The State of Online Distribution in the Vacation Rental Industry

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Thanks to everyone who participated in last weeks survey to determine the current state of distribution in the vacation rental industry. Below we look at the market share of popular online travel agents (OTAs) compared to direct & alternative sources. Here are the key takeaways and how it affects you.

But before I share the results, it’s important to understand the shortcomings of this survey so we don’t overweight the significance of its results:

  • The survey was subjective and didn’t use raw metrics
  • Figures were only estimates, submitted by selecting a range, not an exact number.
  • In some cases, respondent’s bookings came from over 100% of channels (which is not possible and was due to a slight overestimation of bookings)
  • The survey size was 325 people
  • The survey was only sent to our subscribers, so they don’t represent the entire market
  • The survey doesn’t take into account the type of accommodation (for example ski chalets), which can make a big difference

On the other hand, the survey does have some strong points:

  • The survey is a snapshot of 10,000 different owners and managers
  • The survey covers an estimated 8,000+ properties
  • The survey has a wide and evenly distributed range of participants from all around the world, with properties from 1 – 250+ per manager.

All results

  • 69% of respondents use Airbnb
  • 78% of respondents use HomeAway &/or VRBO
  • 39% of respondents use Booking.com &/or Agoda
  • 69% of respondents use TripAdvisor &/or Holiday Lettings &/or Flipkey
  • 9% of respondents use Ctrip
  • 22% of respondents use Expedia’s listing site
  • 27% of respondents use alternative listing sites
  • 94% of respondents take direct bookings

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Takeaways:

  • Direct bookings are performing much worse than the independent hotel industry, whose online direct bookings make up 42% of all online bookings (reference)
  • With only 39% of respondents using Booking.com/Agoda, it holds 21.7% of the market share, which suggests Booking.com is underutilised
  • 60.3% of ALL bookings are controlled by just 4 companies and with talks last year suggesting the potential acquisition of TripAdvisor by Priceline in the near future, this would become 3.
  • 93.6% of all OTA bookings are controlled by just 4 companies
  • Alternative listing sites are not being used and make up a small percentage of the total pie
  • Ctrip was used by 9% of respondents but contributed for under 0.1% of bookings, which is why it doesn’t show. Ctrip is popular for Inter-Asia travel and therefore wasn’t represented well by our respondents.

North America

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Takeaways:

  • North America has the largest share of direct bookings with 41.1%
  • VRBO & HomeAway are still the best performing OTAs for North America, with 41% of OTA bookings
  • Alternative listing sites are barely used and make up only 0.9% of all bookings
  • Booking.com has not penetrated the US market for vacation rentals yet, but TripAdvisor is performing nearly as well as Airbnb.

Europe

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Takeaways:

  • Europe has the highest percentage of bookings from alternative listing sites, taking 7.3% of ALL bookings and 11.4% of OTA bookings
  • Booking.com, HomeAway & Airbnb are very equal with TripAdvisor just behind.

Australasia

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Takeaways:

  • Australasia has the lowest percentage of direct bookings with just 22.1%
  • Booking.com/Agoda (36.4%) & Airbnb (34.9%) make up the lion’s share of OTA bookings in Australasia

Tropical regions

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Takeaways:

  • Tropical regions are dominated by Airbnb, who take a whopping 52.9% of all OTA bookings!
  • Direct bookings are also high, with 33.1%, suggesting properties/regions are unique and easily marketable
  • Alternative listing sites are almost non-existent

Asia

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Takeaways:

  • Asia (predominately South East Asia) is dominated by Priceline with 51.6% of all OTA bookings.
  • HomeAway and its sister sites take only a small fraction of OTA bookings with just 2.1%!
  • Airbnb has a strong presence in Asia with 32.8% of OTA bookings

Under 10 properties (owners & small managers)

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Over 10 properties (medium & large managers)

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Takeaways:

  • Owners & small managers have less direct bookings (30.3%) compared to larger managers (36.1%), probably because larger managers have websites with bigger marketing budgets.
  • HomeAway & VRBO are far more dominant amongst smaller managers/owners with 38.4% of OTA bookings, compared to just 26.3% from larger managers.
  • Bookings are more evenly distributed amongst larger managers, which suggests smaller owners/managers could benefit from using more channels.

Respondents using every channel as part of their marketing mix

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Takeaways:

  • Taking data from only respondents using all channels together shows a surprising advantage to Booking.com/Agoda (31.7%) & Airbnb (24.9%), rather than HomeAway, VRBO, Expedia etc.
  • With TripAdvisor being the second most used OTA, its share of bookings is small in comparison to competitors who were less used like Booking.com.

Respondents using alternative listing sites

27% of respondents use alternative listing sites

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Takeaways:

  • Of the respondents actually using alternative & niche listing sites, they saw nearly 9.8% of ALL bookings & 13.9% of all OTA bookings come from these sources, compared to the entire survey (4.1% of ALL bookings & 6.4% of OTA bookings).
  • This suggests that respondents who are not using alternative listing sites could benefit greatly, especially from reduced fees and commissions for these bookings. However, it’s important to use multiple sources that are relevant for your niche.

Conclusion

Although of the survey’s shortcomings, the results do correlate to what we’re internally seeing within the market.

Airbnb is the most consistent online travel agent and works best with unique destinations & properties. TripAdvisor is the second most popular OTA but brings a relatively small number of bookings. HomeAway & VRBO are strongest in North America but struggling in Asia, where Booking.com rules supreme. Europe is where the battle is currently raging, with every channel, including alternative booking sources providing a relatively distributed share.

What’s worrying is the increasing dependency on OTAs, which is higher than the independent hotel industry. Furthermore, a high percentage of our subscribers already own websites. Therefore, if this survey was representative of the entire market, including newer short-term rentals, I imagine the dependency would be far greater!

On the bright side, respondents utilising alternative booking sources are seeing some success which may continue to increase with the flurry of new listing sites filling niches that can’t be covered by larger OTAs.

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