The Blog

The FlipKey Team is taking a bit of down time and will return to its normal blogging schedule next week. We’re looking forward to an exciting 2008 to share with all of you. Cheers!

On these pages we often discuss new services, both for the specific vacation rental market and the larger online travel industry. Today, we’d like to highlight what’s been happening with Farecast.com.

Similar to Kayak.com, which we wrote about several months ago, Farecast is a “meta” search engine. Farecast provides “Smart Travel Search” by searching flight and hotel information from other online travel search engines and aggregating this information for consumers. Then comes the special sauce: by analyzing historical airfare and hotel rates over the prior 90 days and future trends, Farecast provides predictions on whether airfare prices will rise or fall or whether a quoted hotel rate is a deal or not.

Farecast also has a number of tools to help you plan the best times to travel, and presents the information in a clean, consumer-friendly format. Currently, predictive features for airfare is available for domestic travel between 75 airports. Hotel rate predictions, still in beta, are available for 30 US cities.

Through a partnership with MSN, Farecast has an integrated flight search module on the MSN Travel homepage. Data from Compete.com indicates that in September, MSN Travel was responsible for 10% of Farecast’s estimated 630,000 unique visitors for that month. The graphic below highlights Farecast’s continued popularity and surging monthly visitors.

With these predictive tools, Farecast increases consumer confidence and eliminates some of the guesswork in searching for the cheapest flight for your travel. This is incredibly valuable for converting online consumers from browsing to actual booking. And vacation rentals? Hmmm, sounds like just the industry that could benefit from an online service that increased consumer confidence!

Online video has become increasingly more prominent over the last few years, as evidenced by sites like YouTube and Hulu. As online video becomes even more popular, its role will expand into niche marketing purposes, such as the vacation rental market. According to a survey of over 2,900 people conducted by TNS research, three quarters of respondents said they watched more online video today than they did a year ago. Of that same 75%, half also said they expected to watch more online video in the coming year. Why are users watching video online?

Some of the reasons mentioned were:

• Convenience
• Relevance
• Control of Content

At FlipKey we are committed to “expanding the vacation rental market”, and we are keeping an eye on the potentially significant role of online video to aide the market’s expansion. One of the problems facing the industry today is attracting people who have never stayed in a vacation rental. A short concise online video outlining the services that a property manager provides could be a dynamic tool to help instill confidence in this group of people.

The TNS survey also highlighted that nearly two-thirds (63%) of people said they have taken some action after seeing an online video advertisement. Traditional TV advertising boasts nearly 80% of people taking some action after viewing an ad, but has been around much longer.

“Some Action” was defined as the following in online video’s case:

• Going to the companies website (44%)
• Searching for more information about a product (33%)
• Going to the brick and mortar store to look at a product (22%)
• Talking to friends and family about the product (21%)

Online video can serve as a tool for property managers to help the public learn more about their hospitality services and properties. FlipKey is interested and excited to see the impact that online video can have on the industry.

In September we posted an article highlighting The Weather Channel’s (TWC) expansion into the vacation rental industry. The article outlined TWC’s significant internet presence and its potential to act as a strong referral agent for the vacation rental market.

Similar to The Weather Channel, despite being substantially smaller, Rentals.com launched their secondary vacation rentals service in mid June. Rentals.com “where renters and landlords click” was originally created as a site for renters to find apartments and is attempting to enter the vacation rental market in hopes that people coming to rentals.com could also be looking for vacation rentals.

We wanted to get a sense of the progress made by TWC and Rentals.com. Using traffic estimates provided by Compete, Inc we analyzed the volume of traffic each service is generating and the percentage of their overall visitor base they are exposing to vacation rentals.

• TWC has successfully tripled the volume of visitors to its ForGetAway vacation rental service between Nov ’06-Nov ‘07
• Despite the growth of ForGetAway, only 0.60% of TWC’s overall site audience checked out a vacation rental in Nov ‘07

• Rentals.com vacation rental service is a fairly new service and has yet to attract a significant audience.
• However, Rentals.com does appear to have a more relevant audience compared to TWC. In November 2% of Rentals.com visitors visited its vacation rental service vs. only 0.6% of TWC audience during the same period.

Conclusion

TWC has made significant progress in building ForGetAway into a relevant property within the vacation rental market. Although ForGetAway’s traffic significantly lags the breadth of HomeAway owned properties (VRBO alone attracts over a million visitors per month), it is slowly emerging as a second tier service. If TWC can improve its ability to promote the service among its ~20M monthly visitors it could emerge as a strong marketing resource for the vacation rental market.

Rentals.com only attracts 500K visitors each month compared to TWC’s 20M. With only 2% of Rentals.com visitors checking out its vacation rental service its unclear whether vacation rentals will emerge as a strong offering by Rentals.com. There are few, if any, similarities in the underlying market dynamics between long term apartment rentals and vacation rentals. With that said, we would all have to agree it’s a great domain name.

Unfortunately, this post comes 29 days after the article was published on USATODAY.com, but better late than never. Over the weekend I came across a nice, comprehensive article published by Gary Stoller of USA TODAY highlighting the growth potential of the vacation rental industry.

Titled, ‘Staying at a real home away from home’, the article provided one of the most thorough public reviews of the vacation rental industry and its growth potential.

Article Highlights:

• U.S. vacation rental market is estimated at $63B by HomeAway. (*FlipKey’s internal analysis estimates the worldwide market is $60B and the domestic market is ~$25B, but we like the attitude. Discrepancies in industry estimates are often a result of the definition of what is considered a ‘vacation rental’.)

• Vacation rental management companies expect to manage 12% more rental homes this year than in 2006, according to a survey of 129 companies by the Vacation Rental Managers Association.

• Rental inventory is growing because of a boom in vacation home sales, which have been largely unaffected by a downturn in the real estate business. Sales of vacation homes rose nearly 5% to a record 1.07 million last year, and 18% of buyers said they bought them to rent to others, according to an April survey by the National Association of Realtors.

• According to Steve Holmes, Wyndham Worldwide’s CEO, about one of five European vacationers rent a condo or house. Holmes estimates U.S. adoption rates with match that of Europe in “about a decade”.

Click here to read the full article.

FlipKey applauds the great coverage of the vacation rental industry by USA TODAY. With all the activity and recent publicity of the vacation rental industry, FlipKey sees 2008 as a cornerstone year for vacation rentals. Bring on the New Year!

If you happened to stop by www.flipkey.com today, you may have already seen our new temporary login page for the Beta. You may have also guessed what that means – FlipKey is officially entering Beta status!

Here is how the private Beta works. If you have already signed up for the FlipKey Badge Program, we have been hard at work preparing your Front Desk for you. Over the course of the next few weeks we will be sending out Beta login information to Rental Managers as soon as your Front Desks are ready. We received a tremendous number of sign-ups for the FlipKey Badge Program, so if you don’t hear from us right away, please know that we are working through the list and we will be in contact with you very soon. We will accommodate everybody who signs up. If you have not signed up, and you are a Vacation Rental Manager, please head over to the sign-up form. If you would like more information, please feel free to contact us at info@flipkey.com.

For those of you who are not Rental Managers and are itching to try out FlipKey, we will be opening up the site to the public in January. For now, if you haven’t already, please add your e-mail address to our notification list.

What can I say? I’m a sucker for cool websites. I recently came across TripIt.com and it definitely met my requirements for COOL.

In short, TripIt helps you organize your travel plans.

How it works:

• You set up a free account (takes two minutes)

• As you receive itinerary confirmations from airlines, hotels, car rental companies, etc. you simply forward them to TripIt (takes two seconds)

• TripIt then identifies your email, parses your itinerary and then automatically saves it in an easy to read format. As you send your various travel plans it intelligently blends your trip into one integrated itinerary.

Here is a view of my Colorado trip I just forwarded from my Gmail account.

Why I won’t use it
Although the service is cool and ported my itinerary with 100% accuracy, I just don’t know why I need this service. I, like so many others, get a little stressed before trips. I like having the original itineraries to PROVE to the airline/hotel that I have a reservation. We have all checked into the Marriott at some point in our lives when the dreaded, “I’m sorry sir, I don’t seem to have a record of your reservation in the computer” conversation is initiated.

In addition, there is a sense of craftsmanship in taking notes, stapling multiple itineraries together, printing out to and from maps and placing all needed documentation into a Trip Folder. I understand that this process is so “pre-internet”, but some things were simply never meant to be automated.

Like so many others, TripIt forgot about vacation rentals
Like 99% of the travel sites on the market, TripIt doesn’t really address the vacation rental market. To be fair, it would be near impossible for them to do so. TripIt can only parse standard emails, thus its system works for the standard confirmations generated by major airlines and hotels. However, TripIt does allow a user to manually enter additional details of their trip, but unfortunately doesn’t even recognize the existence of vacation rentals. Notice how “Hotels” is the only option provided to me as I try to add my ski house rental.

I think TripIt has done a great job with a limited idea. I will likely not use it, but if they were to include a link for Vacation Rentals in their next release I could be won over.

We can all agree that Search is important in the vacation rental industry. Ask a property manager how they attract visitors to their site and ‘Search’ is likely the first word you’ll hear. As a result property managers are beginning to explore more creative ways to climb the Google rankings.

Earlier this week we were contacted by Best Coast Rentals of Port Aransas, Texas. In the interest of improving their search ranking, Best Coast Rentals wants to link to complimentary vacation rental sites – with the agreement that these same sites will link to Best Coast Rentals. This arrangement is referred to as a “link exchange”. Link exchanges are popular ways to boost “back links” – a key ingredient to Google’s Page Rank algorithm – however, link exchanges have their pitfalls.

Be Aware of BlackHats!!

As the market began to understand the importance of back links, so did the number of people attempting to “game” search engines by including all kinds of irrelevant links from other sites. Soon Google began to identify “link farms” – irrelevant sites linking to thousands of unrelated sites. This helped inflate the perceived popularity of participating sites within search engine rankings, but did not improve the relevance of Google’s search results. People attempting this strategy were label “black hats”.

Through the maturation of the Search industry, these techniques have been exposed and Search leaders, such as Google and Yahoo, developed techniques to effectively identify link farms and now ding participating websites effectively lowering their search ranking.

Why Best Coast Rentals is Legitimate

Best Coast Rentals link exchange program is not a black hat offer. Best Coast Rentals is only interested in linking to complimentary vacation rental sites and its Travel Links page not only links to participating websites, but also includes a blurb about the site. By including this additional content Best Coast Rentals maintains ‘relevancy’ – the golden word at Google.

FlipKey encourages Search collaboration within the vacation rental industry, but we advise participating companies to be careful to avoid Black Hat status. Focus on relevant and quality sites and you should be ok. If a participating site appears as a link farm, you will want to request that your website be removed from the site.

Two weeks ago, VibeAgent.com launched as a new player in the social travel space long-dominated by TripAdvisor.com. VibeAgent has an interesting concept: emphasize the “social” in social travel, with a clean user-interface and meaty social-networking elements.

The Basics of VibeAgent
Similar to TripAdvisor, VibeAgent collects user reviews of hotels. However the main difference is that VibeAgent attempts to customize recommendations based on “who you are”. VibeAgent customizes search results based on your profile, preferences and tagged attributes of hotels (e.g. hip, modern, boutique). On VibeAgent all reviews are not equally relevant. If you are a twenty-something adventure traveler, you value younger reviews over empty-nesters looking for a quiet retreat. VibeAgent’s mission is to customize its recommendations by matching your travel search with the opinions of similar travelers.

Critical Mass – The Challenge of All Social Offerings
In order to provide users with relevant recommendations, VibeAgent will need a critical mass of guest reviews. It doesn’t help that this squarely competes against TripAdvisor, a company that has amassed an incredible amount of guest information. As an example I searched for hotels and recommendations in Miami, FL. I personalized my search on VibeAgent for “lively” “hip” hotel results, because that’s the kind of guy I am. VibeAgent returned a message that there were 417 hotels in the Miami area, but none that matched my criteria. Redoing the search without the personalization returned the same message, i.e. no availability. Skipping this and searching for reviews on Miami hotels, brought back 10 results.

Over at TripAdvisor I searched the same dates and was presented with 52 results based on TripAdvisor’s popularity index. Even deep into the search results, hotels were presented with over 70 guest reviews each.

Vacation Rentals Need Not Apply

Conceptually, VibeAgent is an interesting offering, but it will only be as useful as the social data it collects. Going head to head with TripAdvisor is a bold endeavor and we look forward to observing their progress.

In addition, we would love to see a broad social travel network begin accommodating vacation rentals. Similar to TripAdvisor, VibeAgent’s platform is not designed to include vacation rentals and as a result, guests are not being shown the breadth of their lodging options. Vacation rentals represent 8% of the lodging market and with the introduction of new marketing services in 2008 (such as FlipKey) we hope to see that increase to 10% by 2009.