At the onset of the pandemic, it was unclear whether travelers would opt for the security of a major hospitality brand’s health and safety policies or roll the dice with a short-term rental platform where the host is responsible for changing the sheets.
But as 2020 winds down, it’s clear where travelers feel most comfortable as the short-term rental market rebounds faster than the rest of the travel market.
“We were lucky,” said Peter Kern, president and CEO of Expedia Group, which owns Vrbo. “Anybody in the vacation rental business got lucky.”
While Vrbo was a bright point, Expedia still saw revenue fall 58% year over year, losing $113 million this quarter. While the company doesn’t share booking figures, Kern told investors that Vrbo was up year over year. And when competitor Airbnb opened its finances to investors in November, it saw revenue rebound from 72% year-over-year in April to 23% in September, netting $2.5 billion in revenue during that period.
“The positioning for Vrbo is family, bigger groups traveling together, wanting space,” said Kern. “It’s all about the whole home experience, and that’s been a particularly attractive experience during Covid.”
But within the home share category, a juxtaposition is emerging. While Airbnb slashed its marketing budget this year, Vrbo is investing in new campaigns. In fact, in 2020 so far, Vrbo has outspent Airbnb by 10 times, according to Media Radar, which tracks U.S. advertising spend.
Vrbo’s latest campaign, titled “Your Vacation Awaits,” will kick off this Saturday during Saturday Night Live. Narrated by singer John Legend, it will run on ABC, NBC, ESPN, AMC, Bravo, the Food Network, Hulu and YouTube. It’s scheduled to run through at least January and on YouTube through next summer.
Vrbo declined to give ad spend figures, but Kantar put Vrbo’s spend for 2020 through September at more than $51.7 million, down 19% compared to the same period in 2019.
“We haven’t stopped marketing because we believe consumers need to know about and be reminded about Vrbo this year because of the value we bring,” said Lish Kennedy, Vrbo’s vp of global brand. “We’ve been custom built for this moment; 2020 has allowed for us to drive more front-of-mind positioning for Vrbo.”
Vrbo, originally Vacation Rental By Owner, has been around for 25 years compared to Airbnb’s 12 years. Despite these extra years, Airbnb hasn’t had to work as hard to remain in the consumer consciousness.
The platform was able to get 91% of its online traffic through owned or unpaid channels, meaning it didn’t rely on performance marketing to attract visitors to its website. As such, Airbnb cut its marketing budget from $1.18 billion in the first three quarters of 2019 to only $545.5 million this year, a number that includes costly multiyear contracts, such as its deal with the International Olympic Committee.
The difference in spend is reflective of the difference in brand recognition. As Alice Jong, travel analyst at market researcher Phocuswright, said, “Airbnb has managed to build a truly loyal fan base. Other travel brands are viewed as a commodity.”
And while Airbnb isn’t spending as much as it used to, we’re still in the middle of a pandemic. Airbnb could flip the marketing switch whenever it needs, especially as the travel industry continues to grow more saturated.
“When you’re selling something thats pretty much the same thing, that usually augers for relatively high marketing spend,” said Jason Bazinet, an analyst at Citi who covers Expedia. “I don’t think anything about that changes because we’re talking about alternative accommodations.”