VRBO, Airbnb, and the big squeeze

[Collin Hays]

Ever heard of the tale of the frog in boiling water?  The frog is content in the water, and as the heat rises, he's content to remain in the water.  Until it reaches such a point that he can't get out of the water, and eventually boils.

Many STR owners are in the water currently, and the temp is rising fast: In case you didn't know it, VRBO and Airbnb are quietly hogging an ever-increasing piece of the revenue pie. Four years ago, I was aghast that VRBO would now actually start charging guests to book - somewhere between "3 and 9 percent" in the beginning. Well 3 percent very quickly gave way to 9 percent, and now, 9 percent is nothing but a distant memory. It then went to 10,11,12,13,14 percent. Now it's as high as 19 percent.   

So if you have a cabin that's $150 per night, VRBO and Airbnb are now slapping on a near-20 percent tax on that, plus hefty credit card fees of 3 percent, and occupancy tax of 13%.  

While we all might first say "hey, it's no sweat off of me...my cabin is still full", the truth is, these high fees are eventually going to come home to roost.  VRBO and Airbnb are actually restraining the growth of your rents.  They are artificially keeping your rents from growing, because you certainly can't afford to raise them on top of these ever-increasing fees. This phenomenon is going to end up slowing the STR carousel a great deal.

I own a small PM, and we've decided we are going to invest around $80,000 this year into ramping up our own website and SEO to wean off of VRBO.  We would like to divorce them in 24 months.  They somewhat have us hostage and we are going to free ourselves, even if we have to spend every penny of our bottom line to do so.  If we do not, the investments of our clients are in jeopardy in the near future.