Expedia CEO Peter Kern discusses Vrbo’s performance: Vrbo hosts earn on average more than Airbnb hosts.
Over the past two weeks, investors have heard the CEOs of Airbnb and Expedia / Vrbo talk about the performance of the first quarter of 2021. For those who have smartly chosen to watch the paint dry rather than listen Appeal on Expedia results, here are some of the highlights and takeaways about Vrbo and the vacation rental industry. According to CEO Peter Kern, “We have benefited greatly from our vacation rental business and our domestic business in the United States, but other aspects of the business still remain struggling.”
Related: Airbnb CEO Brian Chesky Discusses First Quarter 2021 Performance
Expedia does not share Vrbo’s independent performance; Kern and CFO Eric Hart repeatedly told investors on the call that he was not going to release Vrbo separately. “I would say Vrbo is doing really well,” Kern said. “The United States is particularly strong; but like I said, in all of our strongest markets, we are showing share gains. And Vrbo is clearly – and vacation rentals in general – in very positive territory, and that helps push all of our numbers up, without a doubt. But we don’t separate them separately. “
In the first quarter, Expedia’s gross bookings were down 48% compared to the same period in 2019. Overnight stays were 54% lower than 2019 and accommodation revenue was down 46%. According to Cleveland Research, the United States accounted for 80% of total revenue in the first quarter of 2021, compared to 57% in the first quarter of 2019.
Expedia CEO Peter Kern (Kern): The journey remains a study of contrasts. As for the different geographies, some are still closed, others like the United States are quite open now. And also, this is a study on the differences between vacation rentals, domestic travel and international travel; business travel is more difficult; and conventional accommodation, especially in large cities, is more difficult. So, it really is a study of contrasts. . . . The summer is shaping up to be strong, particularly in the United States and other markets where vaccinations are on track. We are already seeing booking trends well above 2019 levels for leisure destinations, beach, mountains and more.
Expedia’s concern about the trip
Kern: I would just like to keep in mind that while the summer is shaping up well and we are ambitious and feel good about the overall recovery, this timeline is still a question mark. We don’t know what the seasonality will look like, as long as COVID is around. And the usual trends that might occur in the fall and winter are still unknown. So while we are extremely excited about the summer, it is a bit too early to predict how these trends with working from home, if school is in progress, and so on, will change commuting behaviors over the course of the year. of the following quarters.
Vrbo is looking for more supply
Like Airbnb, Vrbo is looking for more supply in markets where demand is high (beach, lake, mountain). Expedia is also responding to this consumer demand by pushing travelers to hotels.
“But the reality is that Vrbo hosts earn more overall than average Airbnb hosts.”
Kern: We see some compression in the summer. People often ask questions about it. And I will just say that so far we have seen the replacement as a very good solution. Most people are looking for something that they cannot find, they will find something nearby. And more and more, as more and more people are vaccinated, they are willing and happy to stay in resorts and conventional accommodation. And I would say some of them would actually prefer that. And we’re seeing a very high number of conventional accommodations in these summer recreation destinations.
Campaign to increase supply with the “quick start program”
Vrbo has launched an aggressive campaign to increase supply from homeowners, whom it now calls “hosts,” mimicking Airbnb.
Kern: We have therefore increased our investment in marketing and attract Vrbo hosts, if you will, or the owners. It has succeeded. We are driving it as fast as possible. There is a lot of demand and we are focusing, as you can imagine, in the busiest areas where we need and can sell as much new inventory as we can get. We launched a new product, which we called the Quick start program, where we basically take successful hosts that are highly rated by other platforms, and we quickly launch them into our platform; and instead of having to rebuild their stature as a highly rated host, we sort of proxy their experience elsewhere. And we put them, if you want, very high in the genre and allow them to start their business with us.
But the reality is that Vrbo hosts earn more overall than average Airbnb hosts. And it’s a great opportunity for people to monetize their assets. We think it’s better than any other in the same situation. And we think property owners are becoming more aware of this as our brand becomes more ubiquitous and people get used to the products more and more. So all of our stats make up a great sales story. We just have to get it out there, and we’re spending more to get this story out.
A greater push for the brand and direct marketing
Expedia is investing heavily in branding and direct marketing and still doesn’t list its vacation rentals with meta-products, including Google. Kern’s branding comments are of interest to VRMs as they reflect on their own direct marketing efforts.
“Can you get them in the door?” Can you make them love you? Is the experience great? Does it help them find what they want? “
Kern: We believe that we can do better and do more on the brand building side and create that direct customer relationship. Then that bleeds all along, of course, the importance of doing the right thing, getting the right engagement, improving applications, improving technology, using AI to improve the business. client experience. So all of these things are the classic kind of virtuous cycle of: Can you get them in? Can you make them like you? Is the experience great? Does it help them find what they want?
Brand marketing is a bit of art, not just science, and it takes time to pay off. We believe, however, that by being more of a funnel – by being more efficient in terms of performance and allowing us to put more money up front – we can generate better returns in the long run. Now, it’s not a fast twitch muscle. Like I said, brand marketing now is like running a good ad and tomorrow everyone is booking. We must repeat. You have to sink into that branding proposition and get everyone to focus on your name, and then it starts paying for rewards and performance. He begins to pay rewards and to lead. It starts to be rewarded for a lot of things.
So we believe in this opportunity. We will invest in this opportunity, and it will take time to pay off. It’s not like performance [marketing]. It’s not like you buy the deal every time you make it.
We have a new summer ad campaign for Vrbo that we believe will have a real impact. . . . We’ve already talked about going up a funnel, creating that brand love, pushing for direct interactions, direct consumption. But keep in mind that this is not a quick contraction tool like performance marketing. So we have to invest over time to build this.
On our last call, we mentioned the last time we ditched Google meta-products for vacation rentals. And in fact, in this last quarter, we’ve moved away from other vacation rental meta-players. And so far the results have been great, and as good or better than what we could have hoped for in terms of the returns we’ve seen by getting more direct traffic and traffic in other ways, more efficiently. So it was a great decision. And we will continue to focus on that. But again, we’ll be more outspoken, we’ll be focused, and lean on the wave to come. But it could be bumpy and we might be a little early, but we think now is the time to lean and we will lean accordingly.
Income per night is on the rise
Chief Financial Officer Eric Hart: Income per night has increased by 10%. This is due to two main factors, mixing in Vrbo and then mixing in the United States as well, where ADRs are generally higher. . . . Vrbo obviously sees some nice ADR improvements, just considering the demand in this industry.
On the “Revenge Travel” trend
Kern: I’m looking for a revenge trip, whatever. Whatever type of trip people want to take, we’re happy to accommodate it, revenge or whatever. . . . And I would say that for revenge or not, places like Miami demonstrate that there is a huge pent-up demand to go to places where people can have a relatively normal travel experience. And I don’t know if you’ve been to Miami recently, but it’s crowded. The hotels are full. People are everywhere. The restaurants are full. . . . So if you just think of it in a macro way, you say, okay, where people can travel, where they can have a normal experience, where they feel comfortable freely, whatever your words are, it there is a huge amount of demand for it.
Kern: Finally, I would just say that we are clearly benefiting from our relative strength in some of the better markets, VR, US, etc. But it’s a bumpy ride, and we’re hoping for reopening. . . . We still don’t know what’s going on in many markets. Everything can happen. Things could get worse before they get better, but we’re optimistic. We are seeing many improvements around the world. And we feel good about the work we do in the company.