At the start of the pandemic, it was unclear whether travelers would opt for the safety and security of a major hotel brand’s health and safety guidelines or roll the dice with a short-term rental platform where the host is responsible for changing sheets.
By the end of 2020, however, it is clear where travelers are most comfortable as the short-term rental market is recovering faster than the rest of the travel market.
“We were lucky,” said Peter Kern, President and CEO of Expedia Group, owned by Vrbo. “Everyone in the vacation rental was lucky.”
While Vrbo was a ray of hope, Expedia still saw revenue drop 58% year over year, losing $ 113 million in the quarter. While the company does not share booking numbers, Kern did tell investors that Vrbo has been increasing year on year. And when competitor Airbnb opened its finances to investors in November, it rebounded from 72% in April versus 23% in September, generating $ 2.5 billion in revenue over that period.
“The positioning for Vrbo is familiar, larger groups travel together and want space,” said Kern. “It’s all about the overall home experience and that was a particularly attractive experience during Covid.”
However, a coexistence is emerging within the home equity category. While Airbnb has cut its marketing budget this year, Vrbo is investing in new campaigns. According to Media Radar, which tracks U.S. ad spend, Vrbo has outperformed Airbnb ten times so far in 2020.
Vrbo’s latest campaign, Your Vacation Awaits, kicks off this Saturday during Saturday Night Live. It is narrated by singer John Legend and is aired on ABC, NBC, ESPN, AMC, Bravo, the Food Network, Hulu and YouTube. It is planned to run on YouTube at least until January and next summer.
Vrbo declined to provide figures for advertising spending, but Kantar put Vrbo’s spending at more than $ 51.7 million for 2020 through September, a 19% decrease from the same period in 2019.
“We haven’t stopped marketing because we believe this year consumers will know and be reminded of Vrbo because we are adding value,” said Lish Kennedy, Vrbos vp of the global brand. “We were built specifically for this moment. 2020 has enabled us to bring Vrbo to the fore. “
Originally Vacation Rental By Owner, Vrbo has been around for 25 years versus 12 years on Airbnb. Despite those extra years, Airbnb didn’t have to work as hard to stay in consumer consciousness.
The platform was getting 91% of its online traffic through its own or unpaid channels, which means it didn’t rely on performance marketing to attract visitors to its website. As a result, Airbnb cut its marketing budget from $ 1.18 billion in the first three quarters of 2019 to just $ 545.5 million this year. That number includes costly multi-year contracts like the contract with the International Olympic Committee.
The difference in spending reflects the difference in brand awareness. Alice Jong, travel analyst at Phocuswright, said, “Airbnb has managed to build a really loyal fan base. Other travel brands are considered commodities. “
And even though 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 anytime, especially as the travel industry becomes more saturated.
“When you’re selling something that is pretty much the same thing, which usually results in relatively high marketing spend,” said Jason Bazinet, an analyst at Citi who works with Expedia. “I don’t think about it because we’re talking about alternative accommodation.”