How the New EU VAT Reforms Affect Vacation Rentals
- The EU has agreed to require platforms like Airbnb, Vrbo, and Uber to collect VAT directly, rather than leaving the responsibility to individual hosts or drivers.
- The rules will be optional starting in July 2028 and mandatory from January 2030, giving platforms and providers time to prepare for the change.
- The EU aims to create a level playing field with traditional businesses, like hotels, which already charge VAT. This move addresses concerns that digital platforms have had a tax advantage.
- With VAT rates reaching up to 25%, short-term rental prices could rise across the board, affecting consumers.
- Instead of individual compliance, the platform will collect VAT, reducing administrative pressure on smaller hosts and operators.
- Organizations like the European Holiday Homes Association warn that these rules may disadvantage platform-based rentals and increase prices, especially for small-scale providers.
Snigdha’s View - Under current EU VAT regulations, businesses exceeding specific revenue thresholds must register for and collect VAT. For instance, in the UK, the threshold is £85,000; in France, it’s €92,000.
- Operators below these thresholds are generally exempt. However, the proposed VAT in the Digital Age reforms aim to standardize VAT collection across all operators, regardless of size.
- The EU’s new VAT proposal could make short-term rentals more expensive for guests, potentially affecting demand, especially in markets where VAT-registered hotels already compete directly.
- If short-term rental prices increase by up to 25% in some regions, this shift may drive budget-conscious travelers toward hotels.
- For property managers, this means rethinking value propositions to highlight what makes vacation rentals unique, such as exclusive experiences, privacy, and tailored amenities that hotels may not offer. Monitoring pricing trends closely will also be essential.
- One advantage is that managers won’t need to handle VAT reporting individually, as platforms will collect and report VAT directly to authorities.
- However, this automatic addition of VAT reduces managers’ flexibility in adjusting final pricing to stay competitive.
- Large platforms like Airbnb or Vrbo may look for ways to mitigate these impacts by rolling out features or exclusive offers to attract and retain travelers despite the price increases.
- Direct bookings could become more appealing to guests as platform fees add to booking costs. Therefore, managers should start building their direct booking channels now, laying the groundwork for 2028’s mandatory VAT compliance.
Expedia and Bing Team Up to Offer Dual Rewards for Vrbo Bookings
- Expedia Group has partnered with Microsoft Bing to offer travelers additional loyalty rewards when booking accommodations on Bing through Expedia’s platform, including short-term rentals.
- Travelers booking eligible properties on Bing can earn both Microsoft Rewards and Expedia’s One Key points, making Expedia brands, including Vrbo, more appealing to rewards-focused travelers.
- Vrbo and other Expedia listings will gain more exposure on Bing in multiple global markets, with Expedia serving as the preferred provider in regions like the UK, Italy, and Australia.
- This collaboration is designed to give Bing users access to over 750,000 accommodations, potentially driving more bookings for short-term rentals on Expedia Group platforms.
- Vrbo and other properties listed on Expedia’s platform may see increased traffic due to this dual rewards structure.
- The integration is live in 16 global markets, giving short-term rental managers a broader audience across key countries like the U.S., Canada, Germany, and New Zealand.
About Bing
Bing is Microsoft’s search engine, integrated deeply within the Microsoft ecosystem, Bing is popular among users who frequently use Microsoft services like Office and Teams, positioning it as a preferred choice for those seeking reliable information and tools.
Snigdha’s View - Expedia Group’s One Key™ loyalty program recently launched in the United Kingdom in September 2024. This program unifies rewards across Expedia, Hotels.com, and Vrbo, allowing travelers to earn and redeem OneKeyCash™ on eligible bookings, including flights, hotels, and vacation rentals.
- Bing’s user base includes a significant proportion of affluent individuals. Approximately 38% of Bing users in the United States have an annual household income exceeding $100,000. (Tech Penny)
- This demographic aligns well with Vrbo’s target market, families and groups seeking whole-home rentals with amenities like kitchens and multiple bedrooms, offering a home-like experience.
- For travelers, the advantage is clear: they earn rewards with every booking on Bing, stacking both Microsoft Rewards and Expedia’s One Key benefits.
- For property managers, this partnership means Vrbo listings are now prominently available on Bing, reaching a new audience, and getting visibility.
- PMs with Vrbo properties can gain increased exposure, especially if they highlight the rewards guests can earn through the One Key program.
- Many travelers actively seek loyalty benefits, so this can be a strong selling point.
Hospitable’s Abandoned Bookings Tool Aims to Recover Lost Direct Bookings for Property Managers
- Hospitable, a vacation rental management platform, has launched a new feature called the “Abandoned Bookings” tool, which reclaims revenue from incomplete direct bookings.
- Within its first week, Hospitable reports the tool successfully recovered over $36,000 in potentially lost booking revenue, demonstrating a high engagement rate with a 58.4% email open rate and a 7.9% click-through rate.
- The Abandoned Bookings tool aims to tackle a common issue in direct bookings: guests who start a reservation but leave the process before completing it.
- This feature automatically tracks these abandoned bookings and sends personalized, timely follow-up emails to re-engage guests, encouraging them to return to the booking page and finish their reservation.
- This feature is designed specifically for property managers (PMs) and vacation rental hosts who rely on direct bookings.
- Hospitable also recently launched AI-powered upselling for gap nights, Apple Pay and Google Pay integration for smoother checkouts, and video embedding for enhanced property showcases on direct booking sites.
- PMs frequently encounter booking abandonment, especially in the direct booking space where guests might hesitate due to factors like unfamiliarity or decision fatigue.
About Hospitable
- Hospitable is a tool that simplifies short-term rental management by automating tasks like guest communication, scheduling, and managing listings on platforms such as Airbnb, Booking.com, and Vrbo.
- It claims to handle up to 90% of guest interactions, including responding to inquiries and posting reviews. Hospitable offers features for creating direct booking websites and integrates with Google Vacation Rentals for more booking opportunities.
Snigdha’s View - PMs frequently encounter booking abandonment, especially in the direct booking space where guests might hesitate due to factors like unfamiliarity or decision fatigue.
- By incorporating the Abandoned Bookings feature, property managers can reduce the risk of losing revenue to incomplete bookings.
- PMs can provide a smoother, more engaging booking process that retains guests from inquiry to confirmation, making it easier to increase direct booking reliability.
- PMs should monitor key metrics like open rates, click-through rates, and completed bookings to assess the tool’s effectiveness over time.
- Some guests may feel uncomfortable with too many follow-ups, so consider a balance in communication frequency.
- While the Abandoned Bookings tool demonstrates promising results, the feature should be seen as part of a broader toolkit rather than a guaranteed solution.
- PMs should evaluate how this feature fits into their existing booking processes and whether it complements their current strategy for increasing direct bookings.
