Guests Now Pay a Service Fee to HomeAway

HomeAway promises increased revenues for vacation rental owners, yet many see these changes to the service fee as a threat to owner independence.

Following the takeover by Expedia in December, listing site giant HomeAway is introducing what they describe as a small service fee of up to 10 percent to travelers booking through their site. Corresponding rate reductions have not yet been announced for owner subscriptions or commissions charged on a pay-per-booking basis, though these are under consideration. According to the HomeAway website, traveler charging of the service fee will begin rolling out in February. ‘Travelers will be charged a small percentage of each online booking or payment they make through HomeAway,’ it says.

Service fee dependent on total cost

‘The service fee will vary depending on the total cost of the booking (inclusive of rental amount and cleaning fees and exclusive of taxes and refundable damage deposits) and will be in the range of 4-10 percent. For example, the average rental of $1,600 will have a service fee of approximately $110. ‘The higher the total amount of the booking, the lower overall percentage of the service fee. The service fee is charged through the HomeAway checkout and is paid by credit card. The service fee is only charged on the first payment of a booking.’ Vacation rental owners who use HomeAway will benefit from an increased marketing spend by the company, it says. This year there will be a 50 percent increase in their marketing budget, made possible by the imposition of charges to travelers.

Traveler-friendly features promised

‘It will also enable us to invest more in traveler-friendly features,’ it adds, ‘like mobile functionality, enhanced protections for guests who book through HomeAway’s checkout against things like fraud and double-booked or misrepresented properties, and more.’ Vacation rental owners may worry that the service fee could deter travelers booking with HomeAway’s sites. HomeAway counters this, saying that service fees will not be a ‘meaningful deterrent’. Its own research confirms that travelers are willing to pay these fees, they claim. HomeAway is also giving a strong push to vacation rental owners to adopt online booking. For its subscription owners (as opposed to pay-per-booking owners) it plans to continue offering renewal discounts for subscription listings that offer online booking. And, it says, they are ‘working on’ new discounts based on the amount that an owner uses its online booking service.

Big push towards online booking

The website urges owners: ‘If you have been holding off getting online booking, offer it now to maximize your return on investment.’ For pay-per-booking owners, the plan is to lower commission paid on each booking when the service fee for travelers is rolled out. So if you’re an independent vacation rental owner who wants to retain full control of their own property and bookings, the subscription deal is not so good. You either sign up for HomeAway online booking, allowing you only limited access to your guests’ details, or you accept that you will pay more than those owners who signed up for the service. And, of course, your guests are charged a not insignificant fee for reaching you via HomeAway. That in itself will deter price-sensitive guests.

A threat to owner independence?

Many will see this as another move by a big listing site towards making independent vacation rental owners increasingly dependent on their services. This is something that Homes and Rooms has  looked at in some depth on this blog.  Most recently, we offered tips on choosing a listings site and remaining independent. Take a look too at our piece on who calls the shots?, and at the alternatives to reliance on major listings sites. What should come through clearly is that to remain properly independent and in control of their property rental, owners need their own website to allow payments to be made directly from guests if they so wish. And services that allow them to communicate directly with their guests and gather guest data on which to build their future rental business. These are just some of the essentials Homes and Rooms provide as part of the package to all our subscribers. Essential, if owners wish to keep their independence in a changing vacation rental landscape.