What’s the deal with HomeAway’s new “booking” fee?

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For the last several days, I’ve been on the receiving end of emails from readers like Paul McWilliams about a new fee being charged by HomeAway, which runs VRBO and VacationRentals.com.

The new “booking” fees, these emails suggest, are poorly disclosed, have no discernible consumer benefits and are being forced on unwilling renters.

I checked with HomeAway — I’ll get to its answer in a minute — but first, let’s hear from McWilliams.

My wife and I own a condo on Siesta Key off Sarasota, Fla., that we rent out most of the year.

We enjoy taking extra steps to help our guests plan their vacation, and are available to help our guests during their stay. Over the years, we’ve made friends with many of our guests, and many of them return year after year. It has been a wonderful experience for us and for our guests.

We have used VRBO since buying the condo, and have enjoyed its ability to connect us to guests looking for lodging in our area. As I’m sure you are aware, there has been considerable consolidation in the web based rental industry where VRBO was an early entrant. Most recently, the group of twelve companies that includes VRBO was purchased by Expedia.

During the consolidation process, VRBO’s parent, HomeAway, constantly took steps to expand its business model. These were mostly focused on expanding the information it gathered from guests, and handling credit card processing (where it gets what can be a 12-month float on guest payments). Essentially, it wants to “own” the guest, and leverage the guest’s’ personal information.

However, since being purchased by Expedia, we are now seeing a new guest charge implemented that equals between 4% and 10% of the rental amount. The most troublesome aspects of this new charge are that it is not presented with any explanation (just as a “service charge”) and it is mandatory.

I noticed the new charge yesterday when it was included in a quote VRBO provided to a potential guest. When I called VRBO, they first said that “guests will love it.” VRBO stated that it provides travelers with “insurance” that they will not get ripped off by rental frauds.

As it was explained, a guest who finds he has paid a fraudulent renter can call VRBO 24/7, and VRBO will work out the issues and in the meantime find and pay for a hotel for the guest.

I would have absolutely no problem if the service was presented as an option, but I have a huge problem with VRBO tacking it on unilaterally to every rental.

When I asked more about it, the young customer service agent, who denied my request to speak with a supervisor, said travelers are “used to fees” and will accept them without a second thought.

Really? I guess the rules governing the elasticity of demand have been repealed at VRBO.

I think what we’re seeing here is the result of so much industry consolidation that Expedia is now acting like a monopoly. As I see it, this new fee is not rip-off insurance — it is rip-off “assurance.”

You’re one of the few people I know with the credibility and audience to take Expedia to task — please help. Maybe you can “shame” them into remission.

When I contacted HomeAway about this issue, a representative replied within seconds. “I’ve been meaning to call you,” he said.

Interesting.

We had a brief conversation in which the HomeAway rep explained that this change had been announced months ago, and had nothing to do with the Expedia acquisition. HomeAway is describing the fee as an upgrade.

He sent me the following statement:

We are announcing changes that enable us to provide the best experience and most value to travelers and vacation rental owners and managers.

We are revising our traveler guarantees to provide even more coverage, reducing prices for owners and managers, and changing the way we monetize our business.

Now, travelers who book or pay directly through HomeAway’s sites will have the full amount of their booking protected against things like misrepresented or double-booked properties. Additionally, HomeAway’s 24/7 customer service team will book a new property for travelers should anything go wrong.

In order to invest in more marketing and product and services, and to cover operational costs, HomeAway is introducing a small service fee that travelers will pay when they book or pay through the HomeAway checkout. The fee will vary from 4 to 10 percent based on the total amount of the rental, but will not exceed $499.

Meanwhile, we are introducing discounts to pay-per-booking customers because they have and use online booking, which is aligned with our goal of all properties being online-bookable by the end of the year.

The cost for owners using pay-per-booking will go from 10% to 8% (5% commission + 3% payment processing) for bookings originating on HomeAway.com, VRBO.com and VacationRentals.com.

You can probably anticipate my next question: How is this fee being disclosed? As long as it’s something quoted up front, as part of the initial price, I think consumers will be fine with it.

We spent some time on the HomeAway site, and it turns out the fee is only disclosed later in the booking process. That’s disappointing. The disclosure, my contact noted, was “a work in progress.”

After our conversation, HomeAway followed up with me.

Regarding the visibility of the fee, if you enter the dates, then click ‘view details,’ it will display as a line-item. It’s also available in the checkout flow with a similar ‘view details’ button. Our team is still testing this since we just rolled it out this week, as I mentioned.

So what to make of all this? I don’t know. I haven’t made a HomeAway reservation under the new system yet, but I’m about to for a rental in Utah, and I will report back when I do. I personally believe all mandatory fees and taxes ought to be disclosed right away, as soon as a potential customer asks for a price quote.

Waiting until the end is problematic.

As they say, it’s a work in progress.

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