Did Expedia’s CEO Pull a Martin Shkreli?

By July 11, 2016 Blogging

Do you remember this guy?

This is Brian Sharples, President and CEO of HomeAway Inc. If you remember, Brian told us in a video that HomeAway would not charge a traveler fee, but fast forward to 2016 and what do you know? Travelers are being charged a fee.

Screen Shot 2016-07-11 at 3.15.04 PM
Photo provided by: http://i.ytimg.com/vi/rr93I-eNSHg/0.jpg

Today we know what he told us was not true. What happened? What changed?

After a company says they won’t do something, then turns around and does exactly what they said they wouldn’t do, can the company be trusted to honor their word in the future, or is history bound to repeat itself? What do you think?

There is an increasing amount of turmoil happening in the travel industry. Could these new problems we’re facing with HomeAway be partly because there’s a new Sheriff in town?

Meet this guy… This is the CEO of Expedia.

Screen Shot 2016-07-11 at 3.17.29 PM
Photo provided by: https://goo.gl/images/dbVYdt

Dara Khosrowshahi is an Iranian American businessman and the CEO of Expedia, Inc.

Is Dara now the puppet master pulling the strings?

Not too long ago Dara’s company Expedia acquired HomeAway. When they took control of the company overnight, things changed so fast that people’s heads are still spinning.

Some have become disoriented with the marketplace. They’re trying to make sense of what has happened and understand what they should do next to protect their investment’s financial stability.

It was only a few months after the HomeAway/Expedia acquisition that HomeAway began charging travelers fees for booking through their website (exactly what Brian Sharples said would not happen with HomeAway.)

One of the problems advertisers on the site experience due to the new fee is that the fee significantly changes the pricing of a vacation rental for travelers.

That’s why I recently wrote this post to help you offset the fees. You can check it out here- https://villamarketers.com/marketing-tool-offset-new-homeaway-vrbo-fees/

The added costs for the traveler to book is “changing the plans of travelers”,  says Melony, a vacation rental owner in San Francisco.

Melony told me her property is losing interest and bookings because the fee can be as much as an extra $500 for her guests. She further explained that the increase in the price for booking her vacation home is forcing travelers to find cheaper accommodations elsewhere.

Melony offers an upscale vacation home and has noticed travelers are now looking for larger houses they can fit more people into. They’re doing this to split the expenses of the vacation rental with more friends and family to make the rental more affordable for each person paying.

The booking fees are based on the percentage of each booking. The fee can add up to hundreds of dollars in an extra HomeAway booking fee.

HomeAway started charging these new booking fees to travelers in middle of their agreement with its existing customers who listed their properties for rent on the HomeAway website for an already agreed amount prior to the acquisition. Is that a fair business practice?

People are venting on the blogs, social networks and forums about this, screaming “breach of contract.” According to Tnooz, there may be a class-action lawsuit between advertisers on the site and HomeAway Inc. You can read about that here https://www.tnooz.com/article/homeaway-class-action/

Travelers aren’t happy either. You can read about their complaints about paying these new traveler fees in many complaint forums. Many have used the VRBO family of websites for years and are disappointed with HomeAway’s decision to charge their loyal customers a new traveler fee.

This situation has similarities to the events that happened with this guy…You know him?

Screen Shot 2016-07-11 at 3.46.59 PM

Martin Shkreli is an American entrepreneur and pharmaceutical executive. Former chief executive officer (CEO) of the biotechnology firm Retrophin. (Wikipedia)

Shkreli was able to obtain the manufacturing license for Daraprim, a drug used to treat aids patients. Before Shkreli obtained that license the price of the pill was $13.50 per pill. Immediately after Shkreli obtained the license he raised the price to $750 per pill overnight.

Shkreli has defended his price-gauging methods for the drugs, saying he wished he had raised it higher because “my investors expect me to maximize profits.”

Martin Shkreli is definitely very open about his intentions to make as much money as he possibly can for himself and his investors.

Looking at these situations there are many similarities that gets one thinking. Do the travel giants and their CEO’s feel a similar way – but just won’t come out and say it? Is it all about the money? Is it all about their investors?

Let’s have a look closer at the situation.

How does this happen? In both incidents, the two companies possess something of value that people needed, not wanted. In Shkreli’s case, customers needed the product to survive. For owners and managers, the need is a financial one, which can affect one’s way of life.

Why do companies like these feel they can instantly shoot-up the price of their product? Because YOU NEED THEM!

Needs are way stronger than wants. Products that fill “needs” are much more susceptible to drastic price hikes than “wanted” products or services.

The big problem is rooted in the NEEDINESS. When someone needs something people will do desperate things out of that need.

There are very large groups of owners and management companies who want to leave their HomeAway dependence behind them but they can’t- they’re stuck between a rock and a hardplace and can’t move. And when you can’t leave, they don’t have to worry about satisfying their customers with great service.

I’m happy to see that there has been much push back from managers and owners against the big companies trying to control our businesses.

We need to do more and be even more vocal. Do not fall asleep again at the wheel.  Remember they are going to push their agenda regardless, but we cannot let the industry run us over.