Vacation Rental Booking Success: Getting Your Unfair Share

Working with online travel agency (OTA) networks like Booking.com and Expedia may seem expensive, but they bring a lot to the table. It’s just a matter of using them the right way to increase bookings and manage costs through technology.

Kigo's Vice President of Client Success, Hal Widlansky, believes the evolution of the vacation rental industry has distorted views on the value of OTA channels and the role they play. A common perception is that the commissions that consumer-friendly OTA's charge are too costly for vacation rental companies.

Traditionally, vacation rental companies were charged a listing fee and small commission on sales, while the traveler paid a "booking fee". Now, many listing sites choose not to charge the traveler anything directly, shifting the cost to the property manager in the form of a higher commission.

While the value of these websites is their reach – they generate about two-thirds of today’s vacation rental bookings – properties typically pay 15 percent or more in commissions on these reservations.

But those fees can be managed, and effectively leveraged, if vacation rental companies provide a customer experience that leads to subsequent bookings directly on their website, or positive reviews that lead to others.

Widlansky, who has over 20 years in vacation rentals and digital content and commerce, debunks the myth that channel bookings are pricey in the big picture of vacation rental management.

All in, the costs of channel and direct bookings are about the same, he says. A channel booking may cost 20-25 percent of the rental, factoring in commissions, distribution costs, and transaction fees. Costs for a direct booking can be 15-25 percent to cover traffic acquisition, sales agents and promotions/discounts, as well as website upkeep, credit card transaction fees, and credit card fraud.

That said, a vacant unit is the ultimate cost to your rental business, 100% of the booking that you didn’t get.

Listing sites like Expedia, HomeAway, Airbnb and Booking.com should be considered as an avenue to reach a target audience. These companies spend all of their time trying to attract the right guests to view and book properties on their websites. Vacation rental owners and managers can best spend their time providing an exceptional experience and value to the traveler.

Leveraging today’s rental platforms to increase bookings

At KigoWorld in Barcelona this spring, Widlansky illustrated how operators who know where travelers are spending money can leverage today’s online distribution platforms to increase bookings and manage customer acquisition costs.

Part of effective channel management is realizing that commissions, distribution charges, and transaction fees are part of the cost of doing business, but they are manageable.

“Having a holistic view of things is something that we as an industry need to do better,” Widlansky said. “We need to realize that channel partners provide value in our ecosystem, and property managers need to focus on how to leverage that value to grow their business.”

"Over the next few years, the vacation industry is going to experience more standardization for measuring performance and efficiency that isn’t available today,” Widlansky says.

“The consolidation of different tools being packaged into integrated platforms is just starting,” he said. “Channel management will become more of a function of the platform and a feature of a vacation rental operating system as opposed to a stand-alone product.”

Opening the front door to creating the right guest experience

Your vacation rental website in just the front door. Creating the right guest experience through technology is what brings guests back.

Simple tasks like communicating with guests before, during and after their stay, offering maps and directions and adding value through automation is part of the foundation to customer loyalty. This allows vacation rental companies to stand out from the crowd.

The operator can focus more on those essentials with the right vacation rental software. Kigo Marketplace offers a centralized booking platform that runs reservations and booking reports, and syndicates inventory with the major OTA networks through Kigo Channel Manager.

“It doesn’t matter if it’s being sold on Expedia or Airbnb, your website, or your call center,” Widlansky said.  “The right software platform and connectivity can tailor the vacation rental experience for the traveler, and make property management more efficient."

Best practices for driving vacation rental bookings

With Kigo Marketplace, property managers can stand out on the OTA channels, while effectively using their own website to drive direct bookings. Learn more!