Sites Like AirBnB vs. HomeAway/VRBO vs. FlipKey
Demystifying Vacation Rental Sites Like AirBnB vs. HomeAway/VRBO, vs. FlipKey and the Infamous "Service Fee".
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Are you one of the many travelers who is utterly confused about the different vacation rental websites, sites like AirBnB, Homeaway/VRBO/VacationRental, FlipKey and AVROA?
Are you unsure of the best vacation rental website to use and what they charge? More specifically, what is the Service/Booking Fee? As an owner of several vacation rental properties, I can't tell you how many times I have heard these comments from my guests... "I had no idea I had to Pay a "Service Fee" - Why does my credit Card Statement payment amount differ from my rental contract?.... |
Feel Like Pulling Your Hair Out When Dealing with Vacation Rental Sites Like AirBnB, Homeaway/VRBO or Flipkey?
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Or
"What is this $245 'Service Fee' I had to Pay?"
Or
Maybe, you are just a traveler who is confused about what is the best vacation rental site to use.
If you would like to finally get the scoop on sites like AirBnB, Homeaway, VRBO, FlipKey, TripAdvisor and AVROA then read on...
In addition to going over the in's and outs of each booking site, I am also going to explain how it works from an owner's perspective, as I feel this is important for travelers to see both sides to gain a full understanding of the booking process.
HOMEAWAY INC.
First up, HomeAway inc., as I have the most experience dealing with them.
According to Wikipedia, HomeAway, Inc. was founded in February of 2004. The company launched Homeaway.com in 2006 and had acquired a slew of other online vacation rental companies, including VRBO.com and VacationRental.com.
In December of 2015, HomeAway Inc. (which includes HomeAway.com, VRBO.com and VacationRental.com) was acquired by Expedia, Inc.
This is when the real fun started for both property owners and travelers [insert drawn-out sigh here].
Prior to HomeAway Inc.'s acquisition by Expedia, travelers could rent vacation rental properties without having to pay any 'Service Fees'. "VRBO has no booking fees and is free for travelers" [Source: https://web.archive.org/web/20151015183718/http://www.vrbo.com/]
Prior to the acquisition, It was the property owner's who paid a yearly fee to list their properties on HomeAway Inc.'s rental sites (HomeAway/VRBO/VacationRental). As well, owners paid a 2.5% Credit Card Transaction Fee to HomeAway Inc. for each reservation.
"What is this $245 'Service Fee' I had to Pay?"
Or
Maybe, you are just a traveler who is confused about what is the best vacation rental site to use.
If you would like to finally get the scoop on sites like AirBnB, Homeaway, VRBO, FlipKey, TripAdvisor and AVROA then read on...
In addition to going over the in's and outs of each booking site, I am also going to explain how it works from an owner's perspective, as I feel this is important for travelers to see both sides to gain a full understanding of the booking process.
HOMEAWAY INC.
First up, HomeAway inc., as I have the most experience dealing with them.
According to Wikipedia, HomeAway, Inc. was founded in February of 2004. The company launched Homeaway.com in 2006 and had acquired a slew of other online vacation rental companies, including VRBO.com and VacationRental.com.
In December of 2015, HomeAway Inc. (which includes HomeAway.com, VRBO.com and VacationRental.com) was acquired by Expedia, Inc.
This is when the real fun started for both property owners and travelers [insert drawn-out sigh here].
Prior to HomeAway Inc.'s acquisition by Expedia, travelers could rent vacation rental properties without having to pay any 'Service Fees'. "VRBO has no booking fees and is free for travelers" [Source: https://web.archive.org/web/20151015183718/http://www.vrbo.com/]
Prior to the acquisition, It was the property owner's who paid a yearly fee to list their properties on HomeAway Inc.'s rental sites (HomeAway/VRBO/VacationRental). As well, owners paid a 2.5% Credit Card Transaction Fee to HomeAway Inc. for each reservation.
HomeAway Inc.s Subscription Levels in October 2015 [Source: https://web.archive.org/web/20150905193957/https://www.vrbo.com/info/pps]
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During this time, owners could either choose a 'Pay Per Booking' starting at 10% of the rental amount or pay for a subscription levels which started with the 'Classic' level for $349/per year and went to a 'Platinum' level for $1,249/per year. The higher the subscription level, the higher the owner's property showed up in the search results and the more likely their property would be booked by travelers.
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I see BIG MONEY ahead!
So here we are in 2017 and what's different at Expedia (HomeAway, VRBO, Vacation Rental) you ask?
Let me start by saying that the changes that have taken place at Expedia (HomeAway, VRBO and Vacation Rental), for both owners and travelers, are far too many to go into detail for each, so I am only going to focus on the financial changes that have taken place. Specifically, the changes that are costing owners and travelers money.
- Travelers are now required to pay a 'Service Fee' when they book through any of Expedia's vacation rental websites (HomeAway.com, VRBO.com and VacationRental.com).
- For owners, credit card transaction fees have gone from 2.5%/per transaction to 3%/per transaction. An additional 2%/per transaction charge is collected on all International credit cards.
- Subscription levels for owners are a thing of the past. The Annual Subscription cost for Owners is now a flat $399/per year (or if an owner chooses, the can do 'Pay-Per-Booking' which starts at 8% of the rental amount payable to Expedia).
As a traveler you may be asking yourself "isn't that a good thing for owners - now they only have to pay $399 instead of possibly $1,249?"
As owners, we all know that the 'lowering of the subscription level' to a flat $399 was the only way Expedia could initiate their changes.
Could you imagine the outrage if Expedia continued to charge owners these yearly subscriptions levels (up to $1,249) to list their properties on HomeAway, VRBO and VacationRental, then top it off with charging travelers a 'Service Fee' as well.
Also, it makes more financial sense for Expedia to drop the amount it charges owners and concentrate on the travelers, after all, that is where the BIG money is!
Do you see where this is going?
There is only 1 owner per property and therefore, only 1 chance to make money on a yearly subscription fee.
However, there are many travelers who stay at each property:
# of travelers/per property X $Service Fee = Big $$ for Expedia
I can't speak for everyone, but personally, I would rather pay the $1,249/per year for platinum level and kept it free for travelers - as this was the original premise of VRBO/Homeaway/Vacation Rental. I liked the fact that I was allowed more interaction with my guests and more control over my property's booking.
Under the current operations, if an owner does not accept an online Booking Request, they get penalized and lowered in the search results. To clarify with an example, I have had several Booking Requests come through from families with young children (under 5). My Key West Vacation Rental Property is not suitable for families with very young children, as the 2nd bedroom is not connected to the main house (there is a pool separating the cottage with 2nd bedroom from the main house). Even though I state this in my rental listing, it is sometimes overlooked by travelers. If I see a request come thru from a family with children, I always follow up by asking the age of the children and explain the layout. Ethically, I would never accept a reservation and not disclose this.
Unfortunately, Expedia doesn't care about this - they want owners to 'Accept' the Booking Request and then they can collect their 'Service Fee' from the traveler.
In addition, all owner/traveler correspondence has to go through Expedia's online platforms (HomeAway.com VRBO.com and VacationRental.com) and owners are no longer able to show their external business websites (i.e www.keywestoasis.com) in our VRBO/HomeAway/Vacation Rental listing.
Of course, if a traveler saw an external website and realized they didn't have to pay a Service Fee to stay at that property, HomeAway wouldn't get their money and of course, this can never happen.
As of July 2017, owners are still allowed to show phone numbers in the email correspondence - however, I know this too is coming to an end (once that happens, I will certainly update this post with the date that we are no longer allowed to talk to one another prior to booking).
Sorry, I digress, let's get back to these "Service Fees" Per HomeAway's website (as of 7/11/2017):
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"The service fee is paid by the traveler when booking through the HomeAway websites. This fee helps cover the costs of operating the websites for owners and travelers. Some of the costs to run HomeAway include: facilitating secure transactions, developing our products and services, and providing 24/7 customer service. Additionally, when a traveler books and pays through HomeAway, they are eligible for the Book with Confidence Guarantee.
Paying the fee Travelers pay the service fee by credit card when paying through the secure HomeAway checkout process. The service fee is only charged to the card once the booking has been accepted by the property owner or manager. The service fee is a percentage of the total amount of the reservation, excluding taxes and refundable fees. The service fee is between 5-12% for most bookings but can be above or below, based on the reservation. The percentage rate may change from time to time. Generally, the higher the reservation amount, the lower the percentage of service fee." [Source: help.vrbo.com/articles/What-is-the-service-fee-and-how-does-it-work] |
What the $%#&???
As a side note, I am always amazed how big companies use their words to sound seemingly innocent, but they are actually designed to take absolute advantage of consumers, leaving them little recourse should they desire a more definitive answer to the fees they were charged.
HomeAway's exact words: "The service fee is between 5-12% for most bookings but can be above or below, based on the reservation. The percentage rate may change from time to time."
So what are they saying exactly?
Are they saying that they can charge travelers whatever %'age fee they feel like and change that %'age anytime they feel like?
Well it seems the answer to that question is YES...
...Back in February of 2016, Expedia Stated:
"The service fee is a fee charged to the traveler and is calculated on a sliding scale of 4% to 10% of the total booking. The charge applies to the cost of the rental and will not exceed $499." [Source: VRBO.com February 2016]
So yes, the Service Fee percentage has gone up, from a defined percentage rate of 4% - 10% (not to exceed $499) back in 2016 to now "5-12% for most bookings but can be above or below, based on the reservation."
Hmmm, I can almost guarantee that the service fee they charge never goes below 5% - It just sounds better for Expedia to say "but can be above or below".
Before going on and getting into FlipKey by TripAdvisor, AirBnB and AVROA, I would like to show you the results of a little experiment.
An experiment to show what it would cost both owner and traveler on each of the vacation rental sites like AirBnB, Homeaway/VRBO, FlipKey and AVROA:
HomeAway's exact words: "The service fee is between 5-12% for most bookings but can be above or below, based on the reservation. The percentage rate may change from time to time."
So what are they saying exactly?
Are they saying that they can charge travelers whatever %'age fee they feel like and change that %'age anytime they feel like?
Well it seems the answer to that question is YES...
...Back in February of 2016, Expedia Stated:
"The service fee is a fee charged to the traveler and is calculated on a sliding scale of 4% to 10% of the total booking. The charge applies to the cost of the rental and will not exceed $499." [Source: VRBO.com February 2016]
So yes, the Service Fee percentage has gone up, from a defined percentage rate of 4% - 10% (not to exceed $499) back in 2016 to now "5-12% for most bookings but can be above or below, based on the reservation."
Hmmm, I can almost guarantee that the service fee they charge never goes below 5% - It just sounds better for Expedia to say "but can be above or below".
Before going on and getting into FlipKey by TripAdvisor, AirBnB and AVROA, I would like to show you the results of a little experiment.
An experiment to show what it would cost both owner and traveler on each of the vacation rental sites like AirBnB, Homeaway/VRBO, FlipKey and AVROA:
Methodology:
Experiments are Fun!
The chart below will show the costs incurred by both travelers and owners when booked through sites like AirBnB, Homeaway/VRBO, FlipKey and AVROA.
I am going to use my rental property (Key West Oasis) as the sample property with a week that I know is currently available (as of 7/11/2017). I list my rental property, Key West Oasis, on all online platforms mentioned below.
Property: Key West Oasis (KWO)
Rental Week: August 12th - 19th 2017
Weekly Rate: $3,299
Travelers: 4 Adults
After going to each vacation rental website, I located the property, Key West Oasis. Acting as a consumer, I entered my desired week and # of travelers. These are the results from each vacation rental site:
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Based on $3,299 Weekly Rate
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HomeAway/VRBO
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AirBnB
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FlipKey/TripAdvisor
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AVROA
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Service Fee Incurred by Traveler
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$198
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$194
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$478.36
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$0
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CC Transaction Fee Incurred by Owner (Based on $3,299)
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$98.97
(3%) |
$98.97
(3%) |
$82.47
(2.5%) |
$0 All Transactions done thru owner in US
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Cancellation Policy
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Owners Stated Policy
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Owners Stated Policy
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Owners Stated Policy
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Owner Receives Deposit/Final Payment From Traveler
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Deposited into Owner's Checking Account 2-3 days after each payment is made by traveler
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Owner receives all deposits/final payments 24 hours after traveler checks in
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Owner receives all deposits/final payments 24 hours after traveler checks in
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No Payments are made through AVROA in US - Must be made directly through owner
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FLIPKEY by TRIPADVISOR
Every time I see the Booking Fee that is charged to travelers who book through FlipKey by TripAdvisor, I cringe - I had to add a photo of it (below) because it is so unbelievable:
Every time I see the Booking Fee that is charged to travelers who book through FlipKey by TripAdvisor, I cringe - I had to add a photo of it (below) because it is so unbelievable:
FlipKey by TripAdvisor
So here is a scenario, a traveler gets to the property they rented via FlipKey. Everything seems fine at check-in, but there is an issue overnight and the traveler no longer feels safe staying at this property. What can the traveler do?
To find out, I actually called FlipKey, posing as a potential customer, to ask that very same question and the response I kept getting was "well, we will call the owner".
"What?? I'm sorry, this isn't about the owner, its about me, I DON'T FEEL safe at this property, even if the owner tells me I am fine, shouldn't this be about me and my feelings about being unsafe? After all, I am the one that paid FlipKey the booking fee."
Well, since you "chose" to stay at the property overnight (and you are out of the 24 hour check-in time frame) you have no more basis for a claim. Per FlipKey by TripAdvisor's website:
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"For details of what is and isn’t covered by our Payment Protection, read our full terms and conditions. It also explains what is required when making a claim.
It’s important to remember…
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Now, is the above-mentioned scenario common when staying at a vacation rental?
Absolutely not, but it is interesting to see the kind of "support" that a traveler would receive from FlipKey after paying them this huge Booking Fee.
AIRBNB
Per Wikipedia: "Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is merely a broker and receives percentage service fees (commissions) from both guests and hosts in conjunction with every booking." [SOURCE: https://en.wikipedia.org/wiki/Airbnb]
AirBnB has officially been around since 2009. While it started out small, AirBnB has grown into one of the largest online rental platforms today and is the #1 competitor of Expedia's vacation rental sites, ie. Homeaway, VRBO and VacationRentals.
"According to Beyond Pricing, Airbnb currently has approximately 2.8 million private accommodations listed on its site as of September of 2016, up from 2.2 million in March. In contrast, according to its latest reporting, HomeAway has approximately 1.2 million listings" [SOURCE: http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/]
AirBnB's service fee that it charges travelers is anywhere from 6%-12%, while owners, AKA hosts, are charged anywhere between 3%-5% per booking.
What I respect about AirBnB is they don't try to hide the fact that they collect service fees from travelers. When a traveler goes to book a property through AirBnB, the price for the rental, the taxes AND the Service Fee are clearly displayed. In other words, a traveler does not have to click on anything further to see exactly what they are getting into.
Unlike AirBnb, HomeAway/VRBO and FlipKey only show a lump sum of the total cost - making the traveler click on another link to see the actual breakout. See both examples below.
Per Wikipedia: "Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is merely a broker and receives percentage service fees (commissions) from both guests and hosts in conjunction with every booking." [SOURCE: https://en.wikipedia.org/wiki/Airbnb]
AirBnB has officially been around since 2009. While it started out small, AirBnB has grown into one of the largest online rental platforms today and is the #1 competitor of Expedia's vacation rental sites, ie. Homeaway, VRBO and VacationRentals.
"According to Beyond Pricing, Airbnb currently has approximately 2.8 million private accommodations listed on its site as of September of 2016, up from 2.2 million in March. In contrast, according to its latest reporting, HomeAway has approximately 1.2 million listings" [SOURCE: http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/]
AirBnB's service fee that it charges travelers is anywhere from 6%-12%, while owners, AKA hosts, are charged anywhere between 3%-5% per booking.
What I respect about AirBnB is they don't try to hide the fact that they collect service fees from travelers. When a traveler goes to book a property through AirBnB, the price for the rental, the taxes AND the Service Fee are clearly displayed. In other words, a traveler does not have to click on anything further to see exactly what they are getting into.
Unlike AirBnb, HomeAway/VRBO and FlipKey only show a lump sum of the total cost - making the traveler click on another link to see the actual breakout. See both examples below.
PER FLIPKEY, Price for the week of August 12th - 19th at KWO, shown in one lump sum.
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PER HOMEAWAY/VRBO, Price for the week of August 12th - 19th at KWO, shown in one lump sum.
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AVROA
Not many travelers are familiar with AVROA.com - it stands for American Vacation Rental Operators & Affiliates It was founded in 2011 by Rod Fitts, who wanted to go back to the way HomeAway/VRBO use to operate.
Not many travelers are familiar with AVROA.com - it stands for American Vacation Rental Operators & Affiliates It was founded in 2011 by Rod Fitts, who wanted to go back to the way HomeAway/VRBO use to operate.
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AVROA's Mission Statement "We [AVROA] believe that whether you are a vacation rental owner, run a B&B, rent a Villa or run a local property management company you have a different relationship with your guests than if you were a hotel chain. We believe that we are all better off working together and by doing that we will be able provide many of the services we are all paying now for ourselves at a fraction of the cost and at higher quality. We believe each owner and manager knows how to best run their business and our job at AVROA is to support your business not tell you how to run it. We believe that our job as your association is to support your business through support programs, research, education and advocacy. We believe AVROA needs to stay independent and our mandate is to stay that way." [Source: http://www.avroa.org/about-avroa/] |
While AVROA's mission statement is extremely admirable, it is unfortunate that they don't have the marketing budget that Expedia and AirBnB have. Which means that anytime a traveler does an online search for Vacation Rental Properties, AVROA is going to be beat out every time by HomeAway/VRBO, FlipKey and AirBnb.
Although, I do have reason to be optimistic. When I first joined AVROA back in January of 2016, I was the very first property listed in Key West. As of today, there are over 70 properties listed in Key West and that number is growing everyday.
A major benefit to travelers is that all properties in AVROA's network are Property Certified, which means that travelers can rest assured that they are dealing with the actual owners of these properties and not being scammed. Per AVROA's website:
Although, I do have reason to be optimistic. When I first joined AVROA back in January of 2016, I was the very first property listed in Key West. As of today, there are over 70 properties listed in Key West and that number is growing everyday.
A major benefit to travelers is that all properties in AVROA's network are Property Certified, which means that travelers can rest assured that they are dealing with the actual owners of these properties and not being scammed. Per AVROA's website:
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Providing Guest Assurance with Property Certification
"Every AVROA certification has a dedicated certification page and uniquely numbered seal. Display your seal anywhere you advertise your property or communicate with potential guests, like your email signature, and then link your seal directly to your certification page. That way your guests are always just on click away from seeing your credentials. Guests can also go directly to the AVROA website and click on the “View a Certification” button where they can enter your certification number to view your certification page. Property certification not only assures your guests, it also helps protect you by deterring thieves from using your property listing information to create a fake listing." [SOURCE: http://www.avroa.org/avroa-property-certification/] |
One of the major differences Between AVROA and the other vacation rental sites we mentioned is that travelers can not pay for a rental through the AVROA online platform. Although, I do believe that this may change in the future. Currently, travelers would need to pay the owner directly with a credit card (assuming the owner can take credit cards) or with a check.
Conclusions and Recommendations:
Let me end by saying that "I hate Service/Booking Fees" Personally, it just seems like another way to gouge consumers under the guise of care and concern.
With the exception of AVROA, all the online rental sites mentioned here, sites like HomeAway, VRBO, AirBnB and Flipkey are now charging travelers a Service/Booking Fee, with FlipKey being the most expensive online platform to book through.
What can you do to avoid paying service fees?
...NEVER RENT THROUGH CRAIGSLIST - If you haven't seen my post on Craigslist Vacation Rental Scams, I highly encourage you to check it out http://www.keywestoasis.com/blog/how-to-avoid-vacation-rental-scams
As always, if any owners or travelers reading this has anything to add, please by all means leave a comment - I am sure we can all benefit by your insight.
Namaste,
Kim
With the exception of AVROA, all the online rental sites mentioned here, sites like HomeAway, VRBO, AirBnB and Flipkey are now charging travelers a Service/Booking Fee, with FlipKey being the most expensive online platform to book through.
What can you do to avoid paying service fees?
- If you stayed at the property in the past, contact the owner directly and make a reservation through them.
- Go onto the Chamber of Commerce Websites in the area that you are planning to visit. They will most likely have a "Places to Stay" section. From here, you will most likely find vacation rentals and can work directly with the owner. For example, here is Key West's Chamber listing page with all their legal vacation rentals - http://web.keywestchamber.org/Vacation-Rentals
Tip: If you find a property that you like on a Chamber of Commerce website, it is unlikely there will be any reviews of that property. So what does a traveler do so they are not flying blind? Does the property your interested in have a name? If so, you can google it to find reviews or go look for it on any of the rental sites like AirBnB, VRBO, Homeaway etc. see what the reviews say on these website's. It is very likely that if a property is listed on a Chamber of Commerce website that the owner also has it listed on another rental site like AirBnB, VRBO, Homeaway or FlipKey.
- If you Google the name of the area that you are looking to visit + Vacation Rental you should see local companies who specialize in vacation rental properties in that particular area.
For Example, if you were interested in visiting Key West, you would do a search for Key West Vacation Rentals. Vacation Rental Companies like At Home in Key West, Historic Key West Vacation Rentals and Vacation Homes of Key West would be the first to come up in the search.
...NEVER RENT THROUGH CRAIGSLIST - If you haven't seen my post on Craigslist Vacation Rental Scams, I highly encourage you to check it out http://www.keywestoasis.com/blog/how-to-avoid-vacation-rental-scams
As always, if any owners or travelers reading this has anything to add, please by all means leave a comment - I am sure we can all benefit by your insight.
Namaste,
Kim
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