The Blog

You know the Lending Tree motto, right? “When banks compete you win”. LendingTree.com helps millions of people find the best mortgage rates by inviting them to enter the details of their desired loan. LendingTree then turns around and sells that information as “leads” to banks. Banks bid for the right to respond to your inquiry and LendingTree lets the top three bidders call you or send you an email with their offer. This model has been celebrated by consumers as over 3.5M consumers visit LendingTree each month.

This model of collecting consumer inquiries and having suppliers compete for the right to respond has expanded to the vacation rental market. I was playing around on Rentalo today and noticed the following button at the bottom of my search for accommodations in “Boulder, CO”.

Ah! They did it. Rentalo adopted the LendingTree model… brilliant. It makes sense. Many travelers are flexible and super price sensitive. Why not have local properties bid for your business?

I wanted to see how it worked, so I submitted a request, for any accommodation at a rate of $100/night. My confirmation page is featured below.

There are a few things to notice:

1. Rentalo claims, “91% of our travelers receive one or more offers via Rentalo”
2. Rentalo also claims, “80% of our owners reply within the first 5 hours”
3. Notice the “Check these properties that also match your inquiry criteria”. My inquiry was for $100/night and the first result offered is for $450/night. This disconnect makes me question the quality of offers I was about to receive.

Fast forward >> The next day

To Rentalo’s credit, I did receive two responses to my inquiry within 24 hours. One hotel offered me a room for $250/night and a B&B informed me they were booked. I was a little under-whelmed, but still think it’s a smart service that has potential.

The trick for Rentalo is to ensure the quality of responses from suppliers and not the volume or timing of responses. I would rather get one response that says, “you can stay with us for $100/night” than fifty responses citing fees twice the amount I offered. Should my $100/night bid be too low to attract a realistic offer, Rentalo should tell me.

Quality over quantity!

Today I want to take a look at the state of the vacation rental calendar landscape.

If you went to Marriott.com and its reservation system indicated it had units available during your Miami vacation, would you expect to be able to book a room?

Of course you would… It would be annoying if they responded back, saying “they didn’t have availability and need to update their calendar.”

Unfortunately, we at FlipKey find this scenario to be one of the challenges facing the expanding vacation rental industry. No strong solution has emerged to allow property managers and owners to easily manage the availability of their units across multiple sites.

Rentors.org is Not the Universal Solution

The most widely used calendar system is operated by Rentors.org. Although Rentors.org markets itself as providing ‘universal’ calendars it is a far cry from a universal system.

The gist is:

• Rentors.org is sponsored by its partners
• All of rentors.org’s sponsors are HomeAway properties (VRBO, CyberRentals, Vacationhomes.com, etc.)
• Rentors.org only allows other services to use Rentors.org calendars if they are a sponsor/partner
• Based on what I have been told by other parties, rentors.org is not accepting other partners. (Note: I have an inquiry into rentors.org myself to verify, but I have not yet received a response) Update: I have received a response from Rentors.org confirming.  Third parties are only allowed to link out to rentors.org, a cumbersome solution at best.

In short, Rentors.org is a closed calendar system made available to individuals and HomeAway properties. Needless to say, Rentors.org is not a universal solution.

Emerging Alternatives?

The industry is not completely void of calendar options; unfortunately, no solutions have emerged as best-in-class.

Aximize.com

Aximize is trying to tackle Rentors.org head-on. In fact, they even go so far as to put up a comparison matrix on their site. In concept Aximize sounds great, but after a year very few people have adopted their solution (see blue line below).

VacationRentals411.com

Vacationrentals411.com offers the ‘Vacation Rental Calendar’. The name seems pretty straight forward, but unfortunately offers minimal use outside of vacationrentals411.com web site.

Calendar Software
Most property managers use desktop applications for their calendar needs, but these solutions are localized. They work well for managing several properties, but they don’t help consumers seeking accommodations on the internet. Local desktop solutions are beginning to integrate with various web properties, but ‘integration’ is a lot less efficient compared to ‘open standards’.

What’s the real solution?

Create an open calendar system, free of charge, which can be easily accessed by any site that is representing a property. Property managers would update their calendars in a single location, but the information would be shared across all channels. The single location can still be their desktop software, but the software would integrate with one single, free, open standard service.

We would love it if someone did this. Please email us if you are working on a ‘true’ universal calendar solution.

Remember Ronald Reagan’s “Star Wars” program? Remember pets.com? Remember Kosmo.com, the NYC internet service that delivered anything to your door free of charge? They were all great ideas in theory, but just never panned out. iTravex is a new points based system in the vacation market that will likely follow the same path.

In theory, iTravex is a great idea. iTravex has created a “points system” that allows house swappers to network their properties to circumvent the difficult process of finding a direct match.

Historically, to pull off a house swap two parties must find each other, be interested in each other’s location, agree on dates, and find each other’s properties equitable. As you can imagine, finding a perfect match is very difficult. These perfect scenarios, as popularized by the movie The Holiday, are few and far between. iTravex wants to make it easier by creating a point system that allows swappers to earn “points” for renting out their homes. Through iTravex, John in Houston can rent out his home for 250 points to Susan in Miami and then use those points to rent out my condo in Boston.

The problem with iTravex is that it requires (i) a critical mass of participants and (ii) participants must have confidence in the point currency.

iTravex solved the first challenge by partnering with VRBO and OwnerDirect. In September of ‘06 iTravex sent an email to all VRBO and OwnerDirect members inviting them into its program. I kindly accepted.

Since accepting I have received one inquiry for my Boston condo and was offered 250 points for a week stay. The big questions were, “how much was 250 points worth?” and “will I ever be able to use these points?”.

Personally, I couldn’t get over why this person wouldn’t just pay me in cash. Hasn’t cash been a pretty good substitute for bartering since at least the 19th century? Why would I entertain an intangible point system when we can all just pay each other in the currency we are so familiar with? Aren’t we networked already via the US Treasury?

My feelings seem to be shared by the rest of the rental community. ITravex has seen minimal adoption and usage as determined by Compete.com’s traffic measurements.

I hope iTravex makes it, but I don’t see things panning out. I was actually contacted by iTravex reps by email and phone after I received my first inquiry and found them very knowledgeable and pleasant. From a customer service standpoint they are great, and I hope they can carve out a nice little niche.

I have been a lister on VRBO for the last six months in hopes of renting my condo during the tourist heavy summer in Boston. To date, I will say that I have been satisfied with my VRBO listing. Although I feel the VRBO fees are far too high, I found renters for nearly every week during the summer.

VRBO - Honest inquiries, with a little too much ‘Un-Spam’

I would estimate 80% of the inquiries I receive via VRBO are legitimate guests looking for accommodations. I find many are a bit ‘cheap’, aggressively trying to reduce my (very reasonable) rates, but they are good people for the most part.

The remaining 20% I would characterize as ‘Un-Spam’ – meaning, people that don’t realize they are sending me unreasonable requests.

• A man from Idaho asked me if he could rent my two bedroom condo for one night for himself and 20 of his closest friends. (That was not a typo - 20 friends)
• At least 2 people each week ask to rent my unit on a week that is already clearly booked on my calendar
• A woman from Texas offered $50/night for three nights in exchange to keep it ‘clean’
• A lot of house swap offers

My place is booked for the rest of the year and to cut down on the Un-Spam I have blocked off my calendar, but I continue to get about 3-4 inquiries a week. I don’t see this as a bad thing and more of an illustration of how demand for vacation rentals exceeds supply.

I believe there are some simple solutions to cut down on Un-Spam and I will explore potential solutions in future posts. In the interim I find many of these inquiries entertaining. I try to make it a point to follow up with everybody, regardless of how ridiculous the request is, but I admit my responses are not always timely for Un-Spam.

If you have an interesting / funny story about guest inquiries you have received, email us at stories@flipkey.com.

Today I want to take a quick look at Search in the online vacation rental industry. FlipKey recently conducted a study of over 300 vacation renters and found over 60% could not recall the site they used to find their rental, but remembered using a search engine. 60%!!!! I think it’s safe to say Search is an important component of the marketing ecosystem of the vacation rental market.

The definition of search marketing varies from person to person. I will be focusing on two primary terms, Search Engine Optimization (SEO) and Search Engine Marketing (SEM). First I will provide a quick explanation of how I am defining SEO vs SEM, and then some insight into who is doing it well in the vacation rental industry.

Search Engine Optimization (SEO)

SEO is the practice of coding your Web site to rank highly in the Search Engine’s rankings. In other words, SEO encompasses the things you can do on your own site.

Search Engine Marketing (SEM)

SEM is the practice of marketing your Web site throughout the Internet to improve the likelihood of a user finding you in a search engine. This includes various forms of advertising, linking, press releases, and more. In other words, SEM encompasses the things you can do outside of your own site.

The Typical Search Engine Results Page Layout

When a user searches for something in a search engine, there are two ways that your site can show up in the results.

1. Organic (free) - in red box below
2. Sponsored (paid) - in green boxes below

Organic vs Sponsored Search Results on Google

Good SEO will only help you in the red box. Good SEM will help you in both the red and the green boxes.

Who does organic well?

Organic rankings are an intricate beast. Not only is it difficult to do SEO and SEM well, but the rules of the game are constantly changing. However, it is actually pretty easy to measure success. Here is one quick test – I search for a highly targeted term on the 4 major search engines - “vacation rental”. Below are the top 10 domains on each of the 4 engines.

The results were surprising, to say the least. Only one domain showed up in 3 out of the 4 engines - vacationrentals.com - and they have the huge benefit of nailing the requested term in their domain name. Even industry giant vrbo.com was only ranked #4 on Google, and was nowhere to be seen on the other 3 engines.

Who does sponsored well?

Measuring success in sponsored results is a lot trickier. The whole business is a complex matrix of terms, costs, and returns. Your sponsored results will also change every time you refresh your Search Engine Results Page (SERP). Therefore a good analysis is best left to internal systems, but for a crude check we can at least see who is participating and who is not.

I repeat the same search as in the previous experiment - “vacation rental” - for the top 4 search engines. I then refresh 10 times on each engine. Below I have jotted down the notable domains that most frequently appeared in the sponsored results.

Google
Homeaway.com
Cyberrentals.com

Yahoo
Homeaway.com
Triphomes.com
Disneyvacationclub.com

Live
Hotels.com
Disneyvacationclub.com

Ask
Homeaway.com
Cyberrentals.com

The remainder of the unlisted domains are a random smattering of smaller players and domains that generally did not appear in the top 10 organic result sets.

Conclusion

Search performance is more dynamic than testing “vacation rentals”; however, it is clear that the larger listing services are boxing small property manager owned sites out of the game. In order to compete, the smaller sites need to concentrate on optimizing their site to control the most specific search terms possible through a combination of SEM and SEO. There are several tools and consultants that can help along this front, but it all comes at a cost. However, with the majority of travelers finding you through Search I would argue it’s worth it.

For more information and analysis, I recommend the soon to be released Compete Search Analytics product. This was my final product at Compete, and it recently won an award at Searchonomics while still in Private Beta.

Over the course of this blog you will see FlipKey reference a lot of online statistics. We wanted to let you know where we get most of these data points from.

Compete, Inc, an online market research company, maintains a panel of 2M U.S. Internet users who have agreed to share the web pages they visit with Compete. This gigantic click-stream panel allows Compete to analyze how many people visit a website and what they do while on the website. In lay terms, it’s similar to how Nielsen predicts the number of people watching a given TV show.

Compete works closely with many clients to provide custom competitive intelligence services, but also offers a free service via www.compete.com.

By visiting Compete.com you can monitor the visitor traffic and interaction at any vacation site on the web. Below is a traffic report of HomeAway’s largest U.S. focused services.

You can quickly see that VRBO is HomeAway’s prized possession and attracts nearly 800K more visitors each month compared to its other portfolio properties.

VRBO still maintains much of its look and feel from the 90’s, so I am surprised that it is so popular. However, if I look at interaction on the site, based on the number of pages an average visitor views, the more modern HomeAway.com is heads above.

Compete.com is completely free, so use it at your disposal. Compete offers a number of additional paid services such as Search Term Analytics, Behaviorally Targeted Surveys, and Conversion Analysis that we will cover in future posts.

We look forward to sharing with the rental industry all of the future insights we derive through our relationship with Compete.

Disclaimer: Carl and TJ have been living and breathing data and site analysis for the past 6+ years at Compete.

A picture is worth a thousand words.
   - Ancient Proverb

There is little disagreement that seeing pictures is an essential component of selecting a vacation home. In my experience a home needs at least 10 pictures to accurately represent itself, so why do leading services like VRBO only allow you to only post three pictures and then charge you an additional $24 for each additional photo?

To put this in perspective, I can go on Craigslist and find 10 pictures of a $7 used toaster, yet when I go to VRBO the majority of the listings only feature three photos. A toaster is a toaster, but a vacation rental is a major purchase… this does not make sense.

VRBO’s motivations are rather obvious. Pictures are an essential component of the consideration process, so why not monetize them. VRBO takes it a step further and even prioritizes listings based on how many photos there are.

VRBO Rates:
Annual listing fee = $179/yr (includes three photos)
7 additional photos = $168/yr

Translation = VRBO’s listing rate increases by 93% if you want 10 photos.

(Excuses me for a second… I need to pick my jaw up off the floor.)

Peeling back the economics of pictures

So, what is the cost to VRBO to host and deliver your photos?

Your average image of approximate size 350×250 pixels tends to run at a size of about 15KB-25KB. We’ll call it 20KB for analysis sake.

The cost of downloading an image is measured in “bandwidth”. There are numerous ways that Web sites pay to serve up images, but in a nutshell bandwidth can be boiled down to the cost per gigabyte of traffic. Check out this table for a breakdown of some different common hosting options and how much images cost.

As seen in the rightmost column of the table above, if your image gets viewed 10,000 times, it will cost VRBO about a nickel.

A little math:

• Lets assume each of your photos is viewed 500 times each month
• This means your $24 photo is seen 6,000 times through out the year
• The cost to VRBO is ~$0.03

In this scenario, VRBO’s mark up is 80,000%.

Hold on… I need to pick my jaw off the floor again.