Thursday, May 9, 2013

VR Owners Cautiously Exploring AirBnB

There is always a frank discussion going on that the Yahoo vacation rental owners group about issues that VR owners face when dealing with guests, cleaners and the growing vacation rental service industry (listing sites, etc.).

Last week the group turned its attention to the viability of what AirBnB offers for the full time vacation rental owner, ie., those of us to attempt to rent out our homes as much as possible and run our VR operations more like a business than a hobby.

There was no shortage of opinions and concerns.  Here are a few that were repeated by several owners:
  • While many VR listing sites charge an annual fee for the privilege of having your property listed, AirBnB charges no such fee, but charges both the guest and the owner a fee when someone books a property.  Some owners don't like the "pay for the booking" revenue model.
  • AirBnB forces all communications between the owner and the potential guest to go through its web site, in order to maintain control over the booking process so it can collect its booking fees.  As a result the potential guest never gets access to much of the information that an owner would normally provide to a potential guest.  Some owners feel that this is unfair to the guest and interferes with the owner's ability to select the guests that they want.
  • AirBnB attempts to dictate important elements of the rental relationship, taking control of the cancellation terms, the payment schedule and other things that can be important to a VR owner.
I was skeptical about AirBnB at first, and even more skeptical when I looked into signing up and found that their Cancellation Policy options were very limited, totally out of sync with my own policies, and did little to protect me from last minute cancellations that could cost me a few thousand dollars of revenues.

Then I decided that I should try AirBnB with my 3 bedroom home, which is harder to rent than my smaller, less expensive home.  What did I have to lose? A few additional bookings each year on the larger more expensive home would be well worth the set-up time, the compromised cancellation policy, and the small per-booking fees I would have to pay.

I got a few inquiries, but nothing really happened for the better part of a year. Then an occasional booking actually consummated. So far I've had 3 AirBnB bookings on this home, and one that hasn't come yet, and there hasn't been any problem. I believe I have filled in some open dates that I would otherwise not have filled in. 

I agree with comments by several VR owners that AirBnB short-changes the guest, by intentionally interfering with the amount of information they can get from the rental home owner about the property they are thinking of renting. I also agree that their policies interfere with my ability to carefully select my guests.  

Anything that interferes with my ability to select guests carefully also makes it harder for me to be sure my guests won't violate local laws that regulate my rentals, or have a situation that disturbs full-time residents in the area of my homes. AirBnB's intentional interference is understandable, given the way they make their money, but it is a serious flaw, and one that could be overcome by creative thinkers, without compromising their revenue model.

Another serious flaw continues to be the inability to accommodate owner rental policies, in favor of a rigid set of limited policies dictated by AirBnB. Some owner rental policies are well thought out, or are necessary for particular properties, and AirBnB rental policy options can and should be more flexible.

Perhaps the biggest problem is AirBnB's diverse customer base.  Many AirBnB "property owners" are people with an extra room in their home to rent or people who rent their home out when they are out of town -- while others are full time professional VR home rental owners. The same set of AirBnB policies doesn't work well for both groups, but AirBnB doesn't seem to recognize that the owner who rents a dwelling on a full time basis faces different management issues than someone who rents out a room occasionally.

I don't have a problem with reasonable per-booking charges, and actually see this as an advantage when listing with companies that don't provide a large portion of my bookings. For companies that provide a large portion of my bookings, I prefer the annual charge instead of the per-booking charge, for obvious reasons.

I believe that the per-booking revenue model will become the norm over the next few years. Homeaway.Com is already moving in that direction, its an easier sell for the listing site, and an easier buy for many VR owners. 
As long as the per-booking charges are reasonable, this change will be tolerable, if not advantageous. If listing site owners or their investors get greedy and start upping the fees, then it will be up to VR owners to find or create alternatives to this revenue model.

Overall, I think that AirBnB offers something that most other listing sites don't offer yet -- they are bridging the gap between the traditional listing site model and the sharing economy
.  For those of us who rent our homes year-round, AirBnB offers important opportunities to fill vacant dates, but is unlikely to be seen as a primary source of bookings.  As they perfect their operations and build their understanding of the needs of those renting their homes year-round, this may change.

Doug Coates

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