2015 vr market trends

TRENDS IN THE VACATION RENTAL INDUSTRY

BILL FURLONG VP, HOMEAWAY NORTH AMERICA

© Copyright 2015 HomeAway, Inc.

THE DEMAND SIDE: TRAVELER TRENDS


AFTER SEVERAL LACKLUSTER YEARS, THERE IS A RESURGENCE IN LEISURE TRAVEL

Two thirds of US adults took a leisure trip in 2014; a new post-recession high. Average household spending on leisure travel is up more than 25% since 2009. © Copyright 2015 HomeAway, Inc. 3

Source: Phocuswright’s U.S. Consumer Travel Report Seventh Edi8on.

TRENDS IN THE KIND OF TRAVEL BEING TAKEN BODES WELL FOR VACATION RENTALS

Travelers say they traveled further in 2014. Travelers say they are taking longer trips. 7+ night trips are up from 30% to 34% of leisure trips taken. © Copyright 2015 HomeAway, Inc. 4


FAMILY TRAVEL IS GROWING ESPECIALLY WELL, BOTH WITH YOUNG KIDS AND ADULT FAMILIES

© Copyright 2015 HomeAway, Inc. 5


VACATION RENTAL AWARENESS GENERALLY STEADY


•  Overall awareness for vacation rentals has leveled off after several years of strong growth. •  While trial is high, vacation rentals are still at a relatively low level as a preferred choice for group travelers.

Source: Ipsos, HomeAway Brand and Category Awareness Tracker, 2009-‐14

19% 27%

32% 34% 33% 34% 32% 32% 33%

40% 46% 44% 41% 40% 42%

0%

20%

40%

60%

80%

100%

Jul 2009 Dec 2010

Mar 2011

Dec 2011

June 2012

Dec 2012

Mar 2013

June 2013

June 2014


PRIVATE ACCOMMODATIONS (AKA VACATION RENTALS) USAGE IS ON THE RISE


13% 17%

25%

8% 10% 10%

14%

22%

3% 3%

9%

0% 5% 10% 15% 20% 25% 30%

2010 2011 2012 2013 2014

Percent of US Travelers Who Have Rented Private Accommoda9ons

Total Combined

Home/Apartment

Shared Space

Source: Phocuswright’s Rentals Rising: The State of Private Accommoda8on in U.S. Travel, 2015

WHILE USAGE FOR VACATION RENTALS IS UP, IT IS STILL WELL BEHIND HOTELS

78% of travelers report that they have stayed in a hotel/motel on their last leisure trip. 9% stayed in vacation rental on their last leisure trip. © Copyright 2015 HomeAway, Inc. 8


78%

39%

9%

Hotels Vacation rentals

Preference – first choice of group

travelers

Source: Ipsos, HomeAway Brand and Category Awareness Tracker, 2009-‐14

TRAVELERS MUCH MORE LIKELY TO BOOK VACATION RENTALS AS PART OF LONGER TRIPS


•  For a long vacation, vacation rentals are a much more common preference, with 16% of travelers selecting them for their accommodations.


VR ONLINE SEARCH DEMAND UP 10% YEAR OVER YEAR

HomeAway Confidential© 2014 HomeAway. All rights reserved. 10

Source: Google search volume, all devices, “vacaSon rental” query category by US site visitors, 2013 through 3Q2015

•  Search for VR search terms is up year over year



Women, 53%

Men, 47%

Women Families and Groups

49% 51%

40%

60%

25%

35%

45%

55%

65%

High School/Some College

Bachelors Degree +

US Travelers

VR Travelers

Well Educated Affluent

0% 10% 20% 30% 40% 50%

Under $50k $50k-‐$100k More than $100k

Non-‐Renters

Renters

1, 3%

2, 29%

3-‐4, 33%

5-‐6, 19%

7+, 17%

VACATION RENTALS APPEAL TO AN AFFLUENT TRAVELER


17%

26% 27%

36% 37%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Under $50k $50-‐75k $75-‐100k $100-‐$150k $150k+

Percentage of Travelers Who Have Rented Private Accommoda9on

31% 44% 42%

57%

106%

0%

20%

40%

60%

80%

100%

120%

Under $50k $50-‐75k $75-‐100k $100-‐$150k $150k+

2013-‐2014 Change in Percent Ren9ng Private Accommoda9on

•  High income travelers are more likely to rent private accommodation. •  High income travelers are also the fastest growing segment of renters.



THE US VACATION RENTAL CUSTOMER IS GETTING YOUNGER

© Copyright 2015 HomeAway, Inc. 13 Source: Phocuswright’s Rentals Rising: The State of Private AccommodaSon in U.S. Travel, 2015

0% 5%

10% 15% 20% 25% 30% 35%

18-‐24 25-‐34 35-‐44 45-‐54 55-‐64 65+ Total

Percent of Travelers Who Have Rented Private Accommoda9on by Age

2013

2014

•  More than half of rental travelers are 25-44. •  Strongest growth is in the 18-44 segment.




MORE RENTERS ARE CROSS-OVER HOTEL CUSTOMERS

19%

47%

35%

10%

39%

52%

0% 10% 20% 30% 40% 50% 60%

Rental decided by someone else

Did not consider a hotel

Considered a hotel

2014

2013


VACATION RENTALS CORE CUSTOMER: FAMILIES AND GROUPS


•  61% of vacation rental customers taking a 4+ day vacation are groups and families. 34% of hotel/resort customers are groups and families.

•  One-third of VR customers are couples.

Source: HomeAway research based on naSonal survey of 1,126 adults who take “long” (4+ day) vacaSons, June 2011

41% 26% 27% 22%

17%

6% 3% 5%

3%

4% 1% 4%

0%

20%

40%

60%

80%

100%

Vacation rentals Hotel/resort Friend's or family's home

Cruise ship

Alone My spouse/partner/S.O. A friend A group not including my family A group of family and non-‐family My family


VRS STILL UNDERPENETRATED FOR CORE TARGET: FAMILIES AND GROUPS


•  17% of 3+ families and groups chose vacation rentals on their most recent vacation. •  43% of 3+ families and groups chose hotels/resorts on their most recent vacation.

Source: HomeAway research based on naSonal survey of 1,126 adults who take “long” (4+ day) vacaSons, 2011

7% 9% 17%

50% 15%

16%

2%

14% 9%

13%

15% 14%

27% 47% 43%

1 solo 2 couple or friends

3+ family or group

Accommoda9on chosen by party size % of adults on most-‐recent long-‐stay vaca9on

Hotel or resort

Other

Cruise ship

Friend or family's home

VacaSon rental


SHIFTING OBJECTIONS FROM NON-RENTERS SHOWS WHERE WE CAN GROW APPEAL


0% 5% 10% 15% 20% 25% 30% 35% 40%

Prefer hotels (generally)

Never occurred to me

Prefer hotel services (front desk, concierge, etc.)

Prefer hotel room ameniSes

Prefer hotel property ameniSes

Too expensive

Uncomfortable staying in someone else's home

Traveling alone or in a small group

Not familiar with booking process

Concerned about cleanliness

Concerned about safety

Not sure what to do if there is a problem

Not confident in payment process

Reasons Why Non-‐Renters Did Not Consider/Rent a Private Accommoda9on 2014

2013

Higher awareness

Process improvement

Process improvement

Want more services Want more services

Want more services

Want more services


STILL INTRODUCING VRS FOR THE FIRST TIME TO MANY TRAVELERS


•  A third of guests are first time VR travelers.

Source: HomeAway Customer SaSsfacSon Survey, Q2 2014

First 9me VR

travelers, 32%

Once every few years,

27%

Once a year, 27%

More than once per year, 14%


ROOM TO TAKE A BIGGER SHARE OF THE VR TRAVELER SHARE OF ACCOMMODATION SPEND

Growth opportunity from driving a higher “share of stay” from current vacation rental users.



7.2

5.8 5.8

6.7 6.5

0 1 2 3 4 5 6 7 8

<34 35-‐44 45-‐54 55+ Total

Leisure Trips Over Two Years

6% 9% 10% 12%

19% 20% 22% 24%

48% 85% 86%

0% 20% 40% 60% 80% 100%

Hostel My own VR

My own Smeshare Room in a private home

Cruise Timeshare as renter

Campground Inn/B&B

Friends/Family VR as a renter

Hotel/Motel/Resort

Accommoda9on Types used by VR Travelers in 2 Years

3.4 1.7 2.5 1.6 2.2 1.3 1.5 1.5 1.8 3.1 1.5

SUPPLY SIDE: TRENDS IN VACATION RENTAL HOMES



VACATION RENTAL HOME PURCHASES ARE SURGING

Source: NaSonal AssociaSon of Realtors 2015 Investment and VacaSon Home Buyers Survey

-‐

200

400

600

800

1,000

1,200

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Units in 000

New and Exis9ng VR Home Sales (units)


VACATION RENTAL HOME SALES PRICES ARE DECLINING


$-‐

$50,000

$100,000

$150,000

$200,000

$250,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Median Vaca9on Home Sales Price

WHERE THE ACTION IS: TOP SPOTS FOR VACATION HOME SALES


•  2015 was a big year for vacation home sales in resort markets. •  In 2015, the South extended its lead as the most popular place to own a vacation home, while the West has

been trending downward.


21% 21% 15% 19%

25% 17% 17% 16%

27%

21%

54%

21%

11% 21% 21%

16% 19% 14% 22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Vaca9on Home Sales by Area Type

Resort

Urban

Suburb

Rural area

Small town

15% 17% 18% 15%

12% 12% 14% 14%

42% 45% 41% 46%

30% 25% 28% 25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Vaca9on Home Sales by Region

West

South

Midwest

Northeast


WHERE THE ACTION IS: TOP TYPES OF VACATION HOME SALES


•  No major changes in the distance to the vacation home that people buy. •  2015 was a big year for buying big and small vacation homes with share moving away from the homes in the

middle.


11% 18% 18% 15%

24% 16% 28%

23%

27% 20%

20% 27%

37% 46%

34% 35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Vaca9on Home Sales by Distance

501 miles or more

101 to 500 miles

21 to 100 miles

20 miles or less

17% 18% 13% 30%

53% 49% 50%

40%

19% 26% 28% 14%

8% 8% 9% 17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Vaca9on Home Sales by Size

3,001 + sq m

2,001 to 3,000 sq m

1,001 to 2,000 sq m

1,000 sq m or less


INTENT TO RENT IS HIGH FROM NEW VACATION HOME BUYERS


•  An amazing 77% of vacation home purchasers in 2013 said they planned to rent out their home to short-term renters.

•  13 weeks was the median of the number of weeks of rental availability


14%

9%

77%

2013 vacation home purchaser rental intentions

None

Other

Short-term vacation rentals

19%

9%

21%

23%

12%

9%

8%

40 - 52 weeks

27 - 39 weeks

13 - 26 weeks

9 - 12 weeks

5 - 8 weeks

3 - 4 weeks

1 - 2 weeks

Planned weeks of rental availability for new buyers


RENTAL INCOME IS A MEANINGFUL SECONDARY REASON FOR BUYING A VACATION HOME


•  People mainly buy a vacation home for their own use or for appreciation. •  But rental income was a factor for a surprisingly high 78% of buyers. •  People expect rental income to cover roughly half of their mortgage payments.


2%

4%

10%

13%

13%

29%

29%

Other

Rental income

For future reSrement

PotenSal price appreciaSon

Low mortgage rates

For personal/family retreat

Low real estate price/ good deal

“Most important factor” driving 2013 vaca9on home purchases

78% 22% Yes 0% 20% 40% 60% 80% 100%

“Was rental income potential a factor in your purchase?”

19% 8%

16% 23%

21% 13%

Doesn't apply 100%

76% - 99% 51% - 75% 26% - 50%

Less than 25%

Amount of mortgage rental is expected to cover



PLENTY OF ROOM FOR RENTAL UNIT GROWTH

Source: Radius survey, 2011.

Total Households: 116M

Households owning second home: 19M

Households owning a vacaSon home: 8M

VacaSon homes rented short-‐term to anyone: 6M

VacaSon homes rented to vacaSoners: 4M

VacaSon homes rented 2+ weeks/year: 3.3M

SIZE MATTERS: 3+ BEDROOM HOMES ARE 50% OF RENTALS


•  Half of homes rented out have three or more bedrooms. •  The biggest and smallest homes get the most bookings per year with the mid-sized homes lower.

Source: HomeAway internal analysis of VR properSes managed by customers using Escapia in 2015.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Number of Bookings Units

Greater than 7

6

5

4

3

2

1 or less 23

22

19

20

21

22

24

-‐ 5 10 15 20 25 30

1 or less

2

3

4

5

6

Greater than 7


INCREASING BOOKINGS PER UNIT AND AVERAGE BOOKING SIZE


•  Bookings per year are highest for the largest and smallest properties.

Source: HomeAway internal analysis of VR properSes managed by customers using Escapia.

10

13 14 14 15 16 17 18

19 21

-‐

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Bookings Per Unit Per Year

$943

$1,090 $1,094 $1,010 $1,024 $1,029

$1,092

$1,248

$1,392 $1,339

$500 $600 $700 $800 $900

$1,000 $1,100 $1,200 $1,300 $1,400 $1,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Average Dollars Per Booking


SIZE MATTERS: 3+ BEDROOM HOMES ARE 50% OF RENTALS




$4,087 $4,024

$3,833 $3,371

$2,630 $2,041

$1,487 $1,111

$858

$0 $1,000 $2,000 $3,000 $4,000 $5,000

9+ 8 7 6 5 4 3 2 1

Dollars Per Booking

28 25

22 22

21 20

19 22 23

10 15 20 25 30

9+ 8 7 6 5 4 3 2 1

Bookings Per Year

$114 $101

$85 $74

$56 $41

$28 $24

$20

$-‐ $20 $40 $60 $80 $100 $120

9+ 8 7 6 5 4 3 2 1

Dollars Per Year (in 000)


FEES STEADY; TAXES SLIGHTLY UP




13% 12% 13% 13% 14% 14% 13% 13% 13% 14% 14%

7% 7% 7% 7% 7% 8% 8% 8% 8% 9% 9%

81% 82% 81% 81% 80% 79% 80% 80% 80% 79% 78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% Fees

% Taxes

% Rent


DAY OF THE WEEK ACTIVITY BY BOOKING AND ARRIVAL DATE


•  18% of bookings are created on Saturday and Sunday. Weekdays evenly spread. •  48% of guests arrive on Saturday and Sunday.


Sunday 8%

Monday 18%

Tuesday 17%

Wednesday 16%

Thursday 16%

Friday 15%

Saturday 10%

Booking Crea9on Day

Sunday 13% Monday

9%

Tuesday 7%

Wednesday 9%

Thursday 14%

Friday 21%

Saturday 27%

Bookings By Arrival Day


LEAD TIME: DOWNWARD TREND FOR PAST FIVE YEARS BUT LONGER THAN HOTELS


Source: Lead Sme -‐ HomeAway internal analysis of VR properSes managed by customers using Escapia. Hotel data from Phocuswright’s U.S. Consumer Travel Report Seventh Edi8on.

108 111

96 103

107

97

133

118 120

129

116

97

75

85

95

105

115

125

135

145

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Days

Booking Lead Time


CANCELLATIONS: DECLINING CANCELS AND MORE TIME TO RECOVER


•  Cancellation rates steadily declining. •  Cancellation lead time increasing, giving VR managers more chance to fill cancelled properties.


18%

16% 15% 15% 14%

13% 13% 12% 12%

10%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cancella9o

n %

Cancella9on Rate

36

59 60 54

66 66 71

79 72 74

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Days

Cancella9on Lead Time


OCCUPANCY RATES PEAK IN JULY AND BOTTOM OUT IN MAY AND SEPT


•  Average occupancy is in the mid-30% range (including owner reservations). •  Owner reservations are roughly 7% of the total.


32% 36% 37%

33% 30%

35%

44% 40%

30% 34% 34%

36%

0% 5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

Occupancy Rate

0% 5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

Components of Occupancy

Hold %

Owner Res %

ReservaSon %


SPEED MATTERS: FAST INQUIRY RESPONSE DRIVES CONVERSION RATES


•  Responding to a lead within one hour converts 40% better than a lead handled within one day. •  The big jump is responding immediately. The conversion gains from 1 hour to 2 days are far less.

Source: HomeAway internal analysis of VR properSes managed by customers using Escapia, Sept 2014 to Sept 2015.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

< 1 Hour 1-‐2 Hours 2-‐4 Hours 4-‐8 Hours 8-‐24 Hours 24-‐48 Hours > 48 Hours

Conversion % vs Timeframe of First Response to Lead


CHECKS AS A PAYMENT METHOD USED BY VR MANAGERS IS REMARKABLY HIGH


•  30% of total payment transactions worth 48% of transaction dollars are made via check.

Source: HomeAway internal analysis of VR properSes managed by customers using Escapia, Sept 2014 to Sept 2015.

64%

43%

30%

48%

3%

3%

3%

6%

0% 10% 20% 30% 40% 50% 60% 70%

% of Total Payments

% of Total $ Volume

Payment Methods and Amounts

eCheck

ACHCheck

Cash

Check

Credit Card


VR MANAGER FEES WIDELY DISTRIBUTED


•  Average VR management fee is 23%. •  15% of properties are charged a management fee over 30%.


0%

5%

10%

15%

20%

25%

30%

35%

6-‐10 11-‐15 16-‐20 21-‐25 26-‐30 31-‐35 36-‐40 41-‐45 46-‐50 51-‐55

Management Fee %

Distribu9on of VR Manager Fees Charged to Owners


VR MANAGER FEES BY REGION RANGE FROM <20% TO ALMOST 30%




THIRD PARTY DISTRIBUTION IS SURGING FOR VR MANAGERS


•  The dollar value of VR manager bookings through third party sites has gone up 9x since 2011. •  In the past year alone bookings have gone up by almost 70%.

Source: HomeAway internal analysis of VR properSes managed by customers using ISILink and EscapiaNET.

$-‐ $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 $180,000,000 $200,000,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2011 2012 2013 2014 2015

Bookings and Dollars on Third Party Sites using HASP Distribu9on

BOOKINGS

TOTAL RENT


THE VACATION RENTAL BOOKING PROCESS


ONLINE BOOKING CLEARLY BECOMING THE PREFERRED TRANSACTION METHOD


•  Clear trend for leisure travelers doing all their booking only online. •  Steady decline of the percent who always or usually book offline. •  VR online booking is steadily rising but still well below the hotel industry.

Source: PhoCusWright US VacaSon Rentals 2009-‐2014; PhoCusWright U.S. Consumer Travel Report Sixth EdiSon; TravelClick North American DistribuSon Review, Aug 2014 includes OTAs, hotel websites and global distribuSon systems.

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

2010 2011 2012 2013

How Travelers Booked Leisure Trips

Only/usually offline

Both online & offline

Usually online

Only online 12% 14% 18% 20% 22% 24% 28% 31%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2007 2008 2009 2010 2011 2012 2013 2014

U.S. online share of VR rental bookings

N.A. Hotels 62%


BOOKING OFFLINE LESS AND LESS PREFERRED BY YOUNG TRAVELERS.


•  Only 11% of young travelers prefer to call the hotel to book. •  Calling the hotel is increasingly uniquely preferred by older travelers.



IN SUMMARY…

•  Great macro trends: More travel; more families; longer trips. •  VR awareness, trial and overall usage continues to grow rapidly. •  The vacation rental traveler is getting younger and more affluent. •  The “VR youth movement” is accelerating changes in how travelers search, choose and book. More

mobile. More online booking. •  As vacation rentals go mainstream, the barriers to further penetration of non-renters are increasingly

the level of services that hotels traditionally provide. That provides a great opportunity for VR managers to fill that gap.

•  Distribution of vacation rentals to third party listing sites is surging. Having a successful online listing program matters more than ever before.

•  The rate of vacation home purchases had a banner year. •  Trends for VR managers are positive. Bookings per unit and dollars per booking are up.

Cancellation rate is down and cancel lead time is up. •  The premium earned from renting larger vacation homes is huge.



The whole house. The whole family. A whole vacation.

2015 vr market trends

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