Is Vrbo a threat to Airbnb?

If you are like me and enjoy watching the occasional programme on live television (which seems somewhat neanderthal given the vast migration to streaming services these days) you may have noticed a new and flashy travel booking platform being advertised of late — Vrbo, which stands for ‘Vacation Rental By Owner’. Vrbo is an online travel booking company and Expedia’s answer to Airbnb, the largest global player in home rental booking services. With Expedia looking to expand Vrbo’s reach and take market share from the largest player, this article will aim to examine how much of a threat Vrbo poses to the long term health of Airbnb and whether shareholders should worry about the competitive threats from the likes of Expedia.


The Tale of Two Platforms


Vrbo has actually been in existence for many years under the ownership of HomeAway, a company that also operated a similar homestay platform. Vrbo’s origins are explained by their name ‘Vacation Rentals’ and Vrbo’s customers are typically families with children looking to stay in a property exclusive to themselves. Both platforms, Vrbo and HomeAway, were bought by Expedia in 2015 with the acquisition of HomeAway. In 2020, Expedia merged both platforms into a singular entity under the Vrbo banner and has since stepped up its focus on growing the Vrbo platform into the large addressable market.


Airbnb, on the other hand, was set up by two entrepreneurs in 2008, who had the idea of putting up an air mattress in their San Francisco living room and turning it into a Bed and Breakfast. This idea culminated in the development of a website, ‘airbedandbreakfast.com’, which grew from airbeds and shared spaces into the short-term rental of all kinds of properties you see today. The company name was changed in 2009 to Airbnb. From humble beginnings Airbnb now boasts roughly 4 million hosts on its platform, allowing guests to stay in over 100,000 locations across the globe. Airbnb floated on the Nasdaq in 2020 and now has a valuation of $86 billion.


Current Market Dynamics


As you are likely aware, Airbnb is the market leader in home rental booking services, with a massive lead on any other booking platform. Vrbo has remained pretty dormant for many years. However, there are signs Vrbo is starting to chip away at Airbnb’s roster of hosts and potentially its customers. The Vrbo April ad campaign publicly trashes Airbnb’s customers, whilst also attempting to lure hosts with better rental economics. In March, The Wall Street Journal reported that Vrbo had launched a program to attract Airbnb’s top hosts by offering increased visibility of new properties and transferring their review score from Airbnb so that hosts can join its platform with immediate status. Data from Transparent, a booking platform analytics provider, suggests these campaigns are working; research citing this data suggested Airbnb lost 1 in 10 single-property hosts to Vrbo in the twelve months to March 31st.


Airbnb has faced a host of threats in recent years, from its own hosts to civil authorities looking to curb the rapid expansion of homeowner hotels in their cities. However, it seems as though this is one of the first times Airbnb has faced a credible and direct threat in its specific segment of the travel and tourism market.


So just how big a problem is Vrbo?


Montreal rental channel statistics — AirDNA


Using analytics platform AirDNA, we are able to see a snapshot of the platform skew for hosts in respective catchment areas. Whilst neither platform outwardly discourages listing on both platforms, a dual listing creates many headaches for hosts, who have to navigate two booking systems adding to complexities. Taking a broad view of 16 popular tourist cities, including New York, Sydney and Amsterdam, the combined results showed Airbnb has an 88.8% host share versus 5.3% for Vrbo, with 5.9% listed on both. Below, you are able to see city-by-city data for both respective platforms.


Source: AirDNA city host platform data


Looking at this data, you can see that despite having a shorter time in the market than Vrbo, Airbnb is the dominant force for hosting guests across the globe. Interestingly, on a locational basis, Vrbo does look to have taken share from Airbnb in some geographies, notably the US, with Chicago listings at 14% on the Vrbo platform. However, Vrbo is yet to even scratch the surface in some markets, particularly in Asia and South America, where although the revenue per guest is much lower, the sheer size of some of these markets is not to be underestimated. Looking to a market such as Beijing, where the catchment area for AirDNA delivered 21,000 available locations, 100% were listed on the Airbnb platform. Compare this to a market where Vrbo is reasonably strong, such as Chicago, only 5,500 listings are visible in the catchment area. To me, this speaks volumes to Airbnb’s brand and international reach and goes some way to explaining how much Expedia would have to spend on marketing the Vrbo platform just to chip away at the market Airbnb has created for itself.


So, we have spoken a little about the dynamics imposed on Airbnb from a host perspective, but what about customers?



Scanning the internet for reviews on the Airbnb platform itself can be tricky and somewhat misleading. Trustpilot customer reviews for Airbnb are 1.5/5 stars, otherwise known as ‘terrible’. But the number of reviewers is 7,000. Given that millions of people stay in Airbnbs in a given year, maybe Trustpilot’s reviewers are slightly skewed to those who want to dish some dirt on the platform! Or consequently, those who have had a bad experience with a host and wish to share the experience.


A better judge of the platform’s quality and thus the customer engagement would be the Apple App Store/Google Play reviews and download statistics. Both platforms score 4.8/5* on the App store, however, Airbnb scores 4.6/5* on Google Play Store versus 4.4/5* for Vrbo. The reviewer numbers paint a fascinating picture, with 1.1m reviews for Airbnb on the Google Play Store versus 20,000 for Vrbo. The download statistics for the pair are also drastically different, with 5m+ mobile downloads for Vrbo versus 50m+ downloads for the Airbnb mobile app.




Source: Google Trends


The above graphic shows the overall Google search trends for the two platforms over the last five years. Whilst web searches for Airbnb have been pretty volatile, and during the pandemic took a real hit, there has since been a recovery, and the gap between the two platforms has returned to its typically wide distance. Whilst both companies have shown little real growth in search term frequency over the last five years, clearly, Vrbo is not much further forward today in generating organic traffic than it was five years ago.


So, to summarise these various data points, it is looking likely that Vrbo remains a very small scale competitor to the global force that is Airbnb, and, thus far, Airbnb’s hosts and customer base remain intact.


Can Airbnb hold on to its position of strength?


Well firstly, there is an argument t