Vrbo targets Airbnb 'Superhosts' as rental competition heats up

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Vrbo [Credit: Sulastri Sulastri/Shutterstock.com]
A VRBO rental property on Hawaii Island. Photo Credit: Courtesy of VRBO

Traveler interest in the vacation rental sector shows little sign of waning as the industry moves through the one-year anniversary of the pandemic and into summer 2021.

The refrain has been heard time and time again over the past 12 months: Rentals, compared to hotels with potentially crowded lobbies, are the preferred choice for travelers looking for socially distanced getaways.

Although some countries are still under lockdown, recent data from AirDNA points to a strong spring and summer travel season in the United States, with a record number of new bookings made in February of this year.

For travel providers, the question then becomes how to grow their supply to meet demand.

Supply, however, is not infinite. And for potential hosts -- say, a second home owner -- concerns over measures such as travel restrictions or stay-at-home orders may cause them hesitation to enter the market.

Meanwhile, for existing hosts, their experience over the past year navigating the influx of cancellations and refunds hasn't always been a positive one.

One way Vrbo is aiming to attract new hosts to its platform is through its newly launched "Fast Track" program, which is designed to help experienced hosts -- and "Superhosts" -- who haven't joined the site yet increase their visibility and earnings.

With Fast Start, hosts who have a review rating of 4.5-plus and who have earned more than $3,000 in the past year receive an elevated position in sort on Vrbo for the first 90 days they're on the platform.

Properties are indicated by a "New to Vrbo" badge that displays their review score based on reviews from other travel sites. While individual reviews are not shown, the scores are provided from the hosts themselves or from data scraped by Vrbo.

The designation is available to individual owners or multi-property accounts, and Vrbo provides dedicated support in getting hosts signed up. Hosts do not have to be exclusive to Vrbo to participate.

Expedia Group-owned Vrbo piloted the Fast Start program with 1,600 hosts in the U.S. and reports that those hosts saw a 25% increase in bookings, a 50% increase in booked nights and a 140% increase in gross booking value.

The program officially launched in the U.S. this week and will roll out globally in the coming months.

"We're trying to address the cold-start problem for new hosts that are joining us that are excited about the Vrbo performance and the Vrbo story that has been a big part of Expedia Group's earnings story over the last few quarters," said Cyril Ranque, president of Expedia Group's Travel Partners Group.

In Q3 of 2020, Expedia Group reported that Vrbo saw both bookings and revenue increase compared to the third quarter of 2019, and in February 2021, Expedia Group CEO Peter Kern said most of the site's bookings were coming direct through Vrbo.com, resulting in the company removing Vrbo from Google's vacation rental metasearch product.

Vrbo said individual property owners who joined the platform in 2020 made an average of almost $6,000 per property, or 50% more than other travel sites.

"I think [Fast Start] resonates with a lot of homeowners, and we want to make sure they get a good experience when they join. We created the program to give them an extra boost and exposure," Ranque said.

Superhost scheme

Fast Start, Ranque said, not only helps hosts earn more, but it also helps Vrbo address supply quality on the platform by enrolling hosts with high review scores.

Somewhat unsubtly, Vrbo said in a release about Fast Start that it's targeting "Superhosts"--the term Airbnb uses to highlight experienced hosts on its site.

"It is intentional," Ranque said of using the word. "We spent a year in the industry trying to help customers and supply partners navigate the challenges of COVID, and I think we've positioned ourselves -- Expedia Group and Vrbo -- as being balanced between the traveler's interest and the host's interest. I think it's a bit different from other players. We got praised for that by the industry."

In March of last year, Vrbo said it encouraged hosts faced with cancellations to provide credits to travelers to redeem when they were able or felt safe to travel again. At the time, almost 95% of Vrbo hosts opted into the program.

The platform also included a "local laws" functionality where hosts can see local laws relevant to them in each region through Vrbo's partner portal Discovery Hub.

Meanwhile, Airbnb faced backlash from its hosts who were displeased at how the company communicated its refund policy. Airbnb apologized and paid $250 million to hosts to help cover cancellation costs. It also made changes to its policy, effective January 1, 2021, which eliminated certain guest protections.

"Our first priority was the safety of our community and we offered all guests full refunds on bookings after the World Health Organization declared a global pandemic. We know this was very difficult for our hosts, many of whom rely on their Airbnb income to make ends meet, and we created a $250 million fund to pay part of hosts' cancellation costs and a $17 million Superhost Fund," an Airbnb spokesperson said in a statement. 

"The simple answer is that nearly everyone handled refunds better than Airbnb, including Vrbo," said Richard Vaughton, founder and director of Rentivo and founder of Yes Consulting, who also has a number of short-term rental clients.

"Regardless of legalities, the lack of consultation with hosts exposed the true nature of their guest-centric business and the need for hosts to de-risk and avoid mono-listing, enter Fast Start Vrbo."

Alex Aydin, founder and CEO of BookingPal, said Vrbo handled cancellations differently because it is not the merchant of record for a lot of its properties, "whereas in the case of Airbnb, they are. So Airbnb had full control over the refunding of reservations for all properties," he said.

"In the case of Vrbo, they couldn't just refund for some of their hosts and not the rest--this would have created a lot of issues. So they had to ask and work with the host to see if they are willing to issue refunds. They asked for host participation, which has been more appreciated by the hosts."

Adds Jill Mason, CEO of VRScheduler: "I don't think there is a great solution, but I do think owners and property managers should be able to run their own business based on the laws in their area and their own customer policies. I think Vrbo handled this very difficult situation better than Airbnb."

When asked about Vrbo directly referencing Superhosts, the Airbnb spokesperson said: "'Airbnb' is used as a noun and verb in countries all over the world, and our brand is already deeply embedded in pop culture. According to Google Trends, from January 2016 through September 2020, 'Airbnb' was searched worldwide more often than any other major travel brand.

"Airbnb's hosts are the foundation of our community and business. It is their individuality that makes Airbnb unique. From schoolteachers to artists, our hosts span more than 220 countries and regions and approximately 100,000 cities, and we estimate 55% of our hosts are women. As of September 30, 2020, we had over four million hosts around the world, with 86% of hosts located outside of the United States."

Platform potential

Although Fast Start aims to bring new hosts onto Vrbo, Ranque said the intention is not to make hosts exclusive to the platform.

"Generally speaking, the reality is the world is moving toward cross-channel distribution. It's an evolution. I don't want to corner people to choose one platform over another."

That said, looking at an individual host, for example: "The more of their property we sell, the more share of their calendar we get, the more it takes weight in our algorithm and relevancy and review scores," he said.

"It's going to outperform on our platform if they give us more of their calendar share. But it's not a binary 'you get a boost if you're exclusive.'"

Looking at Airbnb Superhosts specifically, Aydin said he does not believe the majority of Superhosts would leave Airbnb for Vrbo; rather, they would add Vrbo to have a multi-channel distribution strategy.

"The advantage of Superhost vs. professional property managers is that they have more of their calendar open for bookings. Professional property managers distribute everywhere (Booking.com, Expedia, Airbnb, Vrbo, Tripadvisor, etc.), as well as generate a lot of bookings from their own websites, so there are fewer room nights available for Vrbo to sell. Whereas with Superhost, they have more room nights available to Vrbo to monetize."

With Superhosts, Vaughton adds, "Airbnb has grown a sub class of hosts that are the cream of the Airbnb income crop. Many were brand loyal but feel 'listing vulnerable.'

"The IPO and the refund debacle has highlighted this is just another big business, not a PR-driven community club. Vrbo's Fast Start is well-positioned to adopt this market segment and will naturally drive their own loyal customer base toward new and wonderfully pre-qualified inventory. Makes so much sense for both hosts and VRBO. One wants to de-risk the other to grow inventory profitably. How will Airbnb respond is the question."

Ranque said that after the Fast Start program ends, hosts that performed well over the 90 days start to build equity on the platform and take their natural position in the sort order.

He said Vrbo has a targeted acquisition program that includes on-the-ground marketing for hosts in destinations with high demand, for example in coastal destinations.

"It's not the overall number; it's having the supply where demand is," he said. "I would expect that over time when urban centers reopen, when international travel comes back, there's naturally going to be an influx of supply in those big markets because there will be demand for it."

Source: PhocusWire

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