Endangered Species - PPB or PAYG or Owner Oriented Model or whatever you want to call it

I take responsibility for much of the proliferation of acronyms, apologies, however what matters here is the message: marking up on the net to owner - that is having the traveler pay the fee at the moment of booking - is on its way out.

An unseemly thing to say right when the behemoths of Vacation Rental (+Homeaway and +TripAdvisor and +FlipKey) and even huge OTAs (+Booking and +Expedia) are embracing right this model. Right now.

But we need to make a distinction first. #VacationRental is not, professionally managed serviced apartments. The latter is by far closer to a hotel than a vacation rental.

I think the best attempt at defining vacation rental is reversing the definition, get in the travelers' boots resting just below that screen and answer the question: 'What are you looking for?'
local, unique, personal, slow, well in advance
these answers should take you straight to the vacation rental website as opposed to these answers
global, standard, professional, efficient, last minute
that should take you straight to OTAs or specialist websites.

I think mixing the two models can be fatal for venues that have grown with a distinct VR profile. Homeaway for example, why would anybody go to such a cumbersome website if not looking for a very personal deal. Talking of which: these guys are aiming at their forehead right now. Same goes for +Airbnb. And again OTAs I doubt can get away from these constraints. +Booking.com and +Expedia, they're also aiming at the forehead see here, although Booking has it figured out, since they only deal with professionally serviced apartments, as opposed to Expedia taking owners' direct from +HomeAway, tantamount to business suicide, I think.

Somewhat of a special mention in this is deserved by +FlipKey, which I consider a maverick model in many ways, because it does miraculously manage to conjugate on the same site, property owners with professionally managed serviced apartments and villas as well as aggregator and some peculiar way of being a Meta. In that it defies gravity (at least attending the law of physics that I am establishing here ;) by using the Traveler Oriented Model (or PPL, pay per listing) along with the Owner Oriented Model. Aggregate and yet be a Meta (impossible, quoting Brian Sharple from HA, for vacation rentals, since the 'Metas only makes sense when selling commodities' and VR adds a lot more to it). Will they be able to swing it? Maybe, because they have got the pull of Tripadvisor which somehow hasn't yet lost credibility as an unbiased venue despite going commercial. Or has it?

But let me go straight back to the point. Vacation Rentals, ie the previous set of answers above, the reason why the PPB is going to fail is really basic.
You can look at it from two different perspectives
- The private owners posting their ads. These guys just can't be bothered with analytics, tracking, let alone analytical thinking altogether, they're busy doing other stuff, just want to make a little cash and forget about it all. They don't care about control, they want to get it over with the marketing (pay the flat fee) and cash in every time they leave the keys in that mailbox. The result is that when they post on Owner Friendly Websites, Airbnb etc, they forget they paid a flat fee to Travelers Friendly Websites, Homeaway etc, and by posting the same base price on both models they automatically drive the price of the previous above and over the market value.
- The traveler, everyday savvier, will sooner rather then later be aware of this and go for the cheaper option. No matter how social you can be, the market is just going to get at you, you're going to have to find a way to charge that owner or die. +Airbnb included.

AirBnb or the Truman Show syndrome - Disruptive Innovation or just Disruption in the Vacation Rental Market?

If I were to try and give my best shot at an interpretation of Clayton Christensen definition of 'Disruptive Innovation' I would say you need one firm out of an incumbent oligopolistic industry leadership to start using a cheap technology that saves costs. These is then taken up and reused by a newbie company that can afford it because of its low cost and low need of know-how and reinterprets the business model altogether.

Now let's step back and go to the Vacation Rental market as it was, say, in 2008. Homeaway was aggregating by brute force the almost entirety of the PLW (Pay per Listing Websites, which I otherwise call the Traveler Oriented model) and the only competitor worth of that name was Flipkey/Tripadvisor, that had just started using a new business model, the PPL (Pay Per Lead), whereby Property Managers were offered the option to pay just for qualified leads received instead of paying a forfeit per listing a year.

The market already had a Owner Oriented Model (or PAYG) since at least a decade, +Cities Reference among other websites, the property owner can list for free and the traveler is charged, but that affected only a very small share of the market.

Come Airbnb in 2008, uses the PAYG business model, there is precious little to none innovation and shake up of the market looking at the fundamentals. Attending Christensen definition of disruptive innovation, we should have rather looked at Flipkey to see a shot in that direction.

Starting 2011 Airbnb is backed by Andreessen Horowitz and from that moment on Airbnb model starts being trumpeted about as disruptive innovation for the whole, mind you, travel market.

While we don't believe so and we don't even believe that this is a winning model in the medium-long term for vacation rentals, we do believe there are elements of real innovation, targeted to... a wider audience and market.

The one and foremost intuition, albeit not necessarily a conscious one, is that the vacation rental market (the sharing economy in general) cannot be handled as a commodity market (unlike hotels or airlines) and requires human contact. Looking at it from the vacation rental, or even the Bed and Breakfast, perspective, this market had already been monopolized and was hard to tackle.

Thing is that Airbnb, or their backers, seem to be after something much bigger than the VR market or even the travel market. Through the use of massive technology know-how Airbnb created a walled garden where guards and fences have been perfectly hidden. A Truman Show where you are induced to believe that you are among friends, or friends of friends at worst, although every word you type is tracked and you get easily flagged on the basis of the wording you use or the peers that have been invited to report you. Offenders are quietly driven out of the studio with subtle moral suasion techniques. Nice, uh?

Well, yeah, it is actually. These guys are real cool and they know how to make you feel good even when you're kicked out of the place. It's not a real kick-out what you get, you're simply pushed down ranking and, upon time, invited to freeze the listing. I don't think it's too far fetched to call in the Liquid Modernity of Zygmunt Bauman here, these guys are modern, big time, and seduction, not anymore coercion, is the way you have people do what you want them to do, or, he would add, buy what you are selling.

However, getting there is not as easy as it's been described by the medias. Yes, we all know about the nice professional pictures looking good and the sweet little hearts instead of the stars... Sure. But there is a lot more then three nice looking kids with wonderful ideas behind Airbnb, a Big Brother concerted effort looks closer to real.

Disruptive Innovation? No doubt. But not of the vacation rental market or the travel market or the sharing economy for that matter. Much more than that. Describing this kind of disruption takes a much better pen then mine. George Orwell? Probably. Are they going to dominate the vacation rental market? Com'on! At this stage these guys are only looking at the big money coming from the IPO and warming up for the next big thing. What is it? I wouldn't be here if I knew it, but it's going to be BIG. Wait and see ;)

Ah, and while you're at it, go post that ad in the most old fashioned of the oldest digital economy website out there: Homeaway.

One last note: how would you have reacted 15 years ago if I had told you that on 2014 we would be still paying at Cost per (very vaguely tracked) eyeovers! How comes we got the shiniest little website out there well over 5 years now, claiming to be the future happened, yet the majority of internet savvy users keep going for the cumbersome and old fashioned Homeaway? Go figure.

Endangered Species - Instant Booking

At the turn of the new millennium, an Era of great enthusiasm, in the paradisiacal (then) world of Vacation Rental we thought that things could only get better. The thinking was: since there is no awareness about our business and we are backward in technology and processes, the further proficiency we reach with the above, the better for the whole of us. Think again.

Awareness brought the big lobbies and the big financial guys attention bringing about disruption with precious little innovation.

As for the technology and processes we may be facing a half truth here. Sure, it would be 'better' to streamline the booking process and turn it into a hotel like experience, but is it possible and, most importantly, is it really what the travelers are looking for?

The provider's side: is it possible? At Cities Reference we've been doing the Instant Bookings for over a decade now. On a mixed structure, upon great reward pressure, ~25% of owners would go for the Instant. The catch is, that the property owners being mostly unprofessional, if you don't send them a couple of bookings a month they'll quickly lose pace and stop updating the calendar. If you implement penalties at the first mistake you lose ~70% of them thereafter, if you implement just incentives on the opt-in you'll be in for a lot of cancelations. Still bullish about the Instant?

The travelers' side: is it really what they are looking for? Not sure. If they want professionalism and streamlined process they'll just use OTAs on a flight&hotel combo. Vacation Rentals are often a choice of experience where unique, slow, local, personal relationship may weight more than words like quick, professional, standard.

What with the fact that OTAs are debuting into the vacation rentals? I think this is working with Booking.com only because so fare they have only taken up professionally managed serviced apartments, the moment they'll try to catch and digest also the huge mass of the unprofessional owners the system will go bust.

Cities Reference to include VAT into its commission starting today - Is PAYG model an endangered species?

Continuing the race downward of the spread between the net rent to the property owner/manager and the grand-total paid by the traveler, Cities Reference is to include VAT into its commission rates starting today. This will result in a further 22% decrease of its net commission continuing the dramatic drop that has seen the commission fall ~70% in the past 10 years, count in promotions and discounts that nowadays more often than not kick in and you get a razor thin margin.

This is broadly good news for travelers and property owners/managers alike, at least until the system stays afloat. As argued in a previous post here about the winning business model in the vacation rental market which is likely to take-all in the medium/long term, market pressure on the small/medium sized vacation rental portals featuring an 'Owner Friendly' model (or PAYG, or PPB) is applied by its own richer peers, like Airbnb, that are backed by venture until IPO and need more aura than results in the bottom line to keep blowing in the bubble.

It is not reasonable to think they are not aware that this is going to backfire in the medium term after they go public and they will have to bring home results, therefore we can infer they are after a short term strategy at the moment to offer a handsome exit to the ventures that have invested in them money and, most importantly, know-how.

The outcome is somewhat ironical, in that, at least attending our analysis, the winning model in the vacation rental market will likely be the oldest one. Since the beginning of the new millennium we've tended to believe that whatever had to do with internet advertising would have eventually embraced a very analytical approach of pay per results. In the age of virtually full tracking of customers funneling the furthest away you can get, and the closest to old style advertising, is the pay per listing model (PLW) whereby you pay a yearly forfeit in advance with no control on your listing's exposure, forget conversions to leads and/or bookings.

Links and useful info of Cities Reference founder's presentation @VRMA European conference in Bruges (BE)

Just back from an intense two days of seminars and conferences @VRMA European seminar. VRMA is importing to Europe the educational and networking culture it has been selling with great success in the US for over 20years now, something that was and is key to the success of the Vacation Rental Market as a whole. Here is a look at the who's who on one of the vacation rental's leading online magazines, VRMintel.com
http://www.vrmintel.com/whos-who-at-2013-vrma-eurpoean-conference/

As announced day before yesterday during Mr. Parasporo's presentation  here follow a list of relevant links to the subject discussed:

1- The Crisis: endogenic or exogenic @Vacation-Rental-Market?
http://blog.citiesreference.com/2013/09/the-crisis-and-us-whats-within-and.html
2- The business models @Vacation-Rental now, which is winning?
http://blog.citiesreference.com/2013/11/homeaway-vs-airbnb-whos-winning-race.html
3-@Property-Managers: the ponderability of prices:
http://blog.citiesreference.com/2013/10/the-ponderability-of-prices.html
4- Legal battle @Vacation-Rental-Market:
Legal battle against VR
http://www.businessinsider.com/why-hotel-industry-lobbyists-want-a-global-crackdown-on-airbnb-2013-5
http://www.hotelnewsresource.com/article71138.html
http://www.fastcompany.com/3018755/fast-feed/airbnb-wins-legal-victory-in-nyc 
5-@Channel-Manager solution(?):
http://skift.com/2013/11/13/the-trouble-with-managing-managed-vacation-rental-listings/ 
6-@OTAs entering the Vacation Rental market
http://skift.com/2013/12/07/booking-com-no-longer-toying-with-vacation-rentals-reaches-historic-milestone/
http://skift.com/2013/10/22/expedia-partners-with-homeaway-to-offer-vacation-rentals/
7- Origination Vs Destination marketing strategy
http://skift.com/2013/11/04/expedias-uphill-climb-must-meet-booking-coms-structural-advantages/
8- Investments @VR-Market since 2011
http://www.vrmintel.com/over-530-million-invested-in-vacation-rental-startups-since-2011/! 
9- Is google turning to @be-Evil?
http://www.vrmintel.com/googles-organic-keywords-not-provided-10-easy-ways-for-vacation-rental-managers-to-adapt/
10- Engagement Vs conversions does it always work?
https://blog.compete.com/2013/12/05/engagement-case-study/