October 16, 2013

HOW to rent out your house or vacation property - Or should I open a B&B?

How to rent out a vacation property? I asked myself a while ago and researched the web, and posted some finds earlier here (04/2011). Now, since our residence - Palazzo Pizzo Residence as we still call it - is finally, finally ready to be rented out, I looked again into the vacation rental business.

Before getting organised, I got already one request for our residence from a very nice young lady from the States, earlier this year; she introduced herself via email and her partner. I would have loved to host this lovely couple, but they didn't want to stay one whole week. - Understandable, of course, when you plan a round trip through Europe. (I revised that 'policy' to a minimum stay of 3 days.). Further, it was for early June and none of us or our family could have prepared the residence for our first guests. We were just not prepared!

So in June, I started to promote our residence on this blog, with a very good deal for this summer, and stated: "no minimum stay required - including breakfast" - since I was on site and could have managed myself. But I did not reach any potential vacationers. In fact, it would have been a too nice coincidence if another long time reader would have just waited for me to open the door. Too short notice. No broad exposure.

Then this summer in Pizzo, I met some really nice locals. I do believe I made some new friends! It happened that one of them is an expert in Hotel Marketing. We talked, and I got totally fascinated by the idea of opening my own B&B!!!

Who is not dreaming of giving up hectic corporate life and settling down in a peaceful place somewhere in the South, and making a living with a small but own B&B?! Interesting travellers would come along the way and all together we would enjoying local food and wine...

My new friend helped me to download form the regional tourism board website the application form for B&Bs and print it. He explained me all and with the help of Angelo I got all documents ready.

But then I had second thoughts! - I would have to install a sign (a beautiful sign though, see above) at my door. I would have to clean the B&B, depending on category, every or every second day... I would have to declare who was visiting and when. I would have to declare in which month we will be open and when we would be closed, and I would have to be on site  to run my B&B - as the concept is to help locals to increase their family income. This is absolutely great if you live all year long in your property. So maybe one day I will have my B&B!

After all, vacation rental sounded much easier for our purpose!

A visiting friend had planned a trip through Wales (after Pizzo) and had booked some lovely, lovely B&B's. Wasn't the concept of B&B invented in England? I looked at some professional websites and got inspired. A few hours later, I had set up a new blog with just one welcome post and some pages - it's now my own property website.

And now? Still same question: How would a new customer find me??

The only way is :

You have to sign up with one (or two) big leading vacation rental websites!

But which one is the right one for a small vacation rental? Here is a round-up:

1) HomeAway - Group:
HomeAway, now based in Austin, Texas, was founded in 2004. The company initially acquired several sites and consolidated them into a single vacation marketplace, launching HomeAway.com in June 2006. The group offers a mix of both international and U.S. properties. It claims to be the world's leading online marketplace for the vacation rental industry, with sites representing over 775,000 paid listings of vacation rental homes in 171 countries. The HomeAway portfolio includes the vacation rental websites HomeAway.com, VRBO.com and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es and Toprural.es in Spain; AlugueTemporada.com.br in Brazil; and HomeAway.com.au in Australia. Asia Pacific short-term rental site, travelmob.com, is also owned by HomeAway. Also US based BedandBreakfast.com belongs to the group.

Travelers can find a vacation rental for free and homeowners pay an annual fee of US$ 349 (or about 254 Euro or 208 GBP) to advertise their property (with possible upgrades at extra charges for better ranking). If you choose to offer online payment a 2,5 % credit card processing fee applies. You can upload up to 24 photos of your property. Special services by HomeAway include among others possibility for owners to exchange tips with other owners; owners and travellers can buy insurances (damage protection, Europe assistance etc). Other rental websites belonging to the Group:

  • HomeAway holiday-rentals.co.uk - belongs to the big mother HomeAway since 2005 - mainly focuses on UK costumers (annual fee starts at 249 GBP for a "classic" listing).
  • Ownersdirect.co.uk - bought in 2007 by HomeAway - is based in the UK and aims more to UK and Canadian customers with half of the rentals in Canada (annual fee of 219 GBP; you can combine your HomeAway.co.uk listing with Ownersdirect by topping up your annual fee by 159 GBP). 
  • VRBO.com (Vacation Rental By Owner) - belongs to HomeAway since 2006 - claims to be the oldest and most established US rental site (annual subsricption start at 349 USD)

Update 30th October 2013: HomeAway is now offering as well a free listing with a 10% commission to be paid by owners upon guest check-in. No further booking fees for guests will apply. The new "pay-per-booking" is only for certain countries. Others will stay with the annual fee. The "free listing" is only attractive for owners who rent below 5 weeks/year at a daily rate below 100 USD. If you plan a higher return, go for the annual fee!

2) Tripadvisor Vacation Rentals:
TripAdvisor, the world’s largest travel website and an operating company of Expedia acquired United Kingdom’s largest independent holiday home website, holidaylettings.co.uk in June 2010. The acquisition showed TripAdvisor’s expansion into the holiday home market, following the launch of vacation rentals on TripAdvisor in 2009, and the purchase of a majority stake in U.S. based FlipKey.com in 2008. Holidaylettings.co.uk continues to be operated as an independent site.

You can list your property with Tripadvisor directly, if you have more than one room to rent. In order a customer can make a booking your listing should be connected to your own property website or any another booking website like Holidaylettings, Flipkey, venere.com, Booking.com etc. If you have only one room or apartment, and still want to be listed on TripAdisor, you can sign up with one of their above mentioned agents. The advantage of being listed on Tripadvisor is that this is one of the most powerful travel website worldwide. Even if travellers don't book here, they come here to read the reviews about possible accommodation and restaurants. And maybe, someone who would not have considered booking a holiday rental before, will find you on Tripadvisor and send you an enquiry.

3) Holidaylettings (HL) established in 1999 in the UK and bought by Tripadvisor in 2010 offers two different plans for owners: Plan 1) annual fee of 329 GBP (or about 402 Euro, or 550 USD). This allows you to get payed instantly by your customers, and your customer pays no booking fee. You will need to make over 11,000 GBP rental revenues per year to break even (or over 4,100 GBP if you use the 5.5 % booking fee paid by customers to increase your price). If you don't think to make that much money, opt for plan 2) a 'free' listing - especially when you like to fill your empty rooms for a certain period of time. Also great to start and check out how it all works! Well, it is not totally free, as mentioned before HL charges 3 % handling fee - deducted from the owner's earning - and a very fair 5.5 % booking fee, which is charged to the traveller on top of the rental price. So HL earns in total 8.5 % - still less than the other agents! - The money is safely hold back with HL until the guest checks in. Only 48h later the money is released (on the next working day) to the owner. Conversation between owner and guest is possible and helps to make up your mind. You can decline a request. Some emails via HL however, seem delayed (due to filter/control of content?). On the Internet you will find some complaints about slow customer service and slow response to all kind of problems. Apparently some owner/traveller are less happy since Tripadvisor has its hands on. - I cannot complain so far. The online tools to manage your property are clean and easy. Payment statistic, total earnings, communication history, page views, referring pages (visitor source) etc all very transparent and helpful. You can upload 24 photos. The guest's review is posted on both sites, Tripadvisor and HL. - However, if you want to change your payment method you need to call in the UK during office hours.

4) FlipKey established in the US since 2008 - Tripadvisor purchased a major stake in 2009. Webpage is driven by guest reviews and aiming to American market. It also offers two plans: 1) annual listing for US$299.99 and 2) 'free' listing where guest pay booking fee and owner pays processing and hosting fee. However, it was not clear to me how much these fees would be. Also the website looks less appealing than British HL or the American competitor airbnb.

5) airbnb
stands for 'airbed and breakfast', and was an idea by two room mates in San Francisco who rented out a room (with an airbed and breakfast) in 2007 during an international conference out of financial needs. A start up was established in August 2008 and since then this fresh looking company claims to offer unique properties in more than 19,000 cities and 192 countries. Hosts can check potential renter's profile and reviews (yes, you can review your guests!) and vise verse. Conversation between the two parties are well supported. Social network connection via linkedin and facebook are provided and used for 'verification'. Being social is kind of requested - most owners feature a profile picture, a profile write up, and your friends can write testimonials. That makes Airbnb almost another social network... The property listing is 'free', but owner pays a 3% handling or payment processing. And travellers pay a booking fee between 6 - 12% (!) depending on the amount... but here ends the transparency!! - When an owner "accepts" an enquiry, then a quote is automatically submitted to the customer without any chance for the owner to check the rate or add individual cost or allow special discount. Also due dates for payments are not visible. It is like the agent would tell you "this is none of your business". - However, the website is well designed, Californian style, fresh look, many eye candy interiors, young and innovative - visually -  but not technically - during my setup many times I had to redo things that were not saved well (maybe browser problems, as the website indicates, might be the source for problems). Where HL is clearly better value for money (for guests), airbnb releases the payment slightly faster (for owners), 24h after the guests have checked in. Also the amount of photos you can upload seems unlimited. Very special and useful seems the free photographer service by Airbnb, which not only gives you the chance to have really nice photos of your property but also a "verified" watermark by Airbnb shows potential visitors that your property is real. Another gadget is the "guidebook" that an owner can setup along his/her property listing. You can add restaurants and sights to a map around your property - however only as good as the amount of listings via airbnb and the right position in google map.

6) Booking.com
Booking.com established in 1996 and based in Amsterdam, The Netherlands, is part of Priceline.com. The company claims to be the world leader in booking accommodation online, available in more than 40 languages, and offering over 354,181 properties in 187 countries. I find this agent very commercial, putting a lot of pressure to offer lowest price and to enhance speedy booking - a pressure felt by both owner and customer - guests pay to owners directly, no booking fee for guest - owners get invoiced a 15% commission fee on total booking amount (to be transferred by owner to booking.com). Although the most expensive choice for owners, probably resulting in most frequent bookings. Increasing your rental to cover your costs does not work when you offer lower rates elsewhere. Booking.com also reserves the right to automatically resell a room that one of its customers has cancelled, in order not to lose the commission. That means you lose control over who will appear at your door step. This is what a home owner wouldnt' want to happen. I feel, this agent is more suitable for a hotel business.

For Palazzo Pizzo Residence I decided that being on Tripadvisor is key. So I signed up with UK based Holidaylettings for their free listing - to try it out. And then I decided to give American based Airbnb and HomeAway a try as well.

If you are a traveler or holiday rental owner and have experience with one of the mentioned sites, please share your experience.

Before going live with your property you should compare what other owners in your area have published, and how they price their vacation rental. A good read about How to the Rental Rate for your Holiday Home is provided by HomeAway.

In my next post I will write about my first experiences with our listings on Holidaylettings and airbnb - and of course about our experience with the first visitors and their first reviews! All very exciting!

Read also WHY renting out your house or vacation property.

Update November 2014:

Fees have been increased by rental websites without any notice. The billing is not really transparent and you only find out if you observe regularly. Here are my latest observations regarding agents’ commissions:

AIRBNB: 12% (guest) + 4% (host) = 16% total
HOLIDAYLETTING:  10% (guest) + 3% (host) = 13% total
HOMEAWAY: 0% guest + 12% (host) = 12% 

The last two platforms offer annual plan's for hosts, but they are only interesting if you make over a certain amount of rental income per year. However they charge then still some handling fees to hosts. With Homeaway you mainly buy better ranking with their different annual plans. And their "customer service" is non-existing. While the airbnb community is developing fast and "groups" for hosts give excellent, prompt and priceless advises. Less community but a strong team, Holidayletting with Tripadvisor, is attractive for both, owners and guests.

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