There's a popular post circling about why direct booking sites for STR/MTR are overrated. Although the author makes some good points it skips over many of the benefits and how the risks can be mitigated.
Owning Your Business Vs Operating within another business
In 2019 Airbnb had a hiccup in their algorithm where some listings simply did not show up on searches for several months. The issue was eventually fixed but many landlords lost thousands of dollars.
Airbnb and VRBO change their algorithm all the time
If you are relying entirely on 3rd party platforms, you don't have a business. You are operating within another business. It's like driving on Uber claiming you own a taxi business. No, you drive for Uber.
OTA Customer Service
We've all dealt with the poorly trained 3rd world customer service of these OTAs. The issue is, they hold all the cards.
They have the guest's payment information and process refunds erroneously all the time.
I had a guest complain of a smoke smell the day AFTER they checked out and claimed they never stayed in the apartment because of it. Airbnb refunded them the ENTIRE stay of nearly $2,000. We sued Airbnb in small claims court and won but you have little to no real power when dealing with the OTAs.
Saving on Fees:
Airbnb charges guests 14% and hosts 3%. So you can charge 15% more on your direct booking site and guests would still pay less booking through your direct booking site.
Getting on Google Travel:
Although Google Travel is one of the lesser-known OTAs it's not actually an OTA. They direct guests to your direct booking site where they make the reservation.
Google Travel recently fired the head of the department for not being aggressive enough and is expected to grow its market share over the next few years due to its unlimited funding and access to the world's largest search engine
Google Travel is also not the only platform that syndicates listings from direct booking sites.
Extending Reservations off other platforms
If you've had STR/MTR for any length of time you know it's common for guests to ask to extend off the platform. Although most hosts don't allow it, they're leaving lots of money on the table.
Tread cautiously as this does violate many platform's terms of service.
Additional steps are required to protect yourself, which I'll review in the Drawbacks Section of this post
Google SEO
Depending on your niche and location, you can rank on Google Search for "rentals in your city". This does take quite a bit more work to SEO optimize your site but in many markets, you can rank above the OTAs. For example if you Google "Cabins in Big Bear" a direct booking site ranks #1. There are many thousands of searches a month for that key term.
Different Cities will have different competition levels for ranking.
Diversification:
Diversification applies beyond direct booking sites but you should have your listings everywhere.
- VRBO
- Booking.com
- Airbnb
- Google Travel (through Direct Booking Site)
- Furnish Finder (Direct Booking Site)
Speaking of Furnish Finder. For my Mid Term Rental Hosts out there. We know Furnish Finder has no booking feature. Guests are expected to book with you directly. Not having a place for them to finalize their reservation can look unprofessional. A direct booking site allows guests to make the reservation with less work on your part, extend the reservation as they see fit, and even charge a deposit or upsell.
41% of our bookings last year were from direct booking sites.
Drawback to Direct Booking Sites
- It's Work: You save time in the long run but it is work upfront. There are platforms out there to make it easier for you like Hostaway, Guests, or Lodgify.
- You need supplemental insurance to protect yourself. You are not covered by the OTAs insurance. So there is an additional cost but it's typically much less than the fees charged by the OTA platform. We've also mitigated losses with a security deposit.
- No Reviews: As hosts we can filter out potential harmful guests using reviews. Our team has mitigated that risk by collecting a security deposit and asking good questions.
- Marketing for Gurus as mentioned in the other post, many gurus use this as an opportunity to try to sell expensive courses. Although some have value you don't need to spend thousands of dollars to learn to set up a direct booking site.
- Rental Agreements - You'll need guests to sign rental agreements and upload a photo of their ID. This may sound like a lot of work but again, use software to automate
Final Thoughts
The STR/MTR space is getting crowded. Depending on your market, you may have already seen a decline in occupancy. If not, it's coming. Thanks to the aggressive rise of Airbnb, many of us hosts have experienced a period of abundance. The reality is, it's not going to last.
Only those hosts treating this as a business and offering the best product are going to keep both rates and occupancy high.
