Tuesday, December 17, 2013

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.

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