ArniePrior to the crippling of credit markets in the last 12 months, it appeared that the hospitality segment was morphing into a subset of the real estate industry. Scarcely a four- or five-star hotel was built or renovated in the last six years without a significant portion emerging as condos. In that easy -- in hindsight, too easy -- lending environment, condo sales reduced risk and accelerated returns to investors.

The subsequent tightening of credit has put many hotel newbuilds on hold as developers scramble to find financing. But it turns out that the future of hotel development could also be complicated by the past financing model and, ironically, by a separate, parallel trend in real estate.

The condos that were built into hotels might just end up as inventory for an alternative accommodations system, and the impact of this alternative could have wide and deep consequences, not just for hoteliers but for the entire travel industry.

Consider these statistics from the National Association of Realtors: In 2005, 13% of people who bought a second home did so with the intention of renting it to others. In 2006, that number jumped to 18%, an increase of almost 50%. And just one year later, the portion leaped again, to 25%.

To be sure, many of these purchasers plan to rent to relatively stable tenants with annual leases. But not all will, and in 2006 this rising trend in the second-home market caught the eyes of entrepreneurs and investors willing to bet that a good portion of these buyers intended to rent their second homes to vacationers.

That year, a startup called HomeAway announced its desire to become the global clearinghouse for independently owned vacation rentals and quickly raised more than $160 million from five venture firms.

It used the money to consolidate the successful, but fragmented, regional websites that provide direct links between rental owners and travelers. After just two years, HomeAway claims 400 employees, located at its headquarters in Austin, Texas, and in satellite offices in Virginia, New York, Colorado, the U.K., France and Germany.

Interestingly, it wasn't until this year that HomeAway realized it was part of the travel industry. (It thought it was part of the real estate industry.) It will be making its official industry debut at the PhoCusWright Travel Innovation Summit in Hollywood, Calif., in November when HomeAway founder and CEO Brian Sharples presents a rebuttal to a Wyndham presentation on the topic of vacation rentals.

Most traditional hoteliers already have their own vacation sales and rental programs. But the competition they're facing from a Web-enabled, HomeAway-enabled public is not unlike the competition travel agents face from consumers who turn to fellow travelers on the Web for advice, then book vacations directly with suppliers.

In the end, it is but another variation of the Internet-powered megatrend that is eroding established, centralized distribution systems. By providing a means of distribution to amateur hoteliers (i.e., second-home buyers), HomeAway not only potentially disrupts the traditional hospitality industry but the broader travel industry as well, cutting traditional travel agents out of the equation and providing inventory that's competitive with tour operators' offerings.

Three announcements that crossed my desk in August underscored the potential scale of this disruption. First, the Hawaii chapter of the American Resort Development Association reported that in the second quarter on Maui, timeshare occupancy rates (84.7%) outperformed hotel occupancy rates (66.9%). On the Big Island, the situation was even more dramatic: Timeshare occupancies of 86.6% topped anemic hotel occupancy rates of 58.1%.

Based on advance bookings, the situation will tilt even more in favor of timeshares in Q3, when timeshare occupancy is expected to increase to 93.9% on Maui. Though there are now only 7,690 timeshare units in the state (about 10% of the room inventory), 5,300 more units are in the pipeline.

To be sure, there is a difference between timeshares, whose distribution system is mature and still primarily controlled by traditional industry players, and the 118,000 independent second-home owners who list with HomeAway. Part of the threat that these independents pose for the establishment is that unlike the pros, they do not employ sophisticated yield management systems to ensure that they'll get the highest rates they can. The result will be to pull down rates in markets where there are significant vacation rentals.

HomeAway doesn't have a booking engine; it is more akin to classified advertising. Spokeswoman Eileen Buesing said it had no travel agent initiative in the works. Given its Web platform, should it decide to work with agencies, it's likely that it would hook up with an online travel agency, as Zonder, a competitor, did last month when it announced a partnership with Orbitz.

The third announcement I saw related to vacation homes revealed that TripAdvisor, too, is getting into the act. Last month it acquired a majority stake in Flipkey.com, which provides information, reviews and contact information for vacation rentals.

Not content with listing only second homes, HomeAway's Buesing said there was even a market for renting primary residences during special events. Citing her hometown's Austin City Limits Festival, held annually in Zilker Park, she noted, "People living near Zilker could make $1,400 in a week just by staying with friends and renting out their house on HomeAway."

These days, apparently everyone's a hotelier. Not long ago, it was only travel agents who worried about "bypass." Increasingly, the entire travel industry must look over its shoulder and examine its positioning vis-a-vis companies connecting consumers directly to travel products.

Email Arnie Weissmann at [email protected].

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