TRACK VR (Vacation Rental Software) is an enterprise vacation rental software built for growing companies, and companies already at scale. One of the benefits of TRACK VR is the direct connections to HomeAway, VRBO, TripAdvisor and Airbnb (launching Nov 2018) and in the future, other major channels with $0 additional fees for online bookings.
Most property management systems and channel managers charge fees to the property manager for taking bookings from these channels. For example:
Streamline: 1% – 2% per OTA booking
LiveRez – .5% of all bookings plus up to 3%* per OTA Booking via NextPax channel manager
Lodgix – 2% per OTA Booking
BookingPal – 5% per OTA Booking
Guesty – 2% – 5% for all bookings
If you break this down for large enterprise property managers, this can become quite costly. See the chart below as an example with a blended 8% OTA commission rate (across channels) plus the additional fees charged by the channel manager. These are just a few, there are others.
Click on the image below for a bigger view
In this example, by going with TRACK VR and the $0 additional fee – direct connection route, an enterprise property manager publishing and taking $3,000,000 per year in bookings from a channel such as HomeAway, would save $150,000 – $750,000 over the next 5 years in additional fees. At a 5x Multiple – this is $650,000 – $3,750,000 in enterprise value.
So how do Channel Managers and Property Management providers like Streamline suggest you cover these fees that they charge on top of the OTA Commissions? By increasing the rates that you send to the OTA’s, or by passing through the fees to your owners.
The problem with increasing your rates is the OTA’s in the Vacation Rental Industry (just like the hotel space) will eventually want rate parity (we are already seeing it start). In fact, in the future, to participate in their marketplaces, they will require it. This means the rates you publish to HomeAway for example, will have to be no higher than the rates on your own website.
So if you are used to paying 2% or 3% to a channel manager and enjoying the markup model, get ready for a cold reality and a decrease of several points to your bottom line from those bookings in the future.
Vacation Rental Channel Managers provide a valuable service, connecting properties to 100’s of sites online, being a middleware between these sites and the property management systems, and handling difficult APIs and varying models. So it is worth paying for secondary and tertiary sites since PM systems likely won’t build to as many channels as the Channel Managers will, being that is their core business. TRACK does not plan to build to every channel and does currently have the ability to connect to good Channel Managers such as Vaycay Home Connect for additional channels. However, the majority of bookings online for most Vacation Rental Managers, are generated by just a few key OTA’s and these channels are better connected to directly, with $0 Additional fees, instead of paying a middleman markup.