\n \n \n “. concat(self. i18n. t(‘search. voice. recognition_retry’), “\n
Looking at the history of online short-term rentals from the mid-1990s onwards, it’s easy to see how arrogant thinking and missed opportunities have left their mark and influenced the trajectory of the industry.
This is a simple conclusion that can be drawn from Skift’s recently published three-part oral history on short-term rentals, as this topic of missed and missed opportunities permeates the article.
Expedia analyzed vacation rentals from a hotel perspective
In the first component of the series, Expedia founder Rich Barton and HomeAway co-founder Brian Sharples talked about Expedia’s flawed initial technique for vacation rentals and how HomeAway almost embarks on a similar path.
Barton recalled how Expedia acquired vacation rental startup VacationSpot in 2000. Expedia bought the vacation rental aggregator, co-founded through some Microsoft/Expedia alumni, for $82 million in inventory.
However, Expedia’s vision for Vacationspot, as Barton recalled, was to reduce the housing stock for online bookings, just as Expedia was doing for hotels. The challenge for Expedia was that vacation rental home owners were unwilling to cede control of their homes to a third party and corporations that were taking hold in the business, such as VRBO in Colorado and Holiday Rentals in London, employed a style of classified ads that left bookings only between owner and guest.
“I would say we took a bit of an imperfect technique instead of doing it like VRBO did,” Barton said in oral history. “We bought VRBO when we were at VacationSpot. . . sometimes, as well as a bunch of the other types of servers in someone’s closet somewhere in Cincinnati or Steamboat Springs or wherever, essentially running a classified ads website.
Barton said, referring to himself and vacationSpot’s co-founders about the multitude of family ad sites: “We were tech snobs, arrogant techies, who enjoyed software and didn’t seduce us. “
VacationSpot closed several months later when asset owners and managers were no longer looking to be part of the online marketplace strategy. Expedia continued in the most lucrative hospitality industry with commissions of 25% or more.
In 2004, when Brian Sharples and Carl Shepherd co-founded World Vacation Rentals, the forerunner of HomeAway and now Vrbo, owned by Expedia, they had a business plan that also contemplated reservations with parallels to what VacationSpot had tried to do.
But Sharples and Shepherd abandoned that concept when they saw the traction that classified ads or subscription style were having, and after Sharples called Barton and met with him to learn firsthand about what was going on with Expedia and vacation rentals.
“Expedia’s concept was simple: why wouldn’t it function like the hospitality industry?We will take this site and all customers, and transfer them to online booking,” Sharples said. “And they did so, guess what, they lost most of their customers.
HomeAway would move from subscriptions to online bookings a dozen years after Expedia acquired the company in 2015. But in the early years, HomeAway focused on getting vacation rental websites around the world that used the subscription list model.
HomeAway and others have underestimated Airbnb’s threat
HomeAway had Airbnb on its radar from the early days, but underestimated the threat. Shepherd and Chesky developed a friendship and meet and converse to this day.
But like other public or soon-to-go-public companies, HomeAway feared that investors and the Securities and Exchange Commission (SEC) if it tried to win over Airbnb would have to tell them that most Airbnb rentals were illegal in the first place. Airbnb’s losses didn’t bother state-owned companies either.
Of course, this assumes that Airbnb sought to sell, which is probably a dubious proposition.
Sharples did not specify the year, but recalled in Part 1 of the oral history that he addressed the concept of seeking to win Airbnb.
“As Airbnb grew, at one point, investment bankers came to us, I don’t know who it was, saying, ‘Hey, listen. We’re looking at this company [Airbnb]. It’s developing pretty fast. They have. . . ‘I don’t even know what it was like at the time. Maybe they had $25 million in revenue. And they said, “It could be a very smart concept for you to win this. We think you can buy it for $250 million” and I said, ‘Are you crazy?10 times the income? And of course, in those days, other people are doing this kind of thing. it just did.
Jeff Hurst, who most recently served as chief operating officer of the Expedia brands, adding Vrbo, joined HomeAway in 2010 as director of strategy and planning, and recalled in Part II of the oral history how he and some of his colleagues around 2011 didn’t make Airbnb in any meaningful way. threat.
Hurst’s Head of Engagement at McKinsey
“So I did the McKinsey style, and I said we had [HomeAway] an amazing economy because they’re just in shared spaces,” Hurst said in the oral history. “They will be very low ADRs (average daily rates) and very short lengths of stay. And they’re going to have all those regulatory challenges. It wasn’t something we had to pay attention to.
He remembers laughing at himself over the years over the years for the error of judgment, and he wasn’t the only one who didn’t expect or react to Airbnb’s rise.
“We’ve spent several years, I think, caught in a trap: Are we going to get out of Airbnb Airbnb or are we going to be something exclusive?””And I think in the last 3 or 4 years, we (Vrbo) have discovered this unique thing that we are in a way that has given us a lot of momentum. “
For his part, HomeAway co-founder Shepherd said he told investment bankers in the early years that if Airbnb was successful, they could tap into a market, apartments number one, much larger than HomeAway’s vacation home or momentary home market. In this regard, Airbnb has created a completely new market, he added.
Booking Holdings has been more tolerant of threats
Like several executives, Booking Holdings CEO Glenn Fogel said in Part III of the oral history that, in retrospect, the company has previously bet on short-term rentals.
Jon Gray, former Chief Earnings Officer of HomeAway and recently CEO of RVShare, expressed similar sentiments about HomeAway’s system at Skift’s Future of Lodging event in mid-May. Gray said HomeAway has paid more attention to the house’s main stage.
Booking Holdings has been slow to offer number one component apartments due to legal ramifications.
“Brian (Chesky) and I are talking,” Fogel said. Sometimes we are in meetings and we say hello and everything. We’ve talked. Yes. Give credit to this guy. He created a giant company. If I had a time machine, there would be a lot of things I would do differently. I would be willing to tell our investors, and everyone else, that the long term requires us to sacrifice part of our short term. long-term profitability to invest more long-term in this area.
To be more informed, read:
The Final Oral History of Short-Term Rentals, Part I
The Final Oral History of Short-Term Rentals, Part II
The Final Oral History of Short-Term Leases, Part III
Subscribe to Skift newsletters for must-have industry news.