to buy there, but we didn’t because of the (high) price.

IBD: How would you describe typical vacation travel customers?

Sharples: For us that’s a real differentiator. Our customers are first and foremost families. Statistically, 70% to 80% are families with two or three kids and looking for a place to rent with more space and comfort than a hotel.

The balance are groups traveling. For example, guys going skiing, or a girls weekend out or college buddies who get together once a year.

Our customers are also relatively older and more affluent than other companies’.

IBD: What’s your 2014 outlook for the vacation home rental industry?

Sharples: We’re expecting strong growth rates to continue.

We care about the overall economy. But it doesn’t affect our business as much as other businesses. In a good economy, people buy and rent more vacation homes. In a bad economy, people who have vacation homes decide to rent them because they need money.

From what I’m seeing, Europe is stabilizing, the U.S. is getting stronger and Asian growth is unabated.

In Brazil the World Cup is coming and the Olympics. I’m optimistic about the coming year.

IBD: How is the online vacation industry evolving?

HomeAway CEO Brian Sharples is exploring South America horizons.

Sharples: Our marketplace has historically been a classified (ads) market. The vacationer and rental owner agree on a price and go off and figure out how to make that happen.

This year we built and launched online pay-per-booking capability. We will operate a little more like the hotel industry. Consumers like to pay by credit card. They want to see an invoice and what they owe.

More and more we’re pushing transactions to happen through our platform.

( started offering a pay-per-booking arrangement last year, and on Thursday said it’s also available on, a vacation-rentals-by-owner site it operates.)

IBD: What lessons did you learn as HomeAway grew from startup to the market leader?

Sharples: Lessons learned from failure are the most important ingredients to success. I spend time when I bring people into the company focusing on what things have gone wrong in their lives and how they learned from them.

My first company I ever started in my late 20s was a spectacular failure. I lost almost all of the money quickly. I was trying to build a marketplace for used automobiles with physical sites. I would go to football stadiums and set up massive events. A freak storm came in and literally destroyed the event. That taught me you have to work hard to plan for things that might go wrong.

IBD: What could HomeAway be doing better?

Sharples: Our model is not as clean as finding and booking a hotel room online is. Our goal this year is to make it as easy as booking their hotel room. We’re a 5 or 6 on that today on a 1-to-10 scale. And we hope to get to a 9 or 10 this year.


Get ready for the next glut of travel startups: The allure of the vacation rental market is calling.

If you search AngelList for vacation rental companies, you can compile a list of nearly 100 companies ranging from Rentini (“A blend of Airbnb and HomeAway spiced up with Vayable”) to Pinocular (“Kayak for vacation rentals”), and BookingPal (“Next generation vacation rental management”).

Some of the startups, such as Turnkey Vacation Rentals, have attracted funding from high-profile investors.

There are definitely plenty of reasons to be excited about the potential of the vacation rental market, which is transforming the lodging industry.

Market leader HomeAway notched $280 million in 2012 revenue, and just partnered with Expedia, and this has the potential to help make vacation rentals even more mainstream than they are becoming today.

And, there is talk about Airbnb, with its peer to peer rentals, generating a $2.5 billion valuation.

These developments, coupled with a new report from PhocusWright that pegs the U.S. vacation rental market alone as a $23 billion industry, are stoking the imaginations of the next batch of entrepreneurs looking for good startup ideas.

But that seemingly huge $23 billion number may be a little misleading because that vast majority of vacation rentals owned by individuals as second homes are still booked offline.

While professionally managed properties are transitioning to online booking, a huge swath of vacation homes are owned by individuals who may have not have much interest in transacting business online, especially if it brings increased scrutiny from tax authorities.

There are some parallels between the vacation rental, and tours and activities markets.

PhoCuswright estimated that the tours and activities sector was a $27 billion market in the U.S. in 2009.

Both markets — tours and activities, and vacation rentals — are highly fragmented, and despite the very enticing sound of their respective market dimensions, there are huge portions of the tours and activities, and vacation rentals markets that aren’t addressable by the current crop of startups.

In both tours and activities and vacation rentals, there is plenty of potential, but it may take an extended period for the markets to take shape to the extent that there would be substantial pool of customers looking for solutions.

There has been a substantial shakeout among tours and activities companies, particularly the peer-to-peer variety, and with more vacation rental startups drafting business plans as we speak, there may be bitter disappointments in this arena, as well.

It will be the challenge of vacation rental startups to help accelerate online adoption by vacation rental owners, but like the many of tours and activities that have crashed and burned, the vacation rental startups may find some heavy lifting there.

One silver lining in the vacation rental startup trend is there does seem to be a relatively high percentage taking a business-to-business tack, offering marketing services and software for owners and professional property managers rather than merely going after consumers.

Still, big players, such as HomeAway, are offering both B2B and consumer services for vacation rentals, so there will be very tough competition for the ever-growing number of startups.

Following is an Infographic on key findings from the PhoCusWright vacation rental study:



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