HomeAway faces legal response to fee increase

Home Rental

HomeAway, Expedia's vacation rental business that dabbles in the sharing economy, is pushing out aggressive new service fees for guests booking stays. The company is now charging anywhere from 4 percent to 9 percent extra in service fees on all of its vacation rentals, a practice that rental owners are protesting online, claiming it is scaring away bookings.

Expedia acquired the company for $3.9 billion at the end of 2015, and revealed a plan to triple HomeAway's earnings to $350 million by 2018, a plan that may be a factor in recent fee bumps. However, HomeAway CEO Brian Sharples told the Detroit Free Press that the fees were planned before the Expedia acquisition, with the new funds being used for marketing and working with governments to protect the rights of homeowners to rent properties.

"We’ve always been proud to be the lowest cost solution for renting your home. But we simply can’t provide the level of marketing and service that today’s travelers expect without asking travelers to also pay a fee for the service we provide," Sharples said in an e-mailed statement to the Free Press.

Now a federal lawsuit has appeared to challenge HomeAway's fee increase, claiming HomeAway engaged in "bait and switch tactics" after revealing new service fees for customers booking rentals. The suit was filed in the U.S. District Court in Austin, and claims the increased prices are changing HomeAway's business model, and is seeking class-action status by alleging property owners had contracts in place with HomeAway that would have prohibited the company from changing its fee structure without the consent of owners.

According to MyStatesman, Austin attorney Dan Byrne, who filed the suit alongside California attorney Michael Bowse, said the suit of the first of its kind. Because of this, it remains unknown how long it may take for the suit to be resolved, and a court date has yet to be set.

“We do not comment on pending litigation but, as always, HomeAway is committed to maximizing the value of our partnerships with our owner partners and travelers worldwide,” HomeAway said in a written statement.

Are fees really that uncommon in this space? The answer is no, with the most popular sites in the home-rental space sporting a sometimes hefty fee. Airbnb charges a guest service fee that ranges from 6 to 12 percent per rental. TripAdvisor and it's FlipKey.com site began charging its own "booking fee" for vacation rentals, ranging from 5 to 15 percent.

This is one more aspect of the home sharing market that is bucking conventional hospitality wisdom, and may be something that newcomers to the space may find out the hard way. Hoteliers have known for years guests hate hidden fees, and online review scores always take a hit when these fees aren't spelled out clearly.

With industry numbers as strong as they are, some companies are getting daring. MGM Resorts announced in January its decision to begin charging for parking at all 12 of its resort hotels in Las Vegas. It's just the next step in fees for a company that already charges resort fees (and is actually responsible for creating them).

Now fees could be coming to Walt Disney World Hotels. According to the Orlando Sentinal, Disney is testing the waters with a survey asking visitors whether a potential $15-per-night fee would deter their stay. The survey suggests the fee would cover amenities such as Wi-Fi and parking, something many hotels already offer for free for joining their loyalty program. But just as with the top companies in home sharing, the demand for Disney's park hotels means this fee is most likely an eventuality.