Startup makes vacation rentals more hotel-like
RedAwning polishes up listings, reservations for big players
A fast-growing Bay Area startup specializing in vacation rentals just landed a big round of venture capital backing. But it’s not Airbnb.
Emeryville’s RedAwning takes a different approach to home stays than the better-known San Francisco company. RedAwning focuses on helping property managers market their listings, process reservations and provide support such as a help center for their guests.
RedAwning works with Airbnb, as well as other big players like Expedia’s HomeAway/VRBO, Priceline’s Booking.com and TripAdvisor’s FlipKey. It inserts itself as another player between the guest and host (or property manager) to give vacation rentals the professional polish of a hotel stay.
“We help property managers generate more reservations with less work, and for guests add a layer of ease and simplicity,” said CEO Tim Choate, 52, a serial entrepreneur who founded RedAwning as a hobby in 2009 and funded it from his own pocket and company revenue until this year. “We are the largest supplier of properties for most of those websites. We work closely with them to try to present our ads in the best light, making our properties more successful.”
RedAwning exemplifies an increasing trend in vacation rentals away from the
“live like a local,” personalized stays that Airbnb likes to tout and toward a more predictable lodging option with amenities and service similar to hotels.
Airbnb itself, despite publicly emphasizing its listings’ authentic and unique nature, has also moved to increase its professionalism, giving hosts tips on everything from cleaning to guest relations, for instance. This year it outbid rivals for Luxury Retreats, a Canadian company that manages high-end rentals and offers a concierge service for guests. It also supports the idea of third parties taking charge of listings, albeit individuals rather than companies. “Last year we launched a co-hosting tool to offer hosts extra help managing their space when they are traveling or have other obligations,” it said in a statement.
Jason Clampet, cofounder and head of content for travel site Skift, said that Airbnb’s disruptive influence on the “stuck in its ways” vacation-rental industry helped fuel companies like RedAwning.
“Airbnb taught the vacation-rental industry that they can do things differently — invest more in technology, do more with instant payments,” he said. “People don’t want to have to send a Western Union check to Newport Beach and hope it works out. They want safe, online payments.”
RedAwning duplicates or replaces services provided by Airbnb, HomeAway and the like by handling payments and providing 24-hour customer support via a call center in Emeryville, and contractors in Indonesia who handle emails and online chat.
“People who actually know how to do customer service is important,” Clampet said, noting that the big vacationrental sites are regularly dinged for inadequate response to guest issues.
Still, RedAwning’s approach of being an intermediary between guests and property managers — who themselves are intermediaries for property owners — raises some concerns. “There are only so many layers you can shove in there before guests start having to pay too much,” he said. “The person who owns the property wants to make as much money as possible. How much more a middleman can slice off will be a challenge.”
T.J. Clark, CEO of TurnKey Vacation Rentals, a nationwide property management company, uses RedAwning to list his 2,400 properties on Booking.com. “They do a good job helping property managers get into the e-commerce mainstream,” he said.
Although RedAwning will work with individual owners, the company’s main customers are property managers who juggle scores of listings. Typically managers might have 50 to 150 properties, Choate said. Its focus is rentals in traditional vacation destinations like Lake Tahoe or Hawaii.
It minimizes its presence in urban areas like San Francisco, where vacation rentals are controversial because of concerns that they eat into permanent housing. RedAwning’s handful of San Francisco listings either require a 30-day stay (exempting them from vacation-rental laws) or have complied with the city’s registration law, Choate said.
It handles about 40,000 properties in North America on behalf of some 800 property managers. Those managers pay it a commission, generally around 20 percent of their rental income, but RedAwning in turn pays the commissions required by Airbnb, HomeAway and other sites out of its cut, ending up with from 5 to 10 percent of the rental amount.
Most vacation destinations have thousands of listings, making it harder for individual rentals to be seen by prospective guests. Choate said his company meets with each of the big websites quarterly to understand their search tools, and conducts its own tests and marketing to help its properties rise to the top of search results.
The company became profitable — truly profitable, not just cash-flow positive — last year, he said. It’s on track to handle more than $100 million in bookings this year.
Last month, it secured $40 million in venture backing, which it will use to expand to new areas worldwide, more than double its 55-person staff and improve its technology.
After more than two decades in the vacationrentals business, Chuck Maas has seen scores of companies offering marketing and other services. Many failed because they didn’t understand how to work in the fragmented industry, said Maas, a marketing consultant for Lake Tahoe Accommodations, which handles about 200 vacation homes.
Working with RedAwning “was a significant bounce for us,” he said. About $1.8 million of Lake Tahoe Accommodations’ $5 million in revenue last year was generated by RedAwning. “They bring in a third of the business and growing,” he said. “Guests feel more reassured that they’ve got people looking out for them to make sure it’s a good value.”