The Blog

Recent market-share reports indicate Google accounts for 68% of all search queries. We admit that Google is pretty darn good at organizing the web and helping us find “stuff.” However, we would like to highlight that there are alternative search engines that offer useful tools that you should consider taking advantage of.

Specifically, we would like to highlight Ask.com. Ask offers a graphically-heavy search service that goes beyond Google in several ways. Most relevant to this article is Ask’s recent inclusion of statistics in its search results. Similar to Google, Ask applies world-class search technology to help you find what you are looking for. However, Ask takes it one step further and augments its results with additional pieces of information.

Vacation Rental Example:

User: Jerry – a property manager in the Atlantic Beach region of North Carolina

Case: Jerry knows Search Rankings are critical to attract vacation rental guests, but he also knows that the overall traffic a site generates is more indicative of a website’s online marketing effectiveness.

Jerry goes to ask.com and enters “Atlantic beach vacation rentals”. It’s a general and broad search query for his area, but will help him quickly assess the competitive landscape.

Jerry sees that Twiddy.com, BlueWaterGMAC.com, villas2000.com and nccoastvacationrentals.com represent the top four results. Jerry knows that ranking high in search results doesn’t necessarily mean your site attracts traffic. For instance, villa2000.com’s headline reads “Florida Villas and Florida Vacation Rentals”. Jerry really doubts any one looking to go to North Carolina is going to visit this site despite the high ranking.

To better analyze the sites, Jerry scrolls over the binoculars icon and then clicks the ‘Statistics” tab.

Jerry quickly sees that Twiddy not only ranks high for the search term, but also attracts significant traffic. In January over 70K people checked out Twiddy.com. Jerry confirms Twiddy has an effective web presence. A similar ‘binocular view’ of villas2000.com confirms Jerry’s suspicion – only 10K people visit villas2000.com.

Jerry then performs the same quick analysis on BlueWaterGMAC.com and sees that BlueWater attracted over 50K visitors in May and July, but now trails Twiddy by 2x.

Finally, Jerry takes a look at nccoastvacationrentals.com. Although the site ranked 4th in the search results Jerry notices few people visit the site.

By using Ask, Jerry was able to get a better sense of not only how his competitors ranked in Search, but he was also able to determine the overall popularity of the site. To get a more comprehensive sense of the competitive landscape, Jerry entered in a number of different terms (“Atlantic beach nc rentals”, “beach rentals Atlantic beach”, etc.) to discover and analyze the breadth of companies competing for consumer attention in his market.

**Note: The statistics provided on Ask.com are provided by Compete.com. Traffic metrics are estimates based on Compete’s domestic click-stream panel. Click here to read more about how Compete.com estimates website traffic.

Compete, Inc. has been around for 7 years, but Compete’s Consumer-focused product, compete.com, is celebrating its first birthday! In just one year since TJ and myself launched compete.com, it has grown to support the business decisions of 500,000 unique visitors a month. In fact, as of September it has officially surpassed Alexa as the largest metrics service in the world:

To the right you will see a breakdown of the annual achievements of the service, as featured on the Compete Blog.
Although TJ and I have moved on to tackle new challenges, we remain enthusiastic about the value of Compete.com’s free services and we continue to advise the Vacation Rental Industry to leverage Compete’s data to help you with your web presence.

We also recommend you try out Compete’s new Search Analytics product. It is tailor-made for small businesses and represents the most cost-effective way to help promote your Rental Manager web sites via Search Engine Marketing (SEM).

Last week I wrote about the value of keyless entry systems. The analysis highlighted the pros and cons of enabling owners to go keyless. The main con cited by industry sources tends to center on the disintermediation of property managers as the point of key exchange. The basic conclusion is, “keyless entry is one more reason to incentivize owners to migrate to independent management”.

Although this is a respectable concern, we wanted to highlight data points that suggest keyless entry will not motivate rent-by-owner migration.

In a recent FlipKey study, we surveyed 22 owners who currently use property managers. The sample size is limiting, but provides some solid directional findings in their motivations to use a property manager.

Key findings:

• The primary value owners see in property management is convenience. Property management allows the owner to effortlessly collect additional income, without having to worry about marketing, maintenance or cleaning logistics.
• Key exchange is a secondary motivation.
• Focusing your service messaging on convenience is the most effective message. If enabling your owners to become ‘keyless’ supports that message, you can position it as an added benefit.

In June 2007, FlipKey conducted a survey of 277 vacation renters, owners and property managers to evaluate the current state of the market. In partnership with Compete, Inc’s behavioral targeted survey panel of 2M consumers, FlipKey contacted individuals who had recently visited large vacation rental listing services as well as owners/managers actively managing vacation rental properties.

FlipKey is happy to report that the market is vibrant, growing and economically attractive. However, we also identified a number of gaps that have not been addressed by existing logistical and marketing solutions, which are hindering the realization of this industry’s full potential.

• Despite numerous vacation rental listings services, property managers continue to seek effective and economical guest acquisition solutions
• Market growth is handicapped by the lack of reputation transparency between guests and properties/owners
• Many travelers seeking rental accommodations are defecting to traditional hotel lodging services due to the frustration of identifying available and reputable properties

FlipKey has made the report free through its homepage. Click here to request a free copy.

Google Trends (trends.google.com) is a fun and useful way to keep tabs on the search volume of just about anything. Enter a term into the search box and see a graph of the term’s search volume since 2004. The real value comes when you compare two or more terms in the same graph - this provides a great view into the relative popularity of the requested terms.

The ubiquitous example in Boston is “red sox, yankees” - as you can see the two graph lines hold very close except in October 2004 when the Sox won the World Series.

However, this site is about vacation rentals, so we will spare you from our obsession of Red Sox nation.

What is more popular, vacation homes or vacation condos?

Google Trends: “vacation rental” vs “vacation home” vs “vacation condo”

As you can see, “vacation home” outpaces “vacation condo” by an approximately 2-1 margin. The generic “vacation rental” term makes a good baseline to compare the relative popularity of “vacation home” and “vacation condo”.

What popular vacation destination is the most searched for?

Google Trends: “outer banks” vs “cape cod” vs “lake tahoe” vs “vail” vs “myrtle beach”

A bit of an upset here - I would not have guessed “outer banks” to come in dead last. Myrtle takes the crown with the Cape coming in a close second.

How big are the large vacation rental specific sites compared to the general purpose travel sites?

Google Trends: “vrbo” vs “homeaway” vs “orbitz” vs “expedia” vs “travelocity”

Unsurprisingly, traditional travel sites like Expedia and Travelocity have established a clear brand presence compared to vacation rental portals.

While all of the above data is perfectly valid, it doesn’t give you much more than a crude directional metric. We suggest you use Google Trends as a fun exploratory tool, but avoid using it for anything beyond “oh, that’s interesting” based analysis.

FlipKey conducted a survey of 177 people who had recently evaluated vacation rental homes online. The results indicated that vacation home rental conversion is ~60%. Many people either chose to stay at a hotel or Bed & Breakfast, or they simply couldn’t find any type of accommodation that met their needs.

18 of our respondents indicated they were looking for a vacation home rental, but ultimately chose to stay at a more traditional venue (hotel or B&B). The primary cause of this defection centered on the difficulty of locating and booking an ideal property. 50% stated they had trouble finding an available unit and 60% were frustrated with the lack of date flexibility. The sentiment of those that were unable to find any accommodation (29%) followed a similar pattern.

These findings indicate a lack of central inventory search within the vacation rental market. Although HomeAway has consolidated much of the rent-by-owner listing services, the lack of efficient network search is frustrating users.

The lack of central inventory is challenging the full potential of the vacation rental marketplace. Luckily consumers have a robust appetite to stay in a vacation rental vs. a hotel, but we need to help them find the right properties to more efficiently increase occupancy rates.

FlipKey conducted an extensive study among vacationers, property managers and vacation home owners and will be releasing the results at the end of August. If you are interested, please contact us. We will also announce the study on the blog when it becomes available, so stay tuned!

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.

We have written about the fragmentation of the Vacation Rental market and HomeAway is the first entrant that is aggressively creating a mega-listing property. Although you may have never heard of HomeAway.com, you have probably heard of one, if not several of its portfolio sites – VRBO.com, CyberRentals.com, VacationRentals.com, TripHomes.com, and a handful of other properties.

Over the last 18 months HomeAway has been acquiring the largest vacation listing sites on the web. To illustrate HomeAway’s approach, we conducted various vacation home related searches on Google, identified 30 unique sites, and then measured the traffic using Compete.com. Notice that 7 of the top 11 sites, based on visitor traffic, are owned by HomeAway.

Consolidating these large listing services wasn’t cheap. HomeAway has raised over $200M in venture funding and continues to raise more, which begs the question – what’s their plan? World domination?

My guess is that good business is at the root of their plan. Here is my back-of-the-napkin logic:

• 600,000 people renting their homes in the U.S. Over 2M worldwide.
• Assume through acquisitions and general marketing HomeAway can build a portfolio of sites representing 300,000 properties (<15% of all vacation homes)
• HomeAway upgrades all listers to it’s $299 package, which provides listings across all of its core properties
• HomeAway yields annual revenues of $89.7MM
• The cost of hosting property listings is basically $0
• By tying in the properties to each other HomeAway can bolster natural search results (ie. free marketing)
• Because the properties are working with each other and not against each other, HomeAway can reduce competition for paid search terms – again, saving money

Net result = Increase average listing fees by 50% and decrease marketing costs.

Not a bad business plan, right? HomeAway’s size will make it defensible… and the economies of scale are obvious. With that said, there is a downside to the owner / property manager community that I will discuss in my next rambling.

I wanted to take this first post to talk about the Vacation Rental industry, the motivation behind FlipKey and future plans for our blog. To begin, I wanted to jump start the conversation with some interesting data points. According to National Association of Realtors:

• In 2005, 3.3M new and existing home sales were secondary homes.
• In the U.S., in total, there are an estimated 6.5M secondary homes (i.e. vacation homes).
• The average vacation home owner will only spend 39 nights in their secondary home each year. (That is not a typo)

The problem… Less than 10% of secondary home owners are actively renting their properties when unoccupied.

The graph below shows the volume of people that visit VRBO.com on a monthly basis compared to the number of units listed on VRBO.

VRBO represents one of, if not the, largest online vacation rental listing services. The discrepancy between interested travelers and available homes illustrates the immediate opportunity for people to begin sharing and monetizing their homes.

Call me crazy, but this appears to be a market gap that home owners should be celebrating.

Personally realizing the opportunity cost of not renting

A year ago I purchased my first home in downtown Boston. I love my place - a nice two bedroom right in the heart of the city. However, the condo came at a cost and my first mortgage bill was a bit of a reality check.

A few weeks after I purchased my home I had to leave town on an extended business trip. I sat on my patio and calculated that my condo cost was ~$100/day, which meant the opportunity cost of me being on the road for two weeks was nearly $1,500. $1,500!

My mind started wandering:

“What if I could rent my unit while I was gone?”

“I bet I could get $150/night and not only finance my mortgage, but also make some extra cash on the side.”

“Is anyone doing this?”

I went online and discovered hundreds of thousands of people were doing this… with their vacation homes. It made sense…

I thought my two week business trip was costing me money. The secondary home owners have a much larger opportunity – their places sit unused 46 weeks/year. I assumed there has to be someone out there helping people realize this opportunity.

The Vacation Rental Industry

As I suspected there where a lot of people trying to help people rent their homes. After a few hours of casual browsing I discovered the following:

• There are over 1,000 sites dedicated to helping people list their homes for short-term rentals
• The majority of sites are small sites owned and operated by vacation rental property managers
• There are about 10 large listing services that have tens of thousands of listings

So this appeared to be a mature industry, but as I peeled back the layers there seemed to be a major gap.

• At best, only 600K people are renting their vacation homes. This means vacation rental participation is under 10% in the U.S.
• The demand for vacation rental homes FAR exceeds the supply of actual units.
• The fragmentation of online listings presents a very difficult environment for guests to evaluate the reputation, availability, and details of vacation homes.

So the opportunity seemed clear, “let’s figure out a way to get more people to rent their homes and help guests find the right home.”

The FlipKey Blog

FlipKey is developing its core service and will launch publicly this coming Fall. In the interim, we would like to share our insights and opinions with the larger vacation rental community. The three founders of FlipKey are conducting a tremendous amount of research, coding into the wee hours of the night, and pondering the future of the vacation rental market. We do not believe in information firewalls, so we are excited to share our thoughts with the community. The vacation rental market is NOT a zero sum game. There is a lot of room for growth and we look forward to helping owners, property managers, guests, and industry vendors capitalize on the market opportunity.