More than half a year has passed since we published our landmark study of the vacation rental marketplace. Since we released Vacation Rental Marketplace: Poised for Change, there has been a flood of activity in the sector including new startups, new funding rounds, and some significant strategic moves by some major online travel players. Now is as good a time as any for a roundup.

Expedia Gunning for HomeAway

The biggest news, in my view, is the increasing attention paid to the vacation rental category by the largest online travel players. Expedia CEO Dara Khosrowshahi mentioned vacation rentals as a major strategic opportunity for the company on not just one, but both 2009 earnings calls. Expedia’s traveler review behemoth TripAdvisor acquired a majority stake in FlipKey, a vacation rental guest review platform originally conceived for professional property managers. In 2009, they have already launched FlipKey within TripAdvisor, introduced a booking engine (still fairly scarce in the vacation rental category, where most bookings are handled offline), and opened up their platform to individual vacation homeowners with a daring new program that massively undercuts pricing by market leader HomeAway.

HomeAway, which has more or less cornered the rental-by-owner online listings market by rolling up the top URLs (including VRBO.com, VacationRentals.com, CyberRentals, etc.), charges a few hundred dollars a year (it varies by site and service levels). FlipKey has stepped in with a shocking $1.99 per month offer for homeowners. Check it out here. So assuming FlipKey’s offer gains some traction with homeowners, the key question is: will FlipKey be able to leverage that tremendous TripAdvisor community and marketing muscle to drive traffic to its vacation rental platform and make a dent in HomeAway’s market?

I suspect the answer is yes, but I also believe HomeAway has plenty of fight in them. For starters, they have some of the most aggressive SEO/SEM activity in the vacation rental category across their portfolio of online properties. But Expedia is clearly in this for the long haul. It’s worth quoting Dara Khosrowshahi from the 2Q 2009 earnings call:

On the vacation rentals area, we’re just getting started. We are integrating that product into Trip[Advisor], and the advantage that Trip[Advisor] brings is just the enormous traffic that we bring to the eyeball traffic to the vacation rentals area. The challenge now will be to build up a listings business in addition to the base business that we have. We just think it’s a great target market, but we have to measure our progress there in years, not in quarters.
 – Expedia CEO Dara Khosrowshahi, Expedia Inc. 2Q Earnings Call

Source: SeekingAlpha

This is going to be an incredibly interesting space to watch. And Expedia is by no means alone.

Other OTAs Enter the Fray

Priceline signed a deal with LeisureLink, a distribution company that connects professionally managed vacation rental suppliers to GDS, travel agent and online booking channels. Priceline, which has been gaining share against its rivals amid the recession, is serving up LeisureLink’s condo content within its hotel shopping path. Priceline joins Travelocity and Orbitz, which both already have deals with LeisureLink.

I learned from Tom Botts of Hudson Crossing that Orbitz has also given vacation rentals prominent placement within the recently resuscitated Lodging.com. Lodging’s vacation rentals tab is serving up content from a handful of third-party vacation rental and alternative lodging sites through private-label metasearch Vast.com, which pulls content from a range of sources, including AlwaysOnVacation, BedandBreakfast, PerfectPlaces, Rentalo and VacationHomeRentals among others (but not, notably, from the HomeAway network). Zonder was hosting a private-label vacation rental site for the OTA, but all of the links now go back to the Zonder home page. I have emailed both Orbitz and Zonder for more information.

New Vacation Rental Sites & Startups

Amid the recession, interest and innovation in the vacation rental and broader alternative lodging category does not seem to be slowing down at all. Here are a few sites I have come across, in alphabetical order:

abetterstay (www.abetterstay.com): An under-the-radar B2C play from LeisureLink, which announced a funding round earlier this year. They have gone from zero to 100K-plus in monthly uniques visits in just a few months.

Airbnb (www.airbnb.com): Not your conventional vacation rental list site. Airbnb is a marketplace where anybody with a home, apartment or, for that matter, an empty room can list what they have and seek out renters. Not sure how big the opportunity is to rent out rooms in private homes and apartments to travelers, but certainly interesting. It may be more interesting if they had a meaningful social networking strategy, such as implementation within Facebook to find cheap digs for friends of friends, which leads us to our next find.

Second Porch (www.facebook.com/secondporch): Second Porch is tackling the vacation rental trust issue head on by building its business around social media, and Facebook initially. Second Porch is launching as a Facebook application with some tools to enable vacation homeowners to market their homes via their networks, and likewise to help travelers seeking vacation homes. There are some nice features that leverage maps, Facebook profiles, and cool ways to search for homes via your network (like friendsource in the upper-right-hand corner of the screenshot below). I have not tested all the features (I didn’t want my friends seeing a lot of status updates in my stream when I am just testing), but this is definitely an interesting approach to an issue (trust between renter and owner) that continues to dog the rental-by-owner vacation home market and receive continuing and unjustified negative press attention.

Vast (www.vast.com): Vast is a multi-vertical metasearch private-label platform for autos, real estate and, among other categories, vacation rentals. With the proliferation of vacation rental Web sites across both the professionally managed and rental-by-owner categories, a good metasearch play would be welcome relief for online vacation rental searchers. The key question for vacation rental meta is HomeAway: will the 800-pound gorilla play? My bet: not yet.

This is just a shortlist of some of the developments I have noticed in the past few months - not an endorsement, nor an indication of preference. I am sure I have missed some (including a few that are in private beta). If you think I have overlooked – or overstated – something, please let me know, either by commenting below or via email privately at dquinby-at-PhoCusWright.com.

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