Sharples and Sprotte challenge the hotel industry
March 18th, 2011 | 
Author: Collaborative consumption trend boosts two different approaches to vacation rentals
In the bubbling market for alternative vacation accommodation, Carsten Sprotte, founder of Paris-Sharing.com and Brian Sharples, co-founder and CEO of HomeAway.com, have a thing or two in common. Above all, both decided to start a company based on a transformational vision of the vacation industry, one where collaborative consumption between individuals supplants dependency on hotels and resorts. For Sharples, the hotel industry has been targeted as enemy number one. HomeAway’s latest advertising campaign, aired during prime Superbowl air time, provocatively portrays hotels as ruthless capitalists who exploit their customers by subjecting them to scandalous accommodation conditions. Paris-Sharing.com has no qualm with best-in class hotels, but has also set out to prove that travellers would be far better off in a Paris-Sharing apartment than in a mediocre Parisian hotel.
RENT A HOME FOR HALF THE COST OF A HOTEL (HomeAway ad)
One last thing in common: both are Austinites. Before settling in Paris, Sprotte grew up in Austin, Texas, where Sharples set up headquarters for HomeAway in 2004.
What the two men least have in common is their current earnings. While Sharples registered $2.5 million in earnings last year (including stock options), Sprotte says he has yet to receive a penny in compensation. But he does still own 90% of Planet Sharing SAS, the company behind Paris-Sharing.com that he founded in 2010.
In this asynchronous interview, we confront the views of the founders of HomeAway.com and Paris-Sharing.com to gain some insight into a market that is currently getting lots of hype…and lots of private equity (more than $400 million for HomeAway alone).
Brian Sharples, co-founder and CEO of HomeAway
Carsten Sprotte, founder and president of Planet Sharing SAS
In a nutshell, how do you describe your company?
Sharples: Today, we are the undisputed leader in the vacation rental industry, and remain committed to offering the best and most efficient sites for owners to advertise their properties and the largest, most diverse inventory for travelers to find the perfect vacation rental home. We literally deliver millions of rental inquiries each year to our owners who list their homes for rent on our sites. The success of HomeAway and the growth of the vacation rental industry are being driven by travelers who seek affordable accommodations, and by owners who have learned that they can earn significant income from their vacation home investments.
Sprotte: Our mission is to offer savvy travellers a truly local experience, without the rough edges and perceived risks. That’s why we focus on providing services both to hosts and travellers, such as online payment and security deposits, local welcomers and concierges with great local knowledge and a passion for their city. The most important part of our business is the human connection, and we’d like the world to be a better place as a result of how people travel. We’ve started with Paris to prove our concept before expanding to other major cities. We are also unique in that we offer rentals, home exchanges and bed & breakfasts “under the same roof.”
Between travel, ecommerce, and real estate, it’s not so easy to identify what industry you are a part of and what your market is. How do you usually present these?
Sharples: We are the global leader in vacation rentals, a rapidly growing $48 billion segment of the travel industry.
Sprotte: To solve the problem, we’ve made up our own market segment that doesn’t necessary fit within the existing boxes. We call it peer-to-peer alternative accommodations, to includes vacation rentals, home exchanges, as well as B&B. Paris-Sharing.com customers are above all seeking out a unique, local experience at a great value. From a purely legal and completely anachronistic standpoint, we are labelled in France as a real estate agency because we have to comply to a host of strict and costly regulations that protect consumers and owners from fraudulent businesses.
Your businesses are ultimately a serious threat to the hotel industry, a bit like peer-to-peer music sharing was to the recording industry. What’s your take on this up-coming confrontation ?
Sharples: It’s clear an increasing number of travelers are considering vacation rentals as an alternative to hotels. We’ve done a lot of work to promote the benefits of vacation rentals—extra space, added privacy and full kitchens—and that marketing and advertising is having an impact. More travelers are asking themselves, ‘Why hotel when I can HomeAway?’ We’ve heard from travelers all across the country who know all too well about the drawbacks of hotels and are now discovering how vacation rentals truly offer more value for their travel dollar.
Sprotte: In Paris, the Tourists Bureau projects a deficit of some 20 000 hotel rooms by the year 2020. At the same time, there are over 100 000 homes left vacant while their owners are away. In August, half the population of Paris is on vacation! Instead of converting more buildings into hotels, why not make better use of existing homes? Both owners and travelers have everything to gain. I don’t expect this to be a threat to hotels, who will still maintain very profitable occupation rates, especially in the world’s most visited city. Rather, I would say it’s a new opportunity that the hotel industry missed out on because too focused on their existing business model.
Both of you have launched what some perceive as “anti-hotel” campaigns for a combined total of $3 million. Tell us a bit about what’s behind them.
Sharples: The Super Bowl gives you an amazing opportunity to reach, in one fell swoop, over 100 million people who are actually paying attention to the ads. I can’t think of a more efficient way to reach that many people, and that’s just the beginning. From there it flows to the Web. Our ad, in short, shows in a humorous way how that for too long, people have been unable to fully enjoy spending time with their friends and family while on vacation because they are forced to spend a lot of money only to be crammed together in a small hotel room. To help save family vacations, we joined forces with a new government agency – the Ministry of Detourism. Its sole purpose is to let travelers know they can leave behind cookie-cutter travel experiences like hotels for the space, privacy and freedom of vacation rentals.
Sprotte: Well, we didn’t spend more than a few hundred euros on our campaign, so the $3 million is for HomeAway. I wouldn’t call what we did a campaign, really. We just set out to document that many hotels in Paris do not provide good value for the money, supported by some photos of real hotel rooms. When you compare the photos with what you can have on Paris-Sharing, it is rather astonishing. That being said, there are some really great boutique hotels in the city that I would recommend to couples who have the budget and want to experience a unique or a luxurious room. That’s another side of Paris, though. Our focus is the local, true-to-life experience.
How do communities and social networks fit into your marketing strategy?
Sharples: We’ve created an online community for vacation rental owners and managers to share their experiences. Thousands of owners and managers who have a passion to share what they’ve learned – each an expert in their own right – want to participate in this industry and this is a platform to do so. HomeAway still hasn’t figured out how to make money on Facebook, and it’s worth pointing out that 60% of HomeAway users haven’t visited Facebook in the prior two weeks. So, while we will place more emphasis on technology in the future, we won’t forsake our roots. Over the years, while others were busy innovating, we were busy buying.
Sprotte: A technology-enabled community is really central to our concept because most of our members use Paris-Sharing.com to rent or exchange their primary home. To do that, you really have to trust people. We foster that trust by having our members complete an online profile. It’s also more rewarding from a human perspective to know a bit about the people with whom you rent or exchange your home. When people develop cross-cultural friendships thanks to their Paris-Sharing experience, we know we’re on the right track. Another important role of our community is to make the best local information available to travellers. Our website provides a bounty of insider suggestions on places to eat and things to do.
What do you find to be the biggest challenge in converting people from hotels to alternative vacation accommodations?
Sharples: The biggest challenge is that the product is not standardized. We have to work very hard to help customers feel comfortable with their purchase decision. Ultimately the experience is controlled by the homeowner, but we do make sure that if negative things do occur we will work with our customers to get them correctly quickly. As it turns out, customer satisfaction is extra-ordinarily high. People who have experience vacation rentals absolutely love it.
Sprotte: We also put a great deal of effort into presenting the product as completely and accurately as possible, so that people know exactly what they’re getting. Many people are also wary of scams and don’t know what will happen in case of dispute, in particular with foreigners against whom they really have no legal recourse. That is why we serve as a trusted third party, to manage the uncomfortable monetary, legal, and insurance issues. Unlike HomeAway, we also decided to focus our business on the entire process of insuring a superb vacation experience. Not only do we assist owners in preparing their homes, we are also there to serve travelers during their stay. This is important because in many cases, owners cannot be present when their guests arrive and depart. Our customer satisfaction is based just as much on the quality of our welcome services as it is on the great value offered by the homes we list. Incidentally, even HomeAway customers (owners) make use of our welcome services!
About the companies featured in this article
HomeAway Inc, based in Austin, Texas, was founded in 2005 and has increased its revenues by 35 to 40% each year since. Financed by $400 million in private equity, it recently annoucned its first IPO for $230 million.
Planet Sharing SAS, based in Paris, was founded in 2010 and is currently open to private equity to accelerate growth. Contact carsten@paris-sharing.com
Comments from CEO Brian Sharples were compiled from the following sources:
- http://www.youtube.com/watch?v=qtQ3uBmS_Nc
- http://www.gridleyherald.com/brandedcontent?articleID=8053150101&categoryID=209
Posted in Uncategorized, Website and company news | 
Tags: HomeAway, interviews, travel industry, vacation rentals
