airbnb has a real problem: VRBO. VRBO is routinely cheaper than airbnb, has been around longer, and doesn't have the legal issues, and has the support of the baby boomers. Good luck, airbnb.
$150M a year in losses. Sounds great! My parents generation, which maybe also has something to do with living in the midwest, has been using VRBO and it's affiliates longer than airbnb has existed outside of silicon valley, and are reluctant to change.
They're also the property owners right now, relative to the millennials.
$150M is a large number, but so is $1b. At that burn rate they have over six years of runway.
It may be that for every $100M they spend on acquisition, they make $200M over three years in sales, in which case it would make sense to burn cash now to capture the market. They could also be going all LivingSocial: setting money on fire with no path to unicorn profitability.
Anyway, no real way to know without the inside financials.
Have you ever tried to rent from VRBO? I did a couple years ago and have never been back.
Approx 30 calls, 6 or 7 responded, a couple of those hadn't kept their calendars up-to-date, and only 2 actually were available and matched the info on the site. I was doing my best to spend $6k on a ski vacation and vrbo just didn't want to cooperate. The whole thing was a giant waste of time.
I sure have. Take a look at Lake Tahoe's VRBO/homeaway listings. They're routinely cheaper on VRBO than airbnb for comparable properties, and it works fine.
VRBO and HomeAway tend to be better for higher-end properties. People that spend a lot of money want to talk to the owners prior to booking and VRBO/HomeAway facilitates that. People that own high end properties want to talk to the renters too. They also have custom rental agreements baked in to the booking process. I rent a 6BR and everyone wants to get a better deal. That's part of the dance. I tend to favor last minute / higher yield since I have a solid product and an automated home.
AirBnB prevents pre-booking contact because their model is different. They make money on bookings, mostly from the consumer. For HomeAway I pay them ~$1600/yr and get featured placement and no booking fees. That is actually a small marketing expense for my property so the consumer can actually pay quite a bit less by booking my property on VRBO instead of AirBnB which charges the consumer 6-12%.
AirBnB has the problem of being seen as the platform for renting shared space. I think they will do a good job branding as a place for entire home rentals but that may take some time with the older crowd. They have a good renter review system which doesn't exist on VRBO. They are prioritizing hosts that respond quickly because they know that in order to take real share from hotels/resorts and HomeAway/VRBO they will need to provide a better booking experience and also excel at last minute bookings. HA/VRBO doesn't have a lot of checks in place to ensure the consumer receives adequate service and this is mostly due to their chosen business model.
I don't know how this will shake out in full but as an owner, you should be on both. Expedia bought HomeAway so I think that is huge for them because they could launch a really compelling reward platform and provide owners more distribution. I would bet AirBnB would get scooped up by someone as well or finance a strategic acquisition of their own.
Once business travel falls to AirBnb/HA/VRBO due to incentivized rewards programs, hotels will be extremely scared, esp since most are franchises who are losing power. This hasn't happened yet. They're telling the story that AirBnB/VRBO has simply provided more room-nights that wouldn't have happened without them but I don't buy it.
Regardless, there is plenty of space for two heavyweights and I'm bullish on both.
VRBO is actually starting to copy Airbnb's pricing model because they're losing. It has worse legal issues in many areas because it is outright short term rentals instead of hosted rentals. Additionally, the response rate and speed is much worse than Airbnb which is all that matters to most baby boomer users. My dad gets frustrated as soon as instant booking isn't available like a hotel room
what's the pricing model they're copying, exactly? you mean the pricing model that airbnb copied from existing hotel chains (variable pricing?). very unique and innovative.
