When we bought our little old vacation rental on Chincoteague Island, Virginia, we did so because we had some extra money and didn’t want to invest it in paper. Nor did we want the headache of full time renters.
It was a decision we gladly made, thinking that by renting it out during the Peak Tourism Season we could deflect a portion of the mortgage payment. And it worked great for a while. I studiously marketed it on various channels, to include buying a subscription to one of the big listing sites in 2008. We filled it up each summer and actually had net income to show for our effort.
Then, the “industry” that I was completely unaware of being a part of, changed dramatically in 2017. AirBnB had come along as a splashing success that didn’t go unnoticed by the mega corporations like Expedia or Trip Advisor. And in the blink of an eye, everything changed. Suddenly I was receiving emails telling me when and how we could rent the property that we owned, that we painted, that we cleaned and repaired and held as a liability on our bottom line. They began to dictate our rates, our availability, our cleaning fees, our rental terms, our cancellation policies and how we should or should not get paid and by what method we could receive payments.
Acting either in concert or just mimicking one another’s business practices, the “Big Guys” depersonalized the vacation rental experience for both the vacation rental homeowner and the vacation rental guest. My first hint was when I got the email telling me we would not get paid until the renter “checked in.” I called and explained that “this is one house, I don’t have a hotel with 300 rooms to rent, if they don’t check in on Friday at 5 p.m. I can’t just turn around and re-rent it that night.” I even offered to pay more if I could just remain a “listing” on their site. I was told that would work and when I asked if I could be sent an email confirming this, I was told “No, our policies change all the time.”
Boom! Sucker punch. I got off the phone and realizing the gravity of the situation told my husband “I don’t believe we can continue to list with them.” It wasn’t total catastrophe because the Big Guys only provided about 50% of our listing and even without renters, we could afford the mortgage. But still, I knew we would take a hit and we did.
However, in hindsight, I have come to realize that we had it way better than many.
Not long after the “fateful call” I started seeing these websites go up. They were “independent” state sites. I watched and watched and began to think maybe I should get one. So I did. I started Virginia Vacation Rentals with a few thousand dollars and a bucket load of “hubris.” I sweated bullets every day for at least a year. Would this work? What do I need to do next? Will I ever make any money at this? Can my credit cards take the strain of a marketing budget?
And while, a year and half later, I am still “underwater” it’s beginning to work. People are coming to my site, listing their homes and guests are inquiring to rent and vacation homeowners are getting bookings. In fact, it’s working good enough at this point that I added West Virginia to the site a few weeks ago (again, more Hubris).
I have been a bit more cautious than some of the other independent sites. Some of that has to do with my reluctance to waste money and some is my tedious habit of wanting to get it right the first time and not screw up.
However, this week came two pieces of information that tell me I was right, if not righteous in my endeavor. AirBnB announced that they will no longer charge renters a “Booking Fee.” Instead they told vacation rental homeowners to raise their prices to account for the Booking Fee because they would take 14% out of the homeowners rent to collect what they had previously collected from renters. And if the homeowners didn’t choose this option, they would ding the homeowners 3% and the renters up to 20%.
So in other words, they still get their “Booking Fee” but they make it look like the homeowner did it; hiding their “Fee” in the homeowner’s price at the homeowner’s expense.
This is not only deceptive it’s economically counter intuitive. There’s only so much a vacation rental homeowner can charge and still attract renters. In a finely choreographed dance, most homeowners consider the surrounding market, the competitive homes, their particular amenities, the going hotel rates and make conscious, if not acutely critical decisions about what the price per night or per week for their rental should be.
There are homes in Lake Anna Virginia that go for $8,000 per week. My dinky old beach cottage on Chincoteague Island goes for $750. The house in Lake Anna sleeps 25, has a hundred foot dock, three thousand feet of shoreline, a football field, volleyball and basketball courts and dock house to die for. My sweet old built in 1946 cottage has two bedrooms, one huge bath, a comfy living room, board games, books and DVD’s for the kids.
From the inquiries the Lake Anna house gets, I can deduce it’s priced right. And I believe my house is priced right. But according to Air we would both need to up our prices by at least 14% (that’s what they are saying now, but tomorrow is another day). And why? So that they can squeeze another 14% out of the renter without the renter knowing it’s them.
That’s like me smoking in the gym and when the coach comes in handing the pack of cigs to my best friend and saying “hold these, would you?”
At the other end of the spectrum comes Trip Advisor telling homeowners that from now on they can only get a 20% deposit on the reservation. Not 50% like so many of us know is standard. And if the renter cancels 40 days out, they will pay the homeowner the 20% minus the Booking Fee and the homeowner’s “commission.” Say what? So basically, they will collect 20% up front and if there’s a cancellation, the homeowner gets squat, but the renter is still out that 20%. My favorite part is their “don’t worry your pretty little head” sentence “this change will happen automatically on 7 March, you don’t need to do anything.”
While most of us vacation rental homeowners have been enduring the online sharing economy experience, it has become increasingly untenable. I’ve done marketing for 25 years. I’ve negotiated price with the New York Times, billboard companies, radio and television stations, printers, sign makers, magazines, etc. but nothing I’ve ever seen beats this “business” model. It’s no longer providing a platform for paid advertising, it’s gouging and price fixing at the least.
And so far, we haven’t even seen the latest “new” development from VRBO/Homeaway, et al. I just can’t wait for that shoe to drop.
It’s beyond time for homeowners and guests to take back their power. It’s time to go “rogue” if you will, a bit of rage against the machine would be a good thing. Seek out alternative platforms, like my site (and many others) where you pay a flat listing rate, you have complete control over your rental terms and listings and direct communication with potential guests. And for guests, spend a bit more time finding those vacation rentals on those alternative platforms or at local property management sites. Refuse to spend another 15% to 20% on your next rental. With a bit of due diligence homeowners and guests will find one another and everyone will be to the good for it.