Vrbo Is Raising Commissions. Airbnb Is Rebuilding Luxe. A Big Week for STR.

0:19Brandreth Canaley: Good morning. Happy Wednesday, our new best day of the week. I'm Brandi Canaley here with Jamie Lane on our new day. Jamie, how are you feeling? I love Wednesdays, man. Me too. It is so nice to be able to start the week without prepping for a podcast. So

0:47not going to lie. I love the change of the day week. How do you feel about it?

0:52Brandreth Canaley: It's great. Honestly, it was so funny though. I was on Monday morning. I was like, oh, I don't have to like really be a person this morning. That's great. I can be a gremlin at my desk. Um, and, uh, but yeah, Michael is still on the show. He's just not on today. Don't worry. Um, but we have just, I mean, like many of our listeners just kind of wrapping up or surfacing briefly from kind of a conference marathon whirlwind. I don't know how you were, you had a little bit more than I did. You went to Leon, but how are you, how are you feeling after that? Like stint? Uh, you might hear it in my voice, but I have a cold.

1:32I feel like that is, uh, uh, due punishment, uh, for trying to travel from Nashville to Leon in one week. Uh, I would say I, uh, Antonio asked when I got up on stage to go to kick off, uh, the VRWS conference, like how many people here were in Nashville and there were way too many people that raised their hands.

1:55Brandreth Canaley: Did you see people on the flights? Did you track that? I did ask people what flights they were taking and it was crazy how many different routes people took from Nashville to Lyon. And we got into Lyon at like 5 p.m. on Wednesday. Simon Lehman didn't get into like 10 a.m. on Thursday. It was a wide variety of different times and routes that people took. Yeah. Tuesday afternoon, we had a big team lunch. And then I was sitting there and I was like, I'm just done. I could barely talk. And I was like, I just don't want to leave tomorrow morning. What am I going to do? I'm going to go out and eat and drink in Nashville again.

2:51Brandreth Canaley: I don't need to do that after four weeks of conferences and weddings. And so I just snuck on a 6 p.m. flight and I got home and I was in my bed, even though I had a connection, which I usually try to avoid. And it was like, but at like 1230 a.m., I was in bed and I was like, this is great. This is great. So I hope that all of our listeners survived their travels when their conference bursts that happened. So I guess, Jamie, what were some of your takeaways from Verma? How did you feel specifically about the energy at Verma this year? What are your thoughts? Yeah, and I love the energy. And I did a LinkedIn post before, my favorite things like the trade floor of going around talking to all the different vendors.

3:37And we'll get into it. But the talk about Vrbo and their fee change was definitely top of mind for people. Top of mind. But the PE dominance on the vacation rental manager side was big topic. Pavilion going live. And the number of people I talked to that had just been acquired by Wayday was shocking. Yeah, they've been shopping. And then seeing like a new PMS. uh like i got a demo of stateless um apex os uh with uh jeff reed the um former co-founder of track like like oh his non-competes over like he's got a new pms uh it's a giant booth like they've come

4:26Brandreth Canaley: in hot yeah they came in hot yeah i know i um i had some people give me some like advanced like hey you're gonna want to see something at verma there's gonna be something and then i walked by the booth and I was like, this is that something for sure. Did you have any hot takes? What did you feel about the energy? Oh, I thought that was like my main overall takeaway was like it felt so different from the last couple of years. Everything felt like alive. And I don't know, it was interesting because I also feel like personally, like our company kind of had this like burst of energy. and then I felt that mirrored at Verma, like across the board.

5:11Brandreth Canaley: I have to say the vendors have really leveled up. I would shudder to think at what their conference budgets are because who was it? Someone from Inhabit had puppies, which I loved. I was like, I love that gimmick. Our chief commercial officer, Alex, almost left with one. But it just felt like everything leveled up. It felt like there was robust energy and positivity that has kind of been lacking in the previous, like other years, it seems like people are really trying to like force the positive energy or like force being there. And this year, it felt like everyone was like excited to be there.

5:49And you know, a trend I can really get behind is everyone having a barista and espresso at their booths. Like I didn't have to walk more than 10 feet to get a coffee and never once had a drink conference coffee. I know. That really is a bummer.

6:07Brandreth Canaley: I have to say from Guestival, they had baristas all over the place. And I was like, I love this. I'm just constantly getting good coffee. And that is a bummer at normal conferences. You're just getting the tanks. So yes, to all the vendors listening, keep that up. Yeah. And maybe just a quick shout out. If anyone has found us on Wednesdays that is now our regular Monday listener, if you could give us a comment, LinkedIn, YouTube, we would love to know if you actually found us on this new day. Yeah. I know it's a big change. We've had a lot of really loyal Monday listeners and I have to give one of them in particular a shout out.

6:48Brandreth Canaley: Tom Goodwin and I sat next to each other at dinner and loyal listener. And I really enjoyed learning more about his story and his company and his time in the industry. And just wonderful person, wonderful company. And I love learning about people who have had different paths in the industry and who certainly have more experience in the industry than I do. So really wonderful dinner. And so glad you're a listener, Tom. and hopefully you found us on Wednesdays. Maybe one more comment on Verma because I feel like this was a change and it definitely felt like this in our session. We did a panel together.

7:29Brandreth Canaley: We did. It was great. Packed house. I got to say that was pretty awesome. And just about every session I went to, it was a packed house. The main trade floor and the sessions were on different floors the very far the general session like it was hard to find a lot of these different sessions but people made a huge like effort to get to the sessions and michelle marquis i stumbled and she just uh commented i give michelle a a shout out like she was running the education committee this year for verma like they i think created some great content and it showed by the number of people that were going to all the different sessions.

8:16Brandreth Canaley: Yeah, actually your session, not the one we did together, the other one that you did was referenced by our CFO at lunch. And I was like, some of these points were at my session. But yeah, I think it was great. Everyone seemed to be really engaged. And I just think that that is a change from previous years where people are like, I don't really go to the sessions. um and you know and um so yeah i think overall really positive takeaways um and then i think what do you think did you hear any sort of any negative side like things that people are worried about going into the next year yeah i i still think there's a lot of questions and you said how much time and effort people uh put into their booths i think there's still a question from a lot of vendors that I heard on what is the ROI of having, and when you've got three, 400 vendors in that room, it's hard to get the traffic that you need.

9:18I mean, if everyone's in the sessions, then that means that there's some number of people that aren't in the vendor hall. So I'm interested in talking now with people after the fact, like, did they get the, and it takes a month or two to figure out what the return is. So does that feel like it's changed or not?

9:38Brandreth Canaley: And I think that's hard just in general in our industry. These aren't like products that you just buy casually. Like you're not just up and changing your dynamic pricing software or your PMS or whatever. Though you should. Though you should. Yes. And so yeah, any of the vendors, it'll be interesting to hear in the next couple of months, like how, you know, if you've recouped the probably staggering amount of money that you spent on that. But I think the topic of Verma leading into our first topic of the day, because it was the topic of Verma, and that is the Vrbo blowback over all of their commissions and rate changes.

10:20Brandreth Canaley: And everybody, if you're listening to this and you're in the short-term rental industry, or you've been on LinkedIn and you are connected with one single person that's in our industry. You have seen this recently. And so this is, you know, the subscription model and the paper booking, like low rates are all gone. That's bye-bye. Replaced with a 12 % flat fee for everyone. And you obviously have an additional fee if you are doing your own payment processing. So you could add another 3 % or whatever onto that. So yeah, I'd like to, you have all the data, so I just want to give my initial non-data feel about this.

11:05Brandreth Canaley: And I, on one hand, I really understand that people are super pissed. I think that Verbo felt like this was the last OTA that was quote on our side, that was like the host OTA, the host partner. And I see that word a lot, partner, partnership. And the thing is, is that maybe 10 years ago or in the beginning, Vrbo and HomeAway and all these companies were partners, but Vrbo is owned by Expedia. It's one of the world's largest OTAs. This is not a partnership where we give equal. This is kind of like a standard that they set and you can choose to play or not. And that doesn't feel great. And also the communication around this was not good.

11:56Brandreth Canaley: But if you're Expedia shareholders and you see that all your competitors have a higher rate and this is what everybody's on, I think they've been trying to do this for a very long time and they are going to rip the Band-Aid off eventually. So I think I understand the anger, but I think that like we can't be too surprised. So yeah. Yeah. Um, I'll, I'll give some numbers and then, and I'll, I'll give some of my opinion. So, and you talked about the subscription fee going away and it's about 7 % of listings globally have subscription fee about 12 % of the U S so that had already been sort of phased out.

12:38You new hosts couldn't get on it. Legacy property managers could and i even saw like in some of the blowback they then re-emailed people so they're like oh never mind we're gonna let you stay on so and there was already some some and severe pushback on that and then that and you you mentioned the one person on linkedin i'll call her out uh ginger harrelson like she had just some great content she did she has been i have to give her her

13:05Brandreth Canaley: she has been a machine and i you know what like i i it's great to see someone just throwing like put it all out there i gotta give her credit it's yeah it's sassy as hell and i also love that and also reminding me of the shout out i want to do for everyone recovering from the hurricane and in um destined for one beach yeah and man uh the damage coming out of there is extensive and And our thoughts are with you guys that are going to be recovering from that for some time. But so 12 % of the U.S. on subscription fee. And for me, the big thing was this move to 12 % and where they are now not differentiating between PMS connected hosts and non-PMS connected ones that were able to use Vrbo payments.

13:58So essentially, as a PMS connected host, my service fee was 5%. And if I was on Vermo payments, it would be 8%. And now everyone gets moved to 12%. And then if I'm PMS connected, I still can't use Vermo payments. So my effective fee is 15%. And I'm essentially getting charged twice for payment processing, which isn't great. And I feel like then it's disingenuous for Vrbo to say it's still the cheapest of the three

14:36Brandreth Canaley: because Airbnb, yes, is that 15.5%. Maybe my all-in cost for Vrbo is 15. but then Vrbo is still paying or still charging a guest fee, which Airbnb is not. And they don't disclose what that's going to be. It's going to be variable. It's dynamic. They do say it's going to be less, but now essentially, like, I don't know what the channel cost is. I never really, truly knew what channel cost was for Vrbo before. But now with this increase in fee, I think it's all the more highlights, like that. I don't know what it's costing me to acquire guests to that platform. Um, and, and it's a big cost. Uh, I'm all in anywhere from 20, 25%.

15:19Like that's much higher than what I'm paying for some of the other channels.

15:23Brandreth Canaley: What do you, what's your take on them still charging the guest side? Because the others at least were like, Hey, now it's just, the guests are still going to get, it's clean, it's clean. And also the, you're just baking some of that cost into the rates. But the fact that you have an unknown, an N number, that's the guess is being charged. I don't love that. Yeah. And 55 % of global hosts connect to Vervo through a PMS. So it is significant that it's still going to have to pay that additional fee. And I think we we reported on it that Escapia users were getting trialed in Vrbo payments. So essentially, like if you're on Vrbo's PMS, then you might get 3 % less in terms of what you have to charge or what you're charged.

16:16So that almost becomes an unfair advantage for Escapia users, which I don't love. And most people aren't on Escapia.

16:24Brandreth Canaley: Well, is that enough to make you go to Escapia? probably not. Um, but the benefit for hosts of the simple fee, like, like Airbnb has talked about it. Like conversions have gone up when you start, stop charging the additional guest fee. Like they're just, they're going through all this pain and suffering of like raising the fee, but then they're not going to get the increased conversion because they're still charging a separate guest fee. It just doesn't make sense to me. Yeah. I, um, I think that, so acknowledging that like this raisin rate was going to happen one way or it was going to happen eventually.

17:05Brandreth Canaley: Right. I just, I think that there could, the communication needed to be better to give people like a month notice. This has huge financial impacts on all of these companies, you know? And so I think there could have been a better way of being like maybe January 1st or when your current subscription expires or we're going to put your entire account on like, you know, March 1st or whatever it is, you know, just to give people some time to plan and figure out how they're going to handle this. I will say all of the vocal pushback has gotten them to back down on the right parody for direct sites. When I saw that, I was like, oh, that is not good.

17:48Brandreth Canaley: So I'm glad that the yelling and the complaining has actually had some material benefit because at least the parody with other OTAs is like, okay, you know, I don't know. I think that that's standard, you know. How much fun is it now that everyone has Claude and ChatGT and can read through terms of service and like, what do I need to be angry about now because every time Airbnb changes their terms of service, everyone gets in an up or Vrbo now, Expedia now changes their terms of service and you're going through every little line item and figuring out what has changed. You should. And that's a thing because you didn't have a benefit of AI now.

18:35Brandreth Canaley: You're able to do that realistically before you're not, are you really going to sit down and read all the tiny fine print? But now because this is, when you're talking about the relationship between an operator and an OTA, they do have an upper hand that they're on their platform because they are marketing your platform. They kind of control how that is being seen. And so you should know exactly what is going on, what the terms of your relationship are so that you can make proper business decisions about it, or at least know what might be coming down the pipeline so you're not surprised. Yeah.

19:13And the conversations I had with people from Vrbo were like, we've had that in the past, that language. We've never enforced it. We don't plan on enforcing it. I think they sort of made that clear in the aftermath that that wasn't something they planned on enforcing, sort of parody with direct booking sites.

19:29Brandreth Canaley: But then don't put it in there because people are going to be pissed. And you say, we're not going to enforce it. But then when they do enforce it, they could say, well, it's in our contract. And then there's content parity, which I think is a new one that I've seen. And content that you're putting on your direct site has to be aligned with content that you're putting onto Vrbo. And so if you've got additional photos, if you've got additional descriptions, if you've got all the stuff that maybe you want to put and and not have on verbo for any number of reasons like the fact that they're going to force that um and that there's and restrictions on what you can post in photos on verbo that you don't have that restriction on your own direct site so uh it'll be interesting to see how they yeah how they uh enforce that yeah well i remember we were playing that game with airbnb at rome we had so many stuff so many things branded and we were like let's see which bot's gonna catch us now like like watermarking stuff on the TV or on the pillows or whatever.

20:39I mean, I don't know.

20:40Brandreth Canaley: You got it. You can be cheeky with it, you know? And it's, but I do like, I just want to validate that I understand why this is so frustrating for everybody. I think it does feel like any, every time you kind of digest one of these changes, another change comes around and that people feel like they're being squeezed from all these different directions and you know you're going to have to raise rates but then are you going to get the demand to like is there demand for those rates are you going to be able to get your occupancy it just it really shifts your whole revenue management plan and i think it did feel like verbo even though they are owned by xpedia was kind of like the last host friendly site and i think this kind of that's just a relationship they're going to either have to work hard to repair or, you know, it's like in therapy, this is the end of one relationship and you have to consider it starting a new one.

21:38Yeah. And just the PSA. So I don't think we mentioned this is the date is October 29th. You need to raise your rates on Vrbo if you expect to have the same take home pay. So there's a bunch of calculators out there depending on what your fee was prior and the rate's going to vary based on how much you need to increase it. So make sure you do that because as we've seen in the past, a lot of people forget and then you do end up making less money.

22:05Brandreth Canaley: And I do want to, I mean, maybe unpopular take, but I also feel really bad for all the Vrbo reps that were at Vrba just like sent out there to just get absolutely eviscerated. So I hope you guys had some strong beverages after that. And such a curious time for Vrbo execs to have an offsite and not actually be at Burma. Yeah. Yeah. You know, it's, it's all, there's PR people that are telling people what to say and what to do and where to be. Um, but, um, so that was, that was the hot drama. That was the hot tea that was everybody was talking about. So in a less kind of spicy, uh, reveal, um, Airbnb is rebuilding its Lux program.

22:48Brandreth Canaley: So if everyone remembers, mostly pre-COVID with the purchase of luxury retreats, Airbnb was getting into the luxury homes game. So kind of and then COVID, I mean, really just like killed that or paused that, which makes a lot of sense. So now they are back at it. And, you know, there's new standards that I think are really interesting. Like you have to have exceptional design, you know, and like really they want real luxury homes. not things that people consider quote luxury and they're just nice you know yeah so what is your take i i've always loved the idea of airbnb trying to create tiers within their platforms so when you go on airbnb today like you're sort of i'm going through all the properties reading through the reviews trying to look through the photos to get a sense of okay what is the real luxury because you can have a five-star property rated and five stars and short-term rentals is just I'm for the value you got what you expected right and it's not actually a luxury type property so that there is no sort of designation of tiering and there's companies like Moving Mountains that have built a brand around luxury that guests can come to know and go and book and find where their properties are and have that sort of quality built around brand.

24:19And it's really incumbent around either the hotel brands that have done this in the past. And you can be staying with IHG and there's the difference between a luxury property and a budget property like a Holiday and Express. And for Airbnb, there's an outside of Lux in the past, there hasn't been that way to designate. So I would love if they not only came up with luxury, but came up with more sort of tiering or more ways to indicate the type of quality that you can expect for the different price points but i'm i think luxury is probably the easiest uh to sort of designate designate and uh that for a lot of the luxury brands that that can be a great way to separate yourself from the

25:07Brandreth Canaley: from the rest yeah kind of like a tangent but this was a topic about homes and villas um and i had a i'm had a cocktail or three conversation with someone from homes and villas at the guest party um but just about this exact thing that it would be great if there were tiers so that people know that if you are used to booking like this type of hotel, this type of home is like equivalent to that. So yeah, I think this is great. I do think that the kind of dedication to screening and all of that, it'll be interesting. All of these platforms start off being like very strict and very selective. And then it's like maybe because they do want it to be like actually super luxe that they'll stick to that.

25:48Brandreth Canaley: But then if they're after like a bigger market, then usually that just as that goes away but i'm i actually as i was like re you know prepping for this and thinking about this a little bit more i think that maybe they will stick to it because they really do want something that is like very seriously luxury and that meets a certain set of standards so we'll see yeah and it's all about to like how they're doing the verification like you can make any property nice once. And with brands and in the hotels, you meet brand standards when you launch, but then it's ongoing. And the brand's going to come and do a surprise inspection on that property every year to make sure it's meeting those quality standards.

26:33And that's, I think, a big question mark for OTAs creating tierings is can they keep those tierings actually meaningful enough that people trust them.

26:47Brandreth Canaley: Yeah. Because are you really like, what is the budget for sending someone in person to these places? You know? So that's, yeah, I don't know. That's, I'm a little, we'll see. We'll see what happens there. But I do think also for some of the luxury properties, like Moving Mountains is a great example. They're not always the most keen on Airbnb. And maybe if there's like this true luxury sector, because like there there is like such an insane level of service that is associated with that that maybe this will get some of the um more high-end property managers to stop viewing airbnb as like riffraff the number of yeah i've heard from they're like yeah we don't list on airbnb like it's yeah it's below us as a channel like i know and i'm like but money but what about the money and distribution.

27:40Brandreth Canaley: I know. I know. Well, really quickly before we wrap up, there was a article about meta search, not dying, but evolving and a conversation with Kayak and Skyscanner CEO. So I wanted to get your take. And then I also, I had like poked around with Kayak's AI. So what is your thought about just like the meta search conversation in general yeah and i think in general like these new ai booking tools whether it's muse instinct and just using chat gpt in general like they're a form of meta search and they are changing the way people want to search and uh book travel like just the same way kayak was doing 20 years ago right like it was all of a sudden incredible that you could go on one site say your destination they could search 20 different sites find you the best rate and and uh that then you could book it directly from there they'd link you out to the right place to connect and and get the cheapest rate so i think they've got to pivot like uh and if they do not create their own version or try to still capture the consumer in terms of what they expect with ai booking tools they are going to die uh do i think that they can come in being sort of legacy tools and come in and innovate and create the next big thing in terms of how people are going to find and book travel.

29:04I'm a little hesitant, but interested in your view on their first take in terms of how good an experience it actually was and if you're keen to try it again.

29:17Brandreth Canaley: Okay. So I had a pretty basic search. I said, I want to take a long weekend international trip that is not in the US, Canada, Mexico, Western Europe, Columbia, or the Bahamas. I don't want to go somewhere I hadn't been before. I mean, wasn't going to list out every country I've been to, but gave something that would be like close to where I'm going to be. And the destinations listed were Paris, France, Los Angeles, London, and San Francisco. So two in Western Europe, two in the United States. So that wasn't a great, and then it gave me some other options like Santo Domingo, Panama City, Guatemala City.

29:54Brandreth Canaley: So yeah, I mean, that was just one, you know, one search. But I was like, I don't know. I'm still, I know like we're talking so much about using AI for travel and trip planning, but I just, it's not like knocking me off my feet yet. You know what I mean? And I don't like, I'm not, I enjoy the travel planning process enough that I'm like, I can look up a couple of flights, you know, and, or I'm going, I'm going to specific destinations. I don't need you to like plan this trip for me, but I'll keep playing around with it. I just, I'm like, yeah, you know, are you, when you go to book a flight, are you using Google flights or using Expedia or are you going directly to Google flights?

30:38Brandreth Canaley: So I use Google flights to just like see everything. And because Boston doesn't really have like a specific airline hub and it depends on where in the country I'm going, but then I'll go and book direct on whatever airline that is, you know? But I'm not, this year I haven't really done any big like personal travel for the first time in a couple of years. So I haven't been like, it's just been work travel and it's like, I'm going to this destination and I know the hotel I'm staying in. So it's not super exciting. Next year though, next year. It is one of the reasons why like Jim and I feel like it's so great for travel planning because Google Flights is integrated.

31:15Google Hotels is integrated. They have the ability to integrate AI and Metasearch because they own both of them.

31:24Brandreth Canaley: Monopoly. Well, anything fun going on for you in the next week? I'm not going to be here next week. It's my wife's birthday. So we're going down to Puerto Rico for five days without the kids. Oh my God. That sounds incredible. What are you going to do with all that free time? Get tan? Yeah. No kids, no computer. It's going to be a great few days. Wow. I'm jealous. I'm going, we have a kind of like intercompany summit in Colorado. So going out to moving mountains, going to Vail, sadly, just a little early for ski season, but it's still going to be beautiful. I love staying in those houses. The hiking is great.

32:08The Aspens are probably beautiful right now.

32:11Brandreth Canaley: Yes, exactly. Awesome. Well, our first Wednesday, our new home. Thank you to everybody who found us and tuned in. Anyone listening on the downloads, thank you for being a listener. And we will see you all next week.

32:42You