Are most travelers now booking managed vacation rentals on Airbnb? Not by a long shot.
Looking at $2.4 billion in 2020 rental revenue received by US vacation rental management companies, Vrbo outperformed Airbnb as a booking source by more than double (Source: Key Data).
What might surprise Airbnb’s pundits is that 55 percent of rental revenue is coming directly though managers’ own websites and call centers.
Rental Revenue per Booking
The research also shows that the rental revenue per booking differed significantly across channels for vacation rental managers. In 2020, the average booking coming from Vrbo was $1505, while the average booking coming from Airbnb was $941. Booking.com was even lower at $695.
Direct bookings were more valuable than those coming from channels with $1813 in average rental revenue per direct reservation.
In an upcoming article in VRM Intel Magazine’s winter issue, Key Data CEO Jason Sprenkle writes, “VRBO is steady throughout the year. Airbnb performs poorly in the summer months and stronger in the winter months, and direct bookings capture the largest share in peak summer months.”
Why are Direct Booking So Strong for Vacation Rental Management Companies?
There are several reasons that direct booking are still accounting for over 55 percent of reservations with management companies:
- Repeat guests
- Higher conversion rates with better customer service
- Travelers who are familiar with the destination and in drive-to feeder markets know the brand
Building a brand that is known nationwide is near impossible for local vacation rental management companies. However, developing a recognizable brand within their main drive-to feeder markets is doable. Guests who are familiar with the destination know the area in which they want to stay; often, they know the exact community of condo building they want. Local companies not only have developed strong in-market and feeder-market branding, they also better optimize for specific communities in search engines.
Warning: The Percentage of Direct Bookings is Slowly Decreasing
Although direct revenue activity is strong, Key Data’s research shows the percentage is decreasing.
For vacation rental marketers, this is not good news. Rental revenue per booking is almost double for direct reservations over Airbnb. However, when we look at the actual number of reservations, Airbnb gained ground in 2020, while Vrbo’s percentage of reservations decreased.
When considering expanding presence on Airbnb, there are important considerations in addition to the value of the reservation. Dozens of managers are reporting more problems with Airbnb guests than those coming through Vrbo or direct channels. Further, Airbnb’s decisions to override cancellation policies have caused headaches for managers. As you will read in Sprenkle’s article in VRM Intel Magazine Winter 2021, the average booking window for professional vacation rentals in the US is 212 days for stays between March and July. When Airbnb makes a unilateral decision to cancel reservations, most properties are unlikely to rebook without significant reductions to the rate.
Over the last several years, we’ve seen vacation rental management companies fall into two general categories in marketing:
- Those who mainly rely on OTAs for bookings (Large national companies that master distribution optimization and small local companies that don’t wish to compete with larger local brands for awareness)
- Those building a recognizable consumer brand (Primarily local management companies with strong destination awareness, drive-to feeder markets, repeat guests, and high levels of participation in the community.)
It is worth noting that the first group is dependent on (and rides the coattails of) the second group working tirelessly within the community to build a sustainable tourism destination for everyone else . . . but that’s another story.
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January 25, 2021 at 11:14AM
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Vrbo Is Performing Better Than Airbnb for Vacation Rental Managers, But Direct Booking Still Number One Source of Revenue . . . By A Lot - VRM Intel
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