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VRBO. HomeAway. Chances are, if you are a property manager at a destination resort, or just travel a fair amount, you’ve encountered these by-owner rental websites. They have garnered a significant share of the destination lodging market, and appear destined to gain more. Do they represent a threat or boon to resorts?

The answer, it seems, depends on where you’re located, how your lodging program is structured, and how you view your customers.

While VRBO and other by-owner sites have been around for more than a decade, they have gained clout since 2006, when Texan Brian Sharples began acquiring the various sites that entrepreneurs had launched. Sharples consolidated them under the HomeAway banner and organized them into two primary sites: VRBO, where the listings remain primarily by-owner, and HomeAway, where the individual listings are handled mostly by small, independent property managers. HomeAway’s total listings now number more than 540,000 worldwide, and HomeAway has become a $125 million company.

A good number of HomeAway’s listings are at winter resorts. VRBO, for example, lists about 500 properties at Keystone; HomeAway, about 765—although a quick check shows some duplication, which suggests the 550,000 figure overstates the sites’ total number of unique properties.

Are all these by-owner listings cutting into resorts’ property management and lodging reservations activities? Yes, say some. They hold prices down, and take business from central reservations. Resorts and some of the independent managers of by-owner properties agree that resorts are discounting rates up to 40 percent to keep or gain business in the current environment.

Yet a surprising number of resorts say that the impact of by-owner rentals is minimal. And a few say they may actually increase overall resort visits.

And everyone agrees they are here to stay.


CEN RES VS. D-I-Y
That’s because by-owner rentals appeal to one type of traveler, and central reservations to a second type. The latter customer wants one-stop shopping, a simple, fast reservation process. These types enjoy all the usual concierge services, and lift-and-lodging packages make their lives easy. The other type of customer enjoys à la carte shopping, loves to explore each and every aspect of the vacation, and is willing to take days to make a decision, seeking to get the absolutely most perfect solution.

A similar split exists among vacation property owners. Resort property managers typically point to the resort’s marketing support, housekeeping, main- tenance, and overall management services as reasons that owners prefer to stick with their traditional arrangements. By managing all aspects of the lodging operation, traditional managers make it extremely easy on the property owner.

But for many home and condo owners, the lure of much-reduced management fees offsets the resort-managed advantages. Owners can typically arrange for management services for about 25 percent of the total rental fee, compared to what often approaches 50% through a resort lodging association. The average VRBO or HomeAway owner nets 75 to 100 percent of a unit’s carrying costs; nearly 40 percent cover all their costs. For cash-strapped owners, do-it-yourself management can be a life-saver.

For guests, there’s value in being able to view several photos of the specific rental options they have, and in booking the exact property they want. Some also enjoy the social aspect of talking to and coming to know the property owner. It makes it a more personal experience. That’s why some of the resort property managers we interviewed have themselves rented via VRBO, and are fans of the service.

As for lift tickets and other costs, private owners and their managers are often diligent about informing guests of discount ticket offers, Liftopia, gear rental discounts, and restaurant deals. Those, coupled with discounted lodging rates, can keep by-owner renting economical.

And, as many millions of Super Bowl fans know, HomeAway provides its own marketing support. The company has aired a 30-second commercial during the Super Bowl in each of the past two years, and HomeAway spokeswoman Jaime Dito says they have driven a huge response. Thanks to the websites, these properties practically rent themselves.


HOW THE SITES WORK
For the uninitiated, the by-owner sites make it easy to search a single resort. VRBO has recently added a “neighborhood” or property filter that allows would-be renters to zero in on where they want to stay if they already know a resort. Otherwise, site visitors can search by number of bedrooms and price. Both VRBO and HomeAway could be easier to navigate and offer better maps, but neither has been pressed to do so. The sites have been successful enough that HomeAway has not seen a need to vastly enhance either of its major sites.

The strengths of the sites are the photos of each unit, the lengthy property descriptions, and on VRBO, the owner’s profiles and comments. These help making renting on VRBO much more of a social media experience.

From an e-commerce standpoint, “VRBO has a great tool,” one resort marketer says. “Certainly, how they list properties, how they monetize it, there are probably very good lessons for us.”

Could areas allow visitors to book a specific unit, as VRBO and HomeAway do? Not the way most are currently set up. It would make inventory control far more difficult. Some resorts currently charge a premium if visitors wish to reserve a specific unit for that reason.

“We’re all working with legacy systems,” says one resort spokesperson. “It would require a huge investment to update them. Plus, we are operating companies first, not technology companies.”


THE EASTERN VIEW
Among resorts there is something of a regional split in attitudes toward VRBO and HomeAway, and that stems from differences in the housing stock. In Eastern resorts like Stowe and Okemo, where there are few large condo complexes, many of the VRBO listings are for off-mountain properties, and include a high percentage of homes rather than condos. Some of these are offered by the month or even the season.

These properties were never part of the resort association, and VRBO has simply made it easier for groups and seasonal renters to find places to rent. For the areas, that’s a plus for business.

Charlie Dickerman of Okemo admits that, when planning the family’s big vacations, his wife will sit with her laptop and review condo after condo to find the perfect vacation accommodation. For one-week stays, it’s great, he says.

At most Eastern resorts like Okemo, though, visits tend to be multiple-night, but not weeklong. For shorter stays, it’s not worth the time it takes to search on VRBO, he says. Plus, many Okemo condo owners use their places regularly; that’s what the area encourages. “You have to be a true destination to be in VRBO. And we’re not, really,” he says. The area’s hospitality group has not seen any appreciable impact from VRBO.

Ed Stahl, executive director of the Stowe Area Association, doesn’t see VRBO as competition, either, for a similar reason. “VRBO listings are primarily individually-owned properties, and we wouldn’t be booking them even if these services didn’t exist,” he says. “We serve the large condos as well as lodges and B&Bs.”

The by-owner websites, he says, are “not a major competitor for our lodging situation. Visitors hunt and find the accommodations that work best for them.” The sites are “positive in that they provide housing” and expand the visitor base, he adds.

“Someone who rents a house has different considerations than someone who rents a hotel room,” he notes. And he should know: he has a condo of his own that he rents on HomeAway.com.


THE WESTERN VIEW
At Western resorts with larger condo properties, many of which function as hotels without services, the VRBO model has taken a bigger bite from the traditional resort association business. But even then, some marketers see the HomeAway sites as simply offering a different distribution channel, and one that helps keep the resort full. Everyone agrees that having heads in beds is what makes the resort healthy overall. But some areas are more concerned about missing out on a full share of the guest revenue stream than others.

“Any resort that has property management is clearly being impacted,” says one area spokesman. “It’s pressuring prices. It limits the ADR (average daily rate) because there is so much inventory available at a reduced rate. It’s harder to get people to pay close to the rack rate.”

At Mammoth, Bob Peckenpaugh, vice president of hospitality, oversees four condo-hotels. He’s in competition with VRBO, a competition that’s complicated by the hotel aspect of the package. Mammoth hospitality manages most of the units in each property, and operates the front desk, housekeeping, and transportation. Independent property managers and individual owners manage the other units.

Issues can arise when VRBO renters discover that some services, such as housekeeping and routine maintenance services, are not available to them through the front desk. Peckenpaugh sees this as a chance to upsell guests to Mammoth’s program for future visits.

“We talk to the guests one on one, explain the situation, and often convert them for future stays. We’re trying to put the best experience out there, so we do our best to accommodate VRBO guests.

“Our aim is, let’s make it a great Mammoth experience, and show them the difference our program makes. We’ll help VRBO guests find a way to get things done if they’re at a complete loss. That’s where the sales conversion takes place.”

And in the long run, many owners return to the resort program, too, Peckenpaugh says. Many find that getting a tax license, remitting taxes, and being responsible for maintenance and cleaning create too much of a headache.

“But this is a whole new distribution channel. This is a new model, one that gives the owner an advantage from a pricing standpoint. We’ve had to pay attention to it,” he says.

And learn from it. Mammoth is building its own “management company without walls” for luxury home rentals. It originally listed these on HomeAway, but Mammoth hopes to create a premium service for well-heeled visitors and include a high-service component.

“I don’t think any of these channels is going to disappear,” says Peckenpaugh. “By-owner rental just serves a different niche of people. Same with online travel reservation companies, like Travelocity and Expedia. People want to travel and will find ways to do it, in a style they like.”

Taylor Middleton, general manager of Big Sky, Mont., is more bullish. “I love VRBO, it’s good for the industry. Just let the buyer beware. As a renter, you don’t have the same quality assurance you have with a central reservations system.”

But that’s a relatively minor issue in the big picture, he notes. “VRBO has been transformational, like so much of electronic opportunity. It’s so empowering for a person who’s going somewhere. In my family, we use it as one of our tools when we’re searching for vacations.”

Big Sky has embraced VRBO, too. “As a resort operator with central reservations, we use VRBO to market our service,” he says. “We list a smattering of units in several properties and have buyers who purchase us there.

“As a ski area operator, I am so bullish because it puts heads in beds. We have more visitors coming to our resort than we would otherwise.”

But doesn’t it cut into profits? “Competition is bad or good, depending on how you look at it,” Middleton says. “It has caused us to be more rate-sensitive, and push our rates down. It’s been good for customers, and that’s good for everybody at the end of the day.”

He points out that VRBO expands the listings of available accommodations, and thereby helps bring more guests to Big Sky: “There are so many owners who don’t fit the formula for a central reservations mechanism. They might not be ski-in, ski-out, or within a few minutes of a lift, say. Or they might run up against a qualitative limitation. VRBO makes it easy for them to market on an individual basis. And that’s good for resort communities and ski areas.”

Plus, everyone’s going online to find bargains. “VRBO is a search engine,” Middleton says. “It’s the Google of accommodations. And being the Google, I want to be there. As a central reservations operator, I’d be crazy not to be there.”