Vrbo's Biggest Product Push Yet, and What Hosts Need to Know

0:23Good morning. Happy Thursday.

0:27Michael Goldin: That's right. It is not the best day of the week right now but coming on air on monday will be the best day of the week so uh a pre-record in lieu of the holiday the end of summer happy labor day everyone yes and our last uh week in town before we jet off to madrid brandy's old stomping grounds yes i'm so excited it's gonna be so fun yeah and uh and our guest today is giving us some good recommendations so we'll we'll bring him on in a second but jamie you guys have had some big news yeah we did you panicked for a second yeah i'm like what news yeah we uh on tuesday launched uh ai dynamic pricing air dna adapt uh live to the world so uh big launch uh we're we're getting close to a thousand listings synced already so it is rocking and rolling it's exciting did you did Did you test your property first?

1:27My property's been on it live for three months. Benefits. Benefits of being an employee. I would say I was the first property connected, but I wasn't because the uplisting integration came slightly after the Airbnb one. And so my mom's listing was the first one actually synced. And I didn't tell her about it. So I hope you're not listening. I hope you don't have to say sorry. Hopefully it works well.

1:53Michael Goldin: Yeah. Yeah, as long as you're making the money, I don't think she's going to care. Well, we have a really fun episode today. It's always fun when we have a guest and a returning favorite. But before we bring him on, we want to give a shout out to our sponsors at StayFi. StayFi helps short-term rental operators build direct guest relationships through branded Wi-Fi portals, email marketing, and guest data tools that turn one-time bookers into repeat guests. So start growing your direct booking revenue today. It's stayfi.com slash goodmorninghospitality. And without further ado, here to announce some big, exciting updates at Vrbo and Escapia.

2:31Please welcome Tim Rosolio. Pleasure to be here as always. Excited you guys are going to Madrid next week. That's a good place. What I'd recommend for this weekend is eat some vegetables because the Spanish. Not a lot. They eat like salty ham and seafood and alcohol. So it's great. All that's great. Every time I leave, I feel like I'm going to have like a medical catastrophe. So eat a vegetable. The first year we lived there, we were like, we haven't eaten really like a salad in 12 months. And I've been eating ham, cheese, and gin. And I felt great. When they teach you that word, ensalada, in Spanish class when you're a kid, that's just like that's not even really a Spanish word.

3:19They're just, it was something they decided. Yeah. Beautiful.

3:25Michael Goldin: Well, welcome on, Tim. We are excited to dive into some of the updates that Vrbo and the platform has made. But before we jump into two in-depth questions, what are your top one or two highlights that Vrbo has just rolled out? Yep. We're cooking. I mean, I think I've been on this show before. We've talked about replatforming and just wait. And then there's going to be a lot of products that roll out. And, you know, I think it is very safe to say we are at that part of it. I would, I'd mention two. So the first one is, you know, I was around when Expedia bought HomeAway and Verbo at the time. And at the time I thought of Expedia as, oh, that's where you bundle and save.

4:16So at the time, I'm like, this is going to be amazing. We're going to have vacation rentals you can get in package deals. And, you know, after M &A, you start realizing like, oh, crap, all the technology is still different. Everything's still different. And for a while there, we sort of operated as different intentionally. But now that we've replatformed, we are at the point now where we finally are going to sell package deals and bundles on the Expedia platform with the Vrbo Vacation Rentals. So it's taken, oh, I don't know, about a decade. But just as someone who, that was like my first light bulb when I found out about the acquisition and the fact that it's actually happening, I think is really cool.

5:04That is the one that I would say is exciting. The one I think is the most impactful is going to be sponsored listings. Because as you can imagine, I frequently have partners that ask me like, what I really just want is more visibility. And then I need to launch into this whole dialogue about, well, you know, it's a conversion based sword and there's a lot of things that go into conversion. You can reduce your cancellation policies from new promotions, yada, yada, yada. And now I can say like, or you can just buy sponsored listings. And because we have a partner base at a time to platinum subscriptions, which were above gold subscriptions and above silver subscriptions, you know, the idea of trying to do this for visibility is nothing new for him.

5:51And we're really excited about how it's going so far. Yeah.

5:54Michael Goldin: And on the sponsored listings, there's multiple ways to pay, right? Can you talk about, one, some of the data that you have coming out of the pilots, and then two, what the monetization or the strategy is on the actual sponsored listings? Yeah, so actually, I mean, the way it pays pretty straightforward. It is a pay per booked night. It is not pay per click, so it's not paying for an impression. You're paying for a click. You only pay if you get bookings. it is on an auction basis purely with a like flat dollar bid per night so the minimum is five dollars um and then you know five dollars probably will get you there so some people are are bidding something more than that and achieving results um and you will appear in within the top two spots as long as you're relevant for the search and as long as you're a good partner that's going to deliver a good traveler experience because we're not going to do this and drag down conversion and we're not going to do this and degrade traveler experience.

7:00So that's the model. The results are really promising. So in the pilots, we saw 40 % more bookings for those that were participating. So that's probably not surprising. If you're talking about the top two slots in sort, you're going to produce a lot more. I think as we've rolled it out, we've made it a bit more sophisticated to make sure that the bookings are incremental. You can bid for certain nights of the week. You can bid for certain lengths of stay. You can bid for demand from certain countries should you care to. And that's, as you'd imagine, something that's important and particularly for our European business.

7:40um so we're really we want to make sure that what you're doing is you're paying for a booking that you weren't going to get already yeah i think that's some of the comments or maybe like fears for people is that like oh a bad actor can just like throw a bunch of money and just fly to the top so i'm glad to see that that's not the case um that usually isn't the case like i wouldn't expect that you guys would let something like that slip through the cracks um but great to hear that And it's, you know, kind of a sophisticated ad setup. I love the pay per booked night. You're not just like flushing money down the toilet.

8:17Like I think some people sometimes feel like Google ads, you're like, what am I actually paying for? And now you're like, this is exactly what I'm paying for. So that's awesome. It certainly makes the math problem easier for our partners. And, you know, it's really my team, you know, we have 300 account managers globally. it's part of their job to help people understand what is going to be incremental or not now hey if you'll pay me more for something that is incremental i guess i'll take it but that's not how i want this to work you know i want you to be getting more nights than you were going to be getting and i want you to them to be on on verbo so so tim you you mentioned the sort of 40 on growth in bookings is that the equivalent of just like showing up in the top two verse not showing up or showing up on page two or page three generally i think it's a visibility thing i think you it's the same property so it's converting about the same but it's just showing up it's just such a prominent

9:16Michael Goldin: position yeah and they're called out specifically as sponsored listings or there is an ad traveler there is an ad that yeah i think that's that's a requirement for disclosure yep i don't i think people are used to seeing that by now i don't think that that's you know something that people are going to have any issue with and it's good to know. I'm excited about the packages because, you know, to your point, like when a decade ago and you're like, this is going to be great. And I think all of that patience and paying off that technical debt is you're finally getting the benefits of that. And I think that that's, it's also a great way for people to see like the traditional VR managers who are much more like Vrbo focused and don't necessarily, I think, see the point of being on Expedia sometimes.

10:02I think this is a great way of being like, now, look, this is the benefit of that partnership. You're going to get the bundling and the visibility that come with being there. Yeah, I think that, I mean, the Expedia business is becoming really quite meaningful. I mean, we're surpassing a billion dollars annually in run rate of vacation rentals that are selling on Expedia. That's amazing. You know, it's something we've talked about for a while. It's something that we hacked together for a while. And now we're doing properly and seeing the results. On the packages, you know, what's coming to mind, Brandy, is like when you were in Miami, you have a super international crowd.

10:39People coming in from Europe, like package, package probably will crush it there. Or if you're in Mexico or Hawaii, like it's a really valuable way to attract a traveler that's probably going to stay for a while and probably spend a lot of money. Definitely. Tim, as someone who's listing consistently ranks in the top one or two organically on Vrbo, have you heard any pushback from either hosts or property managers that are like, no, I was getting a lot of bookings. Now these sponsored listings are now showing up ahead of me. They're now getting those bookings and it's sort of impacted me negatively or showing up three or four just going to be fine?

11:20I haven't heard it yet. I mean, I think that it's a place where we need to be careful, right? If we have a couple slots that are for sponsored listings, there's still plenty of demand for everybody that isn't participating. Now, if we wanted to sort of just make as much money as humanly possible, as fast as possible, we could dramatically, we can make everything on page one a sponsored listing, but we know that that really isn't in the intent of the marketplace. So we're being careful. I haven't heard the concerns yet. You know, transparently, I have heard some of the like, you know, I work so hard to get premier partner now that getting premier partner is hard.

12:07And I don't like the fact that there's this other competing element there. And I think that's part of why we've incorporated the quality element too so that those things are working well together rather than in conflict yeah i mean it's

12:23Michael Goldin: a merchandising just like google does you want to show up organically but then you're also going to show up in in sponsored slots but we're going to need to be slots have the entire first page now we're going to need to be careful because you know it's e-commerce this this works and if you want to make money we could throw more up there and i can't promise that we won't do more but we cannot take it to the extreme for short-term benefits yeah quick comment on that though like they there's a reality you know we talk to operators who are in their business like this is their day to day and they view every change as very important and almost personal and i really understand that and then there is also like the e-commerce side of things and you have to kind of be with the times and it really will benefit everyone in the long run if verbo is like on par with what everybody else is doing so and i sympathize with the level of change that has occurred i mean especially for people that have been with us for a really long time and even when it was non-e-commerce and they loved the simplicity of that but the reality is you know tiered subscriptions non-e-re non-e-commerce all that stuff like i don't know we stuck around doing that verb i won't hear anymore so um all of the moves that we have made, I know, I was going to say I'd like to think, but I know have in the long run provided more bookings to the industry.

13:49And those partners that have gotten on the bus with the changes are the ones that have benefited more than those that have not. Definitely.

13:56Michael Goldin: Yeah. You want to be early on to some of the changes, which leads me to the next question. And we've talked on this show a lot about LLM traffic, booking reported, you know, sub 1%. Jamie had Jason, the founder of Kismet on, and a lot of it's about attribution could be some of the challenges. What are you guys seeing in terms of traffic and what's your LLM strategy? We are seeing a low base. However, we are also seeing AEO, which is a new cool term I've heard, is one of our fastest growing channels. So that's very exciting. It's going to continue. We're staying at the forefront of it. And then I think there's a certain element of like, how do we think about the visibility in the different LLMs while also leveraging AI internally too?

14:53like we have natural language sort in beta, natural language search in beta on Vrbo. And there's some promising things there too. So I think anybody who has their head in the sand about this stuff will not end up in a good place. They'll end up like the same place we would have if we just stayed with tiered subscriptions and no e-commerce. Tim, when you think about it long term, does LLM search and eventually erode the opportunity on sponsored listings? Like, do you think long term, like the traffic's going to remain where people are searching on Vrbo to find their listings? Are they going to be doing it through their LLM of choice?

15:35And they're ultimately going to decide which properties show up and hopefully they're Vrbo. But that it's no longer your algorithm on showing them up. It's their algorithm. Yeah, I think first of all, I mean, it's our job to first of all, build a trusted enough marketplace and to have a trusted enough offer so that when in fact things do show up, we're the ones that do show up, right? We want to do that. And then additionally, specifically on the sponsored listings piece. Yeah, I have no idea if a language model looks at our sort ranking and one way or another incorporates that into what shows up.

16:14I have no idea. if they do and you pay for a sponsor listing, that's probably good for AEO as well. But I really, I just don't know. Yeah, we're in this phase where everybody is hypothesizing what is going to happen. And you guys are doing kind of like the testing for us. We'll find out in a couple months. It's really crazy how fast all this is evolving. Yeah, it's an exciting time. Yeah, it's exciting. And it's been the subject of many debates on the show and in person at the retreat. You definitely got some of the, I don't know, some of the ire from the crowd of the OTAs versus direct. But I think it'll be an interesting year to see how it all shakes out.

16:57I don't think it was ire. So, like, I can play it back. We were at the STR retreat and we had an intentional structured debate about sort of what was going to be the impact of the changes with AI and how that was going to impact direct bookings versus OTA bookings. And I thought it was a healthy and informative debate. I think hopefully what you guys saw was I tried to remain composed and listen, right? because I need to understand what's the perspective of some of our most valuable partners on this.

17:36Michael Goldin: And that's something Vrbo has consistently done better than anybody else in the space from the host and PM side. I don't think anyone can doubt that. So now I'm interested, Michael, was Tim on Team Jamie or Team Michael in terms of the debate? Tim was redacted. I am stained.

17:58Michael Goldin: Tim sat and listened very graciously. It was good, though. Yes, you were a good sport. Interesting dialogue. Well, there are a lot of products in this release that are for the benefit of hosts, obviously, and one of those is hosts with confidence. So can you explain a little bit about this? And is this for the onesie twosies? Is this for a larger property manager? How do you see this rolling out? Anybody can sign up for it. and it is sort of under one program and one umbrella. It is a wide variety of protection products, including damage protection, including chargeback protection. We are really in beta now with pilot coming this fall, with full go-to-market coming this fall.

18:48Right now, it's probably focused more on the onesie twosies and the individual owners rather than the property managers because they're the ones that are the most exposed and perhaps don't have anything right now. I think the intent for the long term would be to provide the offer to everybody because it is our view that with the scope that we have with an Expedia group, we have the ability to get some pretty good commercial offers for insurance and we can do it in a non-fragmented way under one umbrella. So we're excited about the long-term prospects, but it's going to be the onesie twosies at first.

19:31We also think that part of the future could be, like if you have stuff like this, we've already seen it, like platform partners choosing to not have a refundable damage deposit because they have hosts with confidence and because that happens, they've converted a lot better. So it's not just about the protection, it's about the financial windfall that you get from that in terms of bookings. Yeah. Having the security deposits is just, that's still very old school. So this is definitely a way to make yourself feel better. And like you said, get the financial windfall from that.

20:07Michael Goldin: Jamie, what's your security deposit? I don't have one, but I manage my family's listings and I think I've finally got them off of security deposit. They're like, well, we'd still like to, if it's someone renting that has never rented of us before, we like to do a$500 security deposit. I mean, I can get you guys the numbers later. It decimates conversion as you can imagine. Yeah. So.

20:37So, Tim, one of the sort of announcements that I saw get a little bit of and pushback on was the member-only deals. And I think a lot of people got emails or hosts, property managers got emails about them that member, that Vrbo is going to be rolling out member-only deals. And based on their tier, they were going to get certain discounts on booking. As a top tier Expedia OneKey member, I was really excited about that. But it did, I think for a lot of hosts, feel like it was that Verbo is discounting their property without their permission, even though you could go and opt out and it wasn't something that you were explicitly opting into.

21:22So you feel like they were missing something there? How would you respond to that? Yeah, I think it's a fair call out that, as you'd imagine, I hear periodically. I would say, first of all, with the promotions, the partners that use our promotions convert about 40 % better than those that don't. So using these is going to be ultimately good for the partners and you're going to get a lot more bookings, even if perhaps your ADRs are a bit lower.

21:53And the reality is, we've had these promotions alive for over a year now. If you're not using them, you're not competitive. And, you know, if you have the most incredible house that's on the beach, yeah, you can probably get bookings without it. But if you're if you're just a run of the mill home in the whole bell curve of quality, you probably need to be participating in the promotions. So that's the that's the first part. Now, people want deals. Yeah. Yeah, I mean, yeah, I mean, think of yourself as a consumer, right? So then if you sort of talk about the methodology of the campaigns where we send out emails and, you know, just to be 100 % transparent with how it works with the audience, we will send out an email that speaks to the value of the promotion.

22:47And we tell partners, you should do it. and if you don't tell me you don't want it, we're going to load it on this date. Now, we do that. We do that with at least, I would say, three to four weeks of notice typically. And we do that and we email you three times so that you hopefully don't miss it. And if you're a good partner, you're reading our emails. So I think that for us, it's just about scale. if we needed our team to call over 2 million listings, like we're not going to get to the place that we need to be because ultimately these are a win for the traveler. They're ultimately a win for a partner.

23:36And then, of course, the reason we do it also is because they're a win for us. And what I would say, you know, hey, like I've told you, I've heard from some of these people. And the place I typically start with is, okay, so the first thing that you should do is decline it. And you can do it in one click. So that's where we are at the opt-out campaigns. And we try to be fair about it and make sure that we're over-communicating rather than under-communicating. So on the impact of it, how much of it do you think is just lower prices? and like if you didn't want to lower your price like you could raise it and and like how much of it is like that sort of merchandising strike-through rate you're getting a deal like value does it actually need to be a deal or does it just need to say that you're getting a deal versus like actually showing a much lower price than you were showing price yeah so we um there are if you if If you choose to sort of jack up your rate and then apply the discount to that, we know that and it will have confidence.

24:44Who would do that? You know what everybody does on Amazon?

24:48Michael Goldin: It's like Black Friday deals. Everything is now 50 % off because prices have doubled. So, yeah, I mean, we know that you're doing that and we will not give you quite as much benefit because you're doing that. then what we're seeing overall in terms of promotions is, you know, the interesting thing is our ADRs for the year are up, despite the fact that we've had tons of promotions that are coming through the marketplace. And I mean, what we said in the last earnings call, I think was 40 % of our production was flowing through a promotion. So what that says to me is travelers are trading up. They're getting a nicer property.

25:30They're getting a nicer property at a better value, which is a terrific thing for them and a terrific thing for us. And it's incremental looking for that partner rather than sort of what I would consider the race to the bottom. Well, in addition to the kind of technical debt slog that you've been doing at Expedia and Vrbo on that side, You've also been paying down some debt on your software side and have a bunch of fun new releases. You have the, I mean, the PMS space is, it's getting spicy these days. So why don't you tell us some of like the cool new features that are coming out with Escapia?

26:11Yeah, so here's the deal with Escapia. Escapia has been around for 25 years. It has a really loyal partner base. And the thing about Escapia is Escapia works really well. I mean, the trust accounting is amazing. The reporting is terrific. However, if you think of some of these software companies, I sort of say they're all sizzle and there's not a ton of steak there. Escapia is just all steak. It just flat out works. Now, we also recognize, though, because it's 25-year-old software, there's a lot of monetization that needs to occur. So we've invested heavily in the ResGrid, which is the number one place that people spend their most time.

26:52And we've upgraded that to be something that is something that we're more proud of in 2026. We also are working on improved distribution. So, you know, just because we own, we as Vrbo own Escapia, that doesn't mean we only want you to produce on Vrbo. We're trying to make sure that to the extent you get bookings on other OTAs, it flows more seamlessly into your accounting so that you can be successful on Escapia across a variety of platforms. But then, of course, we also want Vrbo to be the first mover on some of the key APIs with third-party software. So that's where things come in like we, you know, Escapia is the only third-party software that currently has links to do sponsored listings in it.

27:44It's not a full API yet, but it's the only thing where the sponsor listings are in there. Another example would be Vrbo Payments, and that's our merchant record solution. And, you know, we know that's a controversial one. there's plenty of people that sort of have said um i can't wait for you to do this and there are other people that have said over my dead body um and the good news it's still optional but there are partners that are using on escapia and they're doing really well because as much as people may hate merchant of record in some cases um it's a more seamless booking experience and there's less traveler cancellations and you can burn one key cash on those bookings and as such you do convert better so um we are giving the option to our escapia partners to get on uh on verbo payments still in pilot now but we're scaling that uh over the course of this year and into next yeah the payments are always i mean i've been on both sides of that argument um for variety for you know booking when they launch booking payments we would like toggle it on and off depending on the time of year which they hated um i'm sure yeah um but uh yeah it's a great option for people to have i mean as credit card fraud becomes more like creative i think not being the merchant of record can be really appealing if you're in a market where you're dealing with a lot of that so if you can you know manage the cash flow component of that it's definitely a great option and just great to see that there's these improvements coming to your software side.

29:20And you kind of touched on this a little bit, but since you are in the PMS space, what is your view of the landscape right now? I think there's a lot of options out there, is what I would say. I think that there are some that are getting more investment than others. And it will also be interesting to see, especially with the prevalence of AI, how are people thinking about all-in-one solutions versus perhaps a software that does more basic things, but then staples on top of that really good partnerships so that people can sort of have it their way. Is that the Burger King slogan? If you want something that literally does everything end-to-end, you can buy that.

30:10or alternatively you can do a little bit more of choosing what you want. Yeah, it really depends on the operator. I think how you build your tech stack has been this conversation and my view on it has kind of ebbed and flowed over the last couple years as different technology comes out. So it's definitely a good point. And yeah, I think with AI, people want – I mean, I hear about people ditching entire software that I considered staples before. So I think it'll be very interesting to see what happens next. It's rapidly changing.

30:40Michael Goldin: Just vibe code your own system. Yeah, that's not going to go well for a lot of people that are trying to vibe code their full stack. Yeah. But we'll find out. We'll find out. Tim, thank you very much for joining the show. One last question before we go. What is the one thing that most excites you over the next 12 months that Vrbo's doing? Boy, I mean, all of the things that we've done are pretty exciting. I think that you're also going to see more things that are coming in the trust space. So I think, you know, we've started with firing partners that are bad. We've also done VrboCare, which really gives a terrific reason to book with us.

31:27But it's kind of like my vision has always been my vision has always been the bad experiences are so are so infrequent that we can really, really wow you if in fact something bad does happen. And I think that we're going to continue to double down on some of that trust stuff as the reason you should come to Vrbo. Because all the studies we see say that that's what makes people nervous about our category. Is all of the variables that can go wrong that you typically don't think about when you're staying in a hotel. So that's the swim lane that we're going to play in. And if that means that we have fewer properties, that's cool.

32:11and if that means we need to at times sort of shell out some money to right a wrong we're going to do that too as well so much more to come in 27 on that beautiful

32:29Michael Goldin: well appreciate you joining again we always love having you on and sounds like as more products come out through the rest of the year we look forward to those up yes can't wait to be on again every time you come you announce more stuff and we're gonna have to make next year's uh what an hour long hey i'm down i'm down hopefully there's so much rolling out that i'll have to it's a lot it's a lot better a few years ago huh um but yeah you're like something's coming something's coming and now you're like it's here i i can talk about it i was so sick of saying something's coming but i hope you guys have a great time in madrid and for the love of God, eat a vegetable this weekend.

33:09Yeah, noted. Good advice.

33:37Thank you.