AirBnB vs VRBO vs Book Direct

By now most anyone slightly involved in short-term vacation rentals has at some level engaged with AirBnB and VRBO. While there are others like them, these two companies command the lion share of attention in the vacation rental marketing world. As a professional vacation rental manager for the past 15 plus years, I think it is important to explain what exactly these companies do, what their value proposition is to a vacation rental property owner and manager, and what other strategies are out there that can reduce your risk when running a successful vacation rental property.

First, AirBnB, VRBO, HomeAway, etc. are simply OTA’s (Online Travel Agents). In their purest form they are marketplaces that bring buyers (potential guests), and sellers (homeowners and managers) together for the purpose of increasing exposure and maximizing bookings. At the beginning it was a simple value calculation; in the case of VRBO it was pay an upfront “listing fee” and gain exposure to the traffic generated by their ad spend. And in the case of AirBnB it was pay an unreasonably low 3% fee on each booking you get through their platform (which basically covered their credit card transactional expense), but your guest had to pay a “service fee” in addition to your rent amount.

Along the way these companies sought more and more control over “their” inventory, and how property owners and managers were to conduct business. They moved to a more pay-per-booking model with heftier transaction fees, more similar to hotels, they instituted communication limits directly between potential guests and property owners to keep everything “on platform”, and they have sought to discourage any cross listing of a property on multi-sites by coming up with dubious incentives like “super host” or “premier partner”.

This does not mean that these companies are bad, or do not provide value. Lots of people do extremely well with one platform or the other, and are able to navigate the rules and risks perfectly well. However, from our experience as a professional manager, and with one of our primary duties being to mitigate risk for our clients, we have found having all your eggs in one basket is not the best way to create a successful long term, sustainable vacation rental property.

Why Book Direct?

It is true that AirBnB, VRBO, and others have made it easier to start up a vacation rental property in just about every corner of the world. But what are you giving up if you decide to let these platforms control the process from start to finish with your property, and solely rely on them to bring you guests and income?

Booking direct simply means reserving a stay directly with a professional management company or host. You may hear this term often with hotels, but be thinking why exactly is this so important and what are the benefits for short-term vacation rentals?

Some of these benefits to consider when working towards a direct booking strategy are:

1. Direct communication between guests and owners/managers allows for more personal connection and vetting before either decides to rent a vacation rental home.

2. More control over house rules and terms and conditions. In North Carolina renting a vacation rental property is a real estate transaction. Each party needs to treat it as such with the appropriate documents and expectations.

3. Ability to offer travel insurance and other services at the time of booking. In the Cape Fear region, travel insurance is especially important during hurricane season.

4. More payment options and flexibility. Allowing guests more ways to pay for their stay can increase the chances of securing a booking earlier.

5. Gives the owner/manager more control over cancellation policies, extenuating circumstances, and other provisions. This is especially important in a new COVID world.

6. Be able to directly re-market to past guests with personal communication for the chance of repeat bookings (very important!).

It is true that implementing a comprehensive direct booking strategy is harder and more time consuming to get started than simply listing a property on a platform. However, from our experience the pros greatly outweigh the cons and risks.

At Carolina Retreats we have spent years and 100’s of thousands of dollars painstakingly building our direct database with high quality guests that are looking for vacation rental properties in our area. We have achieved about a 90% direct booking rate for stays at our properties, which has greatly increased our owner’s bottom-line and guest satisfaction. Additionally, during COVID, being able to work directly with any affected guests on cancellations, rescheduling, and upfront concerns has been extremely beneficial in retaining positive working relationships with guests for future stays.

Ultimately, everyone has different motivations for getting into the short-term vacation rental management business. OTA platforms certainly have their place in the overall mix of marketing and attracting guests, and should be used in order to maximize exposure. However, be careful when putting all your eggs in one basket and thinking any of these OTA platforms are a magic bullet for making your property successful. A multi-marketing channel approach that gives you the most control over you property will be your best bet 10 out of 10 times.