Do you ever get the urge to just… go away?
I certainly do. With the press of deadlines and other work, vacations are really important. For several years my wife and I have taken mini-vacations simply by looking for houses to rent in places we like.
As residents of Texas, our appreciation of Belfast, Maine, soars in July and August. During the dismal weeks of winter, it is places like Sayulita, Mexico, that we think about. At other times— like when I’m trying to figure out how to use our hoard of Southwest Airlines Rapid Rewards tickets— I think about going to some funky part of Florida, like Anna Maria Island, or to a place with a scent of the Pacific in La Jolla, Calif.
Yes, we think about more vacations than we actually take. I bet you do, too.
We do this by visiting two web sites. One is www.homeaway.com. The other is www.vrbo.com. Both offer listings with photographs and written information about vacation homes that are for rent. Some can be rented like hotel rooms, for only a few days. Others are rented by the week or month. On both websites you can find places that range from rustic to rococo. Think palaces.
It turns out this is not a casual undertaking.
It is, in fact, a deeply funded Austin-based Internet startup. Home Away, the umbrella company for a family of websites, is well on its way to becoming the world’s largest collection of vacation opportunities. Although the real estate involved is worth hundreds of millions, not a dime has been spent building the houses, spas, fountains, pools, docks and decks that make this sprawling complex. Instead, the investment is all in the code for the family of websites that allows anyone with a vacation home to list it and rent it to vacationers.
If you think I’m being hyperbolic when I call it the world’s largest collection of vacation opportunities, you’d be wrong. With 425,000 listings, HomeAway rivals the largest hotel chains in the world. The Intercontinental Hotel Group, for instance, recently ranked as the world’s largest, with 619,851 rooms. It is well ahead of Wyndham Worldwide (592,880), Marriott International (545,705), or Hilton (544,361).
If you call a listing a room, HomeAway is larger than seventh ranked Best Western (305,800). But if you figure that each listing typically represents two or more bedrooms, HomeAway would top the list at 850,000-plus rooms, making it No. 1. However you measure, this is enormous for an enterprise that was only an idea six years ago.
Located in a green building full of birdhouses (the iconic image for HomeAway) and across the street from the intergalactic flagship Whole Foods store, HomeAway is a model for the new wave of Internet-based businesses that are helping us get more from less. Remember, they have “found” the equivalent of one of the world’s largest resort chains without cutting down a tree.
In a recent interview, HomeAway CEO Brian Sharples spelled out the economics. People with vacation homes to rent pay an annual listing fee of $300. They also provide their listing information, and the site encourages renters to write reviews.
“The average rental is $1,500 a week, so it takes only one booking to pay for the listing. But the average customer gets $20,000 a year in bookings,” he said.
“HomeAway is a classic Web 2.0 business. It’s all user-generated content. The subscribers are putting up the photos and prose. And the upside opportunity in the business is very big. We think there are 4 million vacation properties in the U.S. and Europe.”
It’s important to note here that the subscriber fee is minimal compared to most of the alternatives, including property management contracts. As a consequence, Mr. Sharples believes that many vacation home owners who might not have considered renting their home may now build some rental income into their plans.
And that’s a good thing.
The National Association of Realtors estimates there are 8.1 million second homes in the United States. Not all are vacation homes, but many were built and purchased during the bubble of soaring real estate prices. A little rental income may allow thousands of worried owners to hold onto their vacation dream by sharing it. A rental income of $20,000 a year, for instance, will support about $300,000 of mortgage debt. That will be good for everyone— even those who stay home and worry about real estate prices.
On the web:
January 25, 2008: Slider-Land
October 22, 2008: Watching California— The National Yard Sale Begins
July 4, 2007: Letter from Maine— Reinvention Trumps Loss
July 10, 2005: What I Learned on my Summer Vacation
Filed Under: Burns at Large