HomeAway & FlipKey Unite Against a Common Enemy

Hoteliers And HOAs Versus Vacation Rental Owners

[Alvin Brickman for Metrosetter Wire]

HomeAway is teaming with other vacation rental websites to preempt what they consider to be an overregulation of their industry.  The coalition’s primary goal will be to prevent zoning and licensing changes. Vijay Dandapani, member of the Hotel Association of New York’s board of Directors, has responded by saying that it seems “like they want to have their cake and eat it too,” but couldn’t the same be said of the traditional hotel industry as well as of homeowners associations?

Christopher Calnan, “HomeAway, its competitors to band together soon“:

HomeAway Inc. plans to be part of a coalition being formed with a goal to standardize the vacation rental market to preempt localities from overregulating the industry.

The Austin-based company is in the early stages of teaming with other companies to advocate that municipalities carefully regulate the industry rather than implement heavy-handed zoning and licensing changes. The need for such a group has been sparked by an increased popularity of the rental market fueled by the burgeoning presence of online tools provided by HomeAway (Nasdaq: AWAY) and its competitors, an industry expert said.

HomeAway Chief Strategy and Development Officer Carl Shepherd declined to comment about the coalition through a company spokesman. But he told The Wall Street Journal the coalition would create a website and push for “light” regulations.

The motivation behind the coalition would be to protect the huge growth that companies like HomeAway have achieved in recent years.

Thousands of professional management companies handle vacation properties for homeowners. But the rent-by-owner segment doing business online is dominated by a few major players such as San Francisco-based Airbnb Inc., Boston-based FlipKey and California-based VacationHomes.com.

FlipKey Chief Operating Officer Jeremy Gall also confirmed that industry leaders are working to form the coalition, but he declined to give details, saying it’s too early in the process.

The total U.S. market for vacation home rentals generated $24 billion in 2008, and it’s expected to have surged since then. During 2011, 11 percent of U.S. leisure travelers stayed in vacation home rentals, said industry analyst Douglas Quinby, senior director of research for Connecticut-based PhoCusWright Inc.

“The rise of the Internet and the likes of services like HomeAway’s have really transformed the industry,” he said.

HomeAway, which launched in 2005, operates dozens of websites that market such rentals. The company employs about 1,000 workers, of whom 386 are based outside the United States. In November, it posted a third-quarter profit of $5.1 million on revenue of $73.1 million compared with a profit of $2.7 million on revenue of $61.1 million during the same quarter last year.

The Florida-based Vacation Rental Managers Association is evaluating how it could be involved with the coalition, President Steve Trover said.

“This is an ever-important issue that will boost local tourism economies and better promote industry collaboration and integrity,” he said.

In October, the Austin City Council considered the rules applying to short-term rentals after being in effect for only two weeks. The city reviewed them after public resistance and low registration rates convinced many that, after nearly two years of discussion, the rules were ineffective. Only 19 of an estimated 1,500 short-term rentals complied with the rules and paid the $476 fee, city staff estimated.

The Planning and Development Review director asked the City Council to reduce the total fee to $285 to encourage more registrations.

Last month, city officials said they are still formalizing policies during a rollout over several months based on community and property owner concerns. They also couldn’t provide a compliance rate during the November U.S. Formula 1 Grand Prix race.

Meanwhile, cities such as Paris, New York and San Francisco are considering legislation to restrict the vacation home rental industry. As a result, the coalition’s work with municipalities could have a far-reaching effect, Quinby said.

“It’s a local issue,” he said, “that has global implications.”

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