VRBO/Homeaway’s New Service Fee: What it means to Travelers and Property Owners

Service fee

If you’ve taken a few minutes to read our “About Us” page you know that I am a former employee/manager at VRBO.com. I worked for the original founders of VRBO from 2002 through the purchase of VRBO by Homeaway.com in 2006 and then until I left the company in the summer of 2013.

From the time we bought our first vacation rental property in Dillon, CO in 2012 we advertised on VRBO very successfully. So of course when we bought our “Beachy Keen” property in Fort Walton Beach, FL in 2014 and our “Beach Escape” property in the same building in 2016 we very happily created advertisements on VRBO as well.

In short, we love VRBO!

However, as I’ve learned, the one thing you can depend upon in life is change.

Last year (2015), VRBO & Homeaway were purchased by Expedia.com and ever since then there have been changes made to help transition those sites from an “advertisement” model to a “transaction” model. In other words, instead of making money from the subscription fees paid by their clients to advertise on the site, Expedia will profit from every booking or transaction that is processed through the website.

In February 2016 Expedia launched their new “Service fee”, which is a commission that every traveler will have to pay if they book a property through VRBO/Homeaway (or any other site formerly owned by Homeaway.) Those funds do not go to the owner of the property, but to Expedia.

The following information is taken directly from VRBO’s Help System:

The service fee is, on average, approximately 6%. This is a lower percentage than many other vacation rental sites that charge a similar fee. The exact amount of the fee is calculated on a sliding scale based on the total amount, excluding taxes and the refundable damage deposit. The service fee will never exceed 9% and also has a cap so that a traveler will never pay more than $399.

Most bookings have a service fee that falls in the 4-9% range. However, higher reservation amounts can see a service fee that is actually less than 4%.

As can be imagined, this new fee is not welcomed by travelers who use the site nor by owners who advertise on the site. However, owners who want to advertise their properties on VRBO and travelers who want to use VRBO to find a great vacation rental property for their holiday have no option but to play by Expedia’s rules.

If a traveler contacts me by sending an inquiry through VRBO and decides he wants to rent my property, I have decided that I have no choice but to process the booking through my VRBO listing. If I make arrangements to take the guest’s payment outside of VRBO (in order to allow the traveler to avoid having to pay the service fee) my listing’s placement in the search results will suffer because Expedia is tracking “conversion rates”….how many inquiries are converted to bookings that are processed through my owner dashboard. So while it is possible for the guest to mail a check payment or pay through PayPal, etc, I won’t take the chance of hurting my listing’s performance by making such arrangements.

So what is a traveler to do?

As long as the listing owner’s telephone number is displayed on the listing my advice is to call the owner directly BEFORE sending an inquiry. Until Expedia decides to close communications between travelers and owners you can find the owner’s telephone number on the listing as shown below:

Show Phone number 1

You must click on the “Show phone number” link to expand it before you’ll be able to view the telephone number:

Show Phone number 2

(My advice is to ignore the “Payment protection” “warning” that pops up when you click to view a telephone number….it is a ploy designed to encourage travelers to pay through the website instead of making other arrangements so that the company can collect the service fee and sell other products to travelers during the check-out process.)

NOTE: If a listing is a “Pay Per Booking” listing as opposed to a subscription listing, there will not be a telephone number displayed on the listing. In this case the traveler has no choice but to contact the owner through the listing.

As an owner I always want to talk to my guests by telephone anyway, so if the traveler contacts me by phone first it saves time in the process.  Calling the owner also gives the traveler the opportunity to ask all of their questions about the property or the surrounding area and to also gain confidence about the property and the person they would be renting it from.

If a traveler happens to call me before sending an inquiry through my VRBO listing then I have the opportunity to accept his payment through my own website or through PayPal, thus saving the traveler the cost of the VRBO service fee.

One website that is growing in popularity since the advent of the VRBO service fee is TripAdvisor’s VacationHomeRentals.com. It is an advertising site that is reminiscent of VRBO in the “pre-Homeaway” days. Many of the VRBO owners are expanding their advertisements onto that website because it is strictly a classified ad kind of a site without a payment system or other “intrusive” features that have been forced upon users of VRBO and Homeaway.  If you see a property that interests you on VRBO or Homeaway you might try finding it on VacationHomeRentals as well. If you are in luck you can contact the owner through that site and not have to pay a commission on your own vacation.

Finally, for all of our guests who have already stayed with us in one of our properties, I encourage you to contact us directly if you’d like to come for a return visit. You’ll be able to save the cost of the service fee on VRBO and we’ll be able to give you our 5% Return Guest discount that you would not receive if you book directly through VRBO.

Call 720.202.4432 or visit our website.

Happy Vacationing!

Redgie & Valerie Rogers

 

 

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