It hasn't attracted a ton of publicity but Expedia.com, Hotels.com, and Vrbo customers can't redeem their OneKey cash on Vrbo properties hosted by most property managers.
That's because Vrbo requires that property management companies – unlike individual hosts – be the merchant of record and handle their own payments.
Now Vrbo is trying to fix that issue.
Appearing earlier this week on the Alex & Annie podcast, Tim Rosolio, vice president of vacation rental partnerships at Expedia, said the company will introduce an optional program for property managers this year that would enable Vrbo to be the merchant of record for their bookings.
Customers would be able to use their OneKey cash on those listings. That not only boosts the OneKey program is an important way for Vrbo to take market share from hotels and other rivals.
"We know that some property managers value maintaining merchant of record status, and at the same time, travelers are increasingly looking for a less-fragmented booking and payments experience," Rosolio told Skift in a statement Friday. "Additionally, we know that travelers value the ability to earn and redeem rewards across all their stays. At Vrbo, we’re building a solution for professional property managers that will enable travelers to have a seamless experience and access to the full benefits of our loyalty program."
On the other hand, Airbnb is the merchant of record for all bookings.
An Expedia Group spokesperson declined to detail the number of property management listings on Vrbo versus individual host listings. However, 2020 U.S. data from Key Data found that property management revenue from Vrbo was more than double that of Airbnb.
Expedia Group CEO Ariane Gorin said during the company's second quarter earnings call last year that 30% of Expedia and Hotels.com customers who used OneKey cash to book stays on Vrbo were new to the brand.
A 'Complication' in Expedia's Loyalty Program
A key element of the OneKey loyalty program, launched in 2023 and available for customers in the U.S. and the UK, is to enable customers of Expedia.com, Hotels.com and Vrbo to earn and burn OneKey cash on any of these brands.
Rosolio on the podcast characterized it as a "complication" that Expedia Group customers can't redeem their OneKey cash on Vrbo's property manager listings.
"Think of it like a currency. It's like Swiss francs or euros and your cash register doesn't take OneKey cash," he said.
So Expedia Group is building the tech and program to change that.
Rosolio didn't provide much detail or the precise timing of the fix.
"We understand maybe that's not for everybody. So we are trying to figure out what's right, the right way to thread the needle."
Mixed Reaction Expected
Being the merchant of record can be important for any business. When property managers are the merchant of record, they promote their brand, and control the payments and customer service.
For example, when there is a dispute about a stay, property managers have the final say on whether guests get refunds when they are the merchant of record.
As a result, there will likely be a mixed reaction once Expedia launches the new program.
Larger property managers may be reluctant to give up being the merchant of record if it means Vrbo gets the ultimate say on such questions.
Many hosts and property managers remember early in the pandemic when Airbnb – as the merchant of record – unilaterally refunded payments to guests.
“We have always appreciated Vrbo’s more partner-centric approach to how they roll out their new programs," Amber Carpenter, chief marketing officer at property manager Vtrips, told Skift. "A strong loyalty program has been missing from the marketplace. We look forward to hearing more about it.”
Vrbo and Marriott run loyalty programs in the vacation rental sector.
Smaller Property Managers Might Be Receptive
Brise Carpenter, vice president of customer success at Hostfully, which provides software to short-term rental managers, many of which are small- to- medium-size businesses, said there is a subset of property managers who would welcome the new program. Many have been asking for such a thing for years. (Brise Carpenter and Amber Carpenter are married.)
"I’ve heard from many property managers over the years who simply don’t want the headache of managing or collecting payments or taxes and are excited for this change," Brise Carpenter said. "This is because operationally it can be a heavy lift and they’re typically running lean."
He added that allowing Vrbo to be merchant of record on property manager bookings would reduce the cost of reservations that get cancelled and where these property managers don't recoup credit card processing fees.
Annie Holcombe, one of the hosts of Alex & Annie, said she sees the pros and cons.
On the plus side, it could be a powerful marketing tool for property managers to tap into a big brand's loyalty program, and would help in avoiding chargebacks and fraud.
On the down side, property managers would have to wait until Vrbo releases payments, and this could disadvantage them against competitors when some owner agreements require prepayments.
"I see both the positive and the negative, but ultimately it will be a choice the manager makes for their business," Holcombe said.
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