What On Earth Happened At Owners Direct?
From darling of the independent owner to introducing big fees overnight and facing a class action lawsuit things have certainly changed.
Almost 30 years ago when the internet was in it’s infancy Owners Direct started up with a very simple philosophy of advertising holiday properties on behalf of private owners only charging a simple annual fee for a listing. Over the years it grew and grew, sticking by its principles and weeding out agents that listed their properties. As time went on and technology changed a game of cat and mouse between the directory and agency owners developed which was actually quite fun and conducted with good nature on both sides rather like a 1970s teacher catching the smokers behind the bike sheds.
Of course we had nothing to do with this sort of behaviour but a friend of mine was telling me how if he was struggling for bookings in a property he would create a blank template on his website with duplicate property details and a virtual number that diverted to his switchboard to get around the checks before posting the advert from a newly created hotmail account.
In 2007, HomeAway came calling and plucky independent Owners Direct Joined a host of other directories consolidated under the US based group and quietly the rules were relaxed. By 2010 agents were being approached by Owners Direct suggesting a relationship and a few years later we had a dedicated team to deal with us administrating a bulk account with discounts and even filling in the content for us to help maximise our spend with them. On the one hand this was a great way to give a boost to underperforming properties at a reasonable annual charge however I did worry that increasingly I would meet owners telling me that they could manage without an agent as directory listings were so efficient. We had the defense of being a full service agent so owners continued to join as they didn’t want to organise their own cleaning and be on call 24 hours a day but many were predicting that the writing was on the wall for the booking only agent.
In November 2015 the news broke that Expedia were acquiring HomeAway for an eyewatering $3.9 billion. Yes you did read that right billion as in thousand million and more than the GDP of about 40 countries. The world gone totally bonkers- how could an investment like that ever pay off? I even read a fabulous conspiracy theory that as Expedia makes most of it’s money from Hotels it was buying up the competition to deliberately run it into the ground.
Now suddenly all becomes clear. Regular readers may remember my piece about Airbnb, Holiday Lettings and other directories changing model from charging a set listing fee to taking payments online and taking a percentage out of the value of the bookings. My point was that they were charging pretty much the same as an agency but getting the customer to deal with their own enquiries and look after their own guests- Genius, wish I’d thought of that.
Airbnb’s approach to this has been entirely honourable and transparent- they introduced the model and make it completely clear to the guest that they are charging a fee to them, they charge a smaller fee to the owner and there’s no charge for listing on the site. Whilst we were all fretting about charging a £20 or £30 booking fee they showed that in some cases a guest would pay £100 or more as a service charge as long as they felt they were getting fair value overall.
Every other directory looked at the stunning results and quickly looked at introducing a similar offer with various twists. Holiday Lettings/Trip advisor gave their advertisers a choice- continue paying the annual fee or switch to a free listing. The twist is the fee that the guest pays is added into the total so the amount taken by Holiday Lettings is not disclosed to the guest so even more like an agency where you do all the work but at least you only pay when you get a booking. There’s been rumbles about properties on the new model being promoted above those on annual subscription but generally things seem to have settled down and they have a team dealing with agents who sort out a special arrangement for us so things feel OK.
Owners Direct introduced tiered pricing in line with HomeAway where you could pay more to get ahead of other advertisers but the basic listing rate remained the same, results were good and we renewed all our adverts in the spring and added more, spending a very substantial amount of money.
Then things got a bit weird starting with a web revamp and new interface which confused us but we were assured was part of long term improvements. Then for ‘guest protection’ emails were blanked out and phone numbers removed so all communication between us and the customers we had paid to acquire had to be through the dashboard. Ok we went with that and then huge pop ups started to appear obliterating the screen asking us to sign up for online bookings. I called our rep to say we needed to take the money directly as we have our own facilities and was delighted to hear that there was a special facility for agents allowing the guest to book and then be forwarded to our website to pay.
A few weeks later we get a call from a guest saying that they have been charged by Owners Direct as well as us, turns out that guests now have to put in their card details and are charged a service fee in return for a ‘safe payment guarantee’ (rather like the guarantee you already get when you pay with a card) This fee is 6-8% and if in future you want to change to a free listing there will be a further 6-8% charge to the owner.
I think that I paid for a directory listing and if there’s going to be a guest charge then I should at least get a refund of the rest of my year’s subscription but my rep informs me that it’s nothing to do with our contract as the arrangement is between owners Direct and the guest and anyway I should be grateful as their research shows guests don’t mind a fee and the extra protection will get us extra bookings!
I must be the idiot then except that OD has now garnered a rating of 0.3 out of 10 on Trustpilot from disgruntled advertisers and in the US a class action lawsuit is coming. https://uk.trustpilot.com/review/www.ownersdirect.co.uk
So why on earth has this happened? A simple sum. OD has a milion properties, if they take a cautious £10,000 a year of bookings from each and get up to a total of 12% from guests and owners that’s £1.2 billion or about $1.6 billion dollars a year in income. Suddenly $3.9 billion doesn’t seem so nuts after all.