Okay, I have to start this deep dive with a quote
that honestly has probably caused a few arguments
in your living room, or at least a confused glance
or two during a Super Bowl commercial break.
When you see those four letters, V -R -B -O,
how do you actually say them in your head? Ah,
yes. It is the great pronunciation debate of
the last decade. It's sort of the GIF versus
G of the travel industry. Right. Because for
the longest time, I was strictly a VRBO person.
It's an acronym. You spell it out. It stands
for something very specific. It did. But then
almost overnight, it felt like the entire world
and, you know, all the commercials on my TV started
saying VRBO. It felt like someone changed the
rules of the English language when I wasn't looking.
Well, effectively, they did change the rules,
or at least the massive corporation behind the
name decided to rewrite the dictionary for their
own benefit. And honestly, that confusion, that
shift from saying the letters to saying a smooth,
marketable word is actually the perfect entry
point for what we're talking about today. So
it's not just semantics. Not at all. I mean,
that shift represents a fundamental change in
the business model. It represents the move from
a clunky kind of functional tool for homeowners
to a sleek. lifestyle brand for mass consumers.
It mirrors the shift from the early internet
to the platform economy that dominates our lives
today. That is exactly what we are here to unpack.
We are talking about the platform officially
known as of 2019 anyway, as Vrbo. As Vrbo, yes.
And while you might think of it... Just as that
app you use to book a beach house in Florida
or a cabin in the Smokies. This story is so much
bigger. It really is. We're talking about a company
that started with a guy in a garage in 1995 trying
to rent a single ski condo. It ended up being
a multi -billion dollar piece of the Expedia
Group empire. It is a fascinating trajectory.
It's a case study in scaling. You have the humble
beginnings, the massive acquisitions, the rebrands.
But you also have the darker side of the platform
economy that we really need to scrutinize today.
Oh, we're going there. We have to talk about
the controversies. We've got stacks of documents
here, corporate history, details on their tech
integration, reports on lawsuits, and some pretty
hairy customer service nightmares that happened
during the pandemic. Yeah, we're going to look
at the fights over refunds, the really unsettling
stories about safety and hidden cameras, and
the massive legal battles with major cities like
Los Angeles. Our mission today. is to trace the
evolution of the vacation rental market through
the lens of this one pioneer. We want to understand,
how did we get from a single ski condo in Colorado
to a global giant that's reshaping neighborhoods?
And crucially, what happens when that by -owner
spirit, which is literally what the name stood
for, gets swallowed up by a massive corporate
machine? Right. Does the soul of the project
survive the spreadsheet? So let's fire up the
time machine. We are going back to the dial -up
days. The year is 1995. A very different internet
landscape. I mean, no Google, no Facebook. Amazon
was just selling books. Completely. And we are
in Aurora, Colorado. I want you to meet David
Kloss. He's a programmer. And like a lot of people
in Colorado, he has a specific enviable problem.
He owns a condo at the Breckenridge Ski Resort.
Not a bad problem to have. No, not at all. But
he wants to rent it out. He's not living there
2047. You know, think about 1995. If you wanted
to rent out a vacation home, what did you actually
do? It was an analog world. You put a classified
ad in a newspaper, maybe the Denver Post or a
skiing magazine. Maybe. Maybe you nailed a physical
flyer to a bulletin board at the ski lodge near
the lift line. Right. It was high friction. You
had to wait for someone to see the paper, call
you on a landline. Maybe you'd... What, fax him
a contract? Exactly. It was slow, your reach
was tiny, and it was incredibly inefficient.
And Klaus, being a programmer, looks at this
emerging thing called the World Wide Web and
sees a way to cut through all that noise. He
builds a website specifically to list his Breckenridge
condo. And he calls it Vacation Rentals by Owner.
Hence the acronym VRBO. And we have to pause
on that name for a second. Vacation rentals by
owner. Yeah. It wasn't a brand name like Yahoo
or Google. It was a literal description of the
transaction. It does exactly what it says on
the tin. Right. And that specificity is important.
It implies a direct relationship. It's not vacation
rentals by a corporation. No. It's by owner.
It suggests a handshake deal, even if it's digital.
And this leads us into the garage phase of the
story. It's classic startup lore. He builds it
for himself just to solve his own headache. But
then what happens? Other homeowners see it. They
see that Klaus is actually getting bookings and
they say, hey, I've got a cabin in Vail or I've
got a beach house in the Outer Banks. Can I put
my place on your website too? And it creates
the snowball effect. It really does. And what's
interesting here is the speed of adoption, especially
considering this is before social media viral
loops. It was just word of mouth. By 2006, just
over a decade later, the site had over 465 ,000
rental listings. That number is staggering for
that era. And the source material says that by
2006, they were adding 100 new listings per day.
That really speaks to the pent up demand. You
have to realize there were hundreds of thousands
of second homeowners across America who had these
valuable assets, these houses sitting empty for
40 weeks a year. Right. They were bleeding money
on mortgages and HOA fees. And suddenly Klaus
hands them a global storefront. Exactly. But
I want to spend a moment on the business model
here because this is really important for understanding
how the industry has changed. OK. In the early
days, Vrbo operated on a subscription model.
Okay, let's unpack that. How is that different
from what we see today? So in a subscription
model, the homeowner pays an annual fee to list
their property. Let's say it was, I don't know,
$300 a year. Sure. You pay Vierbo $300, and in
exchange, you get a page on the site with your
photos and your phone number. That's it. So it's
basically a digital classified ad. Precisely.
Vrbo was selling shelf space. They weren't involved
in the transaction. When a traveler booked your
place, they sent the check to you. They paid
you. Not to Vrbo. Vrbo didn't touch the money.
They didn't take a commission on the nightly
rate. They didn't process the payment. That feels
almost nostalgic. It's very old internet. It's
clean. You pay for the service. You get the service.
The incentives are aligned around visibility,
not around squeezing every percentage point out
of the booking. It was a very pure marketplace.
It was simply a conduit connecting you to the
owner. And because of that, it fostered a specific
kind of culture. It felt like a community of
owners. We are all in this together. But as we
know, in the tech world, that kind of slow, steady,
honest subscription revenue is nice. It's nice.
But it's not usually what attracts the sharks.
No. Subscription revenue is linear. Transactional
revenue taking a cut of every dollar that flows
through the system that is exponential. And that's
where the money is. And that brings us to the
end of the garage phase. The sharks began to
circle. Enter segment two, the acquisition ladder.
This is where the story shifts from local programmer
does good to high stakes corporate chess. The
first big move happens in 2006. Vrbo is acquired
by HomeAway. Now, for those who don't remember
HomeAway, who were they in the grand scheme of
things? HomeAway was basically the roll -up king.
Their entire strategy was consolidation. What
do you mean by that? They saw all these fragmented
vacation rental sites, Vrbo, Cyber Rentals, Great
Rentals, all these little independent operations,
and they said, if we buy them all, we control
the market. So Vrbo loses its independence in
2006, but it's still operating. somewhat distinctly
yes it's a brand within a portfolio the name
is still there the website still looks familiar
to its users But the water is getting warmer.
Okay. Because while HomeAway is consolidating
the traditional market, a little startup in San
Francisco called Airbnb is starting to make waves.
Ah, the disruptor. Exactly. Airbnb proved that
people would stay in anything. An air mattress,
a spare room, a tree house. They completely changed
the game. Yeah. And the big travel giants, the
Expedias, the booking .coms, they are watching
this happen with growing anxiety. They are realizing
that hotels are no longer the only game in town.
And they need to own the alternative. They can't
let this whole other market just grow without
them. Which leads us to the real seismic shift.
The moment that turned this into the beast we
know today. November 4th, 2015. I got the date
right here. This is when the big fish swims into
the pond and swallows the medium fish. The Expedia
Group. A giant in the travel industry. They own
Hotels .com, Orbitz, Travelocity. Pretty much
everything you can think of. And they announced
they are acquiring HomeAway, which of course
includes our friend Vrbo. Yep. And the price
tag, hold on to your hats, folks, $3 .9 billion.
Billion with a B. That transaction closed in
early 2016. And I think it's important to contextualize
why Expedia would spend nearly $4 billion on
this. Yeah, why? That seems like an astronomical
amount for a collection of rental websites. Because
they saw the writer on the wall. They needed
inventory. They needed those 465 ,000 homes.
They needed to own the alternative accommodation
market to protect their dominance in travel.
So if they don't buy them. If they didn't buy
home away, someone else would or Airbnb would
just crush them. It would be an existential threat
to their hotel business. So it's a defensive
move as much as an offensive one. Absolutely.
So Vrbo goes from being a subscription site for
ski condos to being a jewel in the crown of one
of the world's largest travel corporations. And
once you are owned by a giant like Expedia, the
pressure to streamline and brand build changes
everything. Everything. Which leads us back to
that pronunciation debate we started with. The
great pivot of 2019. Talk us through this. Why
change the name? Why change the vibe? What was
the thinking here? So Expedia looks at its portfolio.
They have HomeAway. They have Virbo. They have
all these other little brands they acquired over
the years. It's a mess. It's a mess. And they
decide, this is too confusing. We are splitting
our marketing budget 10 ways. We need one horse
to ride. And they looked at the data and chose
Virbo. They did. In May 2019, they announced
they were retiring the HomeAway brand, which,
remember, they spent billions acquiring to focus
entirely on Vrbo as their primary vacation rental
brand. But not just VRBO. They gave it a total
makeover. A total rebrand. New logo. New capitalization.
It's now Vrbo, capital V, lowercase R -B -O.
Right. And the official decree on pronunciation,
it is Vrbo. I feel like there was a meeting room
somewhere where a marketing exec stood up and
said, VRBO sounds like a government agency. It
sounds like you're filing taxes. Verbo sounds
like a friend. That is almost certainly the logic.
Verbo is a word. It's approachable. It sounds
like a verb. Let's verbo a place for the weekend.
Oh, yeah. You can't really do that with let's
VRBO a place. It just doesn't roll off the tongue.
It's stickier. And they put serious muscle behind
this, didn't they? I mean, we're talking Super
Bowl money. Huge money. This wasn't a soft launch.
In 2022, they teamed up with the ad agency Whedon
plus Kennedy. That's the Nike agency. Just do
it. The heavy hitters. They produced a spot called
A Place for Together. It aired during the Super
Bowl pregame. Oh, I remember this. It had that
song from the Muppets. Is that right? Yes. Right
where I belong. From the Muppets take Manhattan.
That is top tier emotional manipulation right
there. Yeah. Using Kermit the Frog nostalgia
to sell rental bookings. That is genius. It creates
a warm, fuzzy association. It frames the brand
not as a transactional website, but as a facilitator
of family connection. Absolutely. The ad is all
about families reuniting, kids running around,
grandparents smiling. It's saying hotels separate
you. Verbo brings you together. A place for together.
It's a powerful tagline. And they didn't stop
there. In that same year, 2022, they became the
title sponsor of the Fiesta Bowl. So now we have
the Verbo Fiesta Bowl. That is mainstream. You
don't get more mainstream than college football
bowl games. Exactly. This is Expedia saying,
we are not a niche site for ski bums anymore.
We are a major consumer brand alongside Coke
and Ford and Budweiser. But here's the thing
that really gets me. As they are polishing the
outside of the car with mucket songs and football
games, they're also completely rebuilding the
engine, right? They are. And this is the under
the hood segment of our deep dive. If you are
a user, you might just see a new logo and a catchy
jingle. But if you are a host or if you follow
the tech industry, the changes were profound
and frankly, a little disturbing for the old
school users. We're talking about the one key
era. Yes. This happened recently in 2023. Expedia
launched a unified loyalty program called One
Key. Explain that for the listeners who might
just book a flight once a year and not pay attention
to the points. Why is this a big deal? So traditionally,
these loyalty programs were siloed. You had your
hotel points, your airline miles. Right. One
Key unifies Expedia, Hotels .com, and Vierbo.
This is significant because it turns Vierbo from
a standalone rental site into just another cog
in the massive travel ecosystem. How does it
work, practically? You can book a cheap motel
on Hotels .com for a business trip, earn something
they call one key cash, and then spend that cash
on a Vierbo villa in Tuscany. That sounds great
for the consumer, honestly. Flexibility is good.
Who doesn't want free money towards a vacation?
Convenience -wise, yes, it's a win. But philosophically,
it represents the final step of platform consolidation.
What do you mean by that? It commoditizes the
homes. A unique historic home in New Orleans
is now just another inventory unit interchangeable
with a chain hotel room in terms of earning and
burning points. It flattens the market. It takes
away the uniqueness. Exactly. And in 2023, they
also migrated Vrbo's consumer front end onto
the brand Expedia technology stack. OK, technology
stack is a bit of a buzzword. What does that
actually mean? For the experience. It means the
unique code, the unique architecture that David
Klaus and his successors built, it's effectively
gone. Wow. Vrbo is now running on the same engine
as Expedia. It's a skin on the same database.
So when I search on Vrbo, I'm basically searching
Expedia with a different color palette. More
or less. It signifies that there is no going
back to the independent days. It is fully integrated.
It's like when a local coffee shop gets bought
by a chain. They might keep the old sign out
front that says Dave's Coffee. But the beans,
the espresso machine, and the employee handbook
are all corporate standard issue now. That is
a perfect analogy. And usually when that happens,
policies get standardized too. Right. And that
brings us to the most contentious part of recent
history. Because you can have all the Super Bowl
ads you want, but when a crisis hits, that's
when you see what a company is really made of.
We have to talk about COVID -19. The pandemic
was the ultimate stress test for the travel industry.
And frankly, it broke a lot of things. I think
we all remember the chaos of March 2020. It feels
like a bad dream now, but remember that week.
Borders closing, flights grounded, everyone panicking.
Complete chaos. If you had a vacation booked,
you wanted your money back. Period. You weren't
thinking about terms and conditions. You were
thinking about survival. And this is where we
see a stark divergence in strategy between the
major players. On one side, you had Airbnb and
TripAdvisor. Okay. When the lockdowns hit, they
made a controversial but very consumer -friendly
decision. What did they do? They invoked their
extenuating circumstances policies. They forced
property owners to offer full refunds to travelers.
Forced being the operative word there. I remember
hosts were furious because that money was gone
from their account. Oh, they were livid. Some
of them had already spent it on mortgage payments.
It was a brutal decision for hosts. But for the
traveler, it was a relief. Airbnb prioritized
the guests' trust and safety over the hosts'
income. They decided the brand reputation with
travelers was paramount. But Vrbo, Vrbo took
a very different path. According to the sources,
Vrbo did not mandate refunds. No. So what did
he say? Tough luck. They leaned heavily on that
by owner legacy. They said, look, we are just
the marketplace. We are the venue. The contract
is between you, the guest and the host. Oh, so
they left it up to the guests and hosts to, quote,
work out the detail, work out the details in
the middle of a global plague. That sounds like
a recipe for disaster. It was. It led to absolute
chaos. You had travelers who had paid thousands
of dollars for a beach house they legally couldn't
travel to because of state border closures. And
the host was saying, sorry, my cancellation policy
says no refunds within 30 days. Tough luck. That
is infuriating. I can see why people were angry.
If I paid $3 ,000 for a trip I can't take because
the government says I can't leave my house and
the platform says, talk to the guy who owns it.
The guy says, no, I'm going to lose my mind.
The backlash was immediate and fierce. Yeah.
There were calls on Twitter to boycott Vrbo.
People were calling it theft. Yeah. And Vrbo
was stuck in the middle trying to maintain their
buy owner philosophy, which is we don't interfere
in the contract in the situation where that philosophy
felt incredibly callous. Did they do anything
to mitigate it or just let it burn? They tried
to nudge people. They prohibited hosts from downplaying
the COVID risks. You couldn't say, oh, it's just
the flu. Come anyway. OK, that's something. And
they offered rewards like better search placement
to hosts who did give refunds, but they wouldn't
force the money back. It's interesting because
it highlights the risk of that buy owner model
we talked about earlier. When things are good,
buy owner feels personal. Oh, I'm renting from
Dave. He's a nice guy. Right. When things are
bad, you realize you don't have a corporate safety
net. You're just arguing with Dave. Exactly.
And it seems Vrbo eventually realized that this
stance damaged their brand. Because if we fast
forward to 2024, four years later, policy evolution
occurred. Better late than never. Perhaps. In
2024, Vrbo finally added a policy for unforeseen
large -scale travel disruptions. Okay, so what
does that cover? Another pandemic, a hurricane.
Under this new rule, if Vrbo decides a situation
qualifies like a hurricane or another pandemic,
hosts must issue refunds regardless of their
cancellation rules. So they finally adopted the
Airbnb approach. They tighten the loosh. They
realize that you cannot leave large scale disruptions
up to individual negotiation. It breaks the trust
in the platform too severely. Right. You can't
have a Super Bowl ad about togetherness and then
let your customers get fleeced during a crisis.
Speaking of trust, this transitions us perfectly
to the next segment because COVID wasn't the
only time users felt like the platform left them
out in the cold. We need to talk about the book
with confidence guarantee. This is a major marketing
pillar for them. You see the badge everywhere.
Book with confidence? It sounds great. It suggests
that if something goes wrong, Vurmo has your
back. But the sources suggest that Guaranty might
have some holes in it? Serious holes. There is
a specific case study in the reporting involving
a villa in Ibiza. Oh, Ibiza. The party capital.
But this wasn't a party, was it? No. A customer
lost 6 ,000 pounds. That's nearly $8 ,000. That
is a life -altering amount of money for a vacation
budget. What happened? The property owner disappeared.
Just vanished. The customer arrived on the island,
luggage in hand, ready for the villa, and...
Nothing. Nothing. No keys. No owner. The address
might not have even been the right place. A scam.
A pure scam. Effectively. Now, usually in the
modern world, you think, OK, call the credit
card company, charge back goods and services
not received. Right. That's standard. That's
why we use credit cards for that protection.
But the credit card issuer wouldn't help. Why?
Because the payment went to an agent, Verbo,
rather than directly to the host in a way that
fit their protection criteria. It was a technicality
regarding how the funds flowed. Oh, that's a
nightmare. So the customer turns to Verbo and
says, hey, book with confidence, right? I have
been scammed. And what did Verbo say? I'm afraid
to ask. They dismissed the claim. They cited
that it was a matter between the host and the
renter. Wait, wait, wait. How can you have a
book with confidence guarantee and then say,
hey, figure it out yourselves when the host literally
disappears with six grand? That feels deceptive.
That is the platform defense. It's the legal
shield these companies use. They argue in court
that they are merely a bulletin board. They aren't
the hotelier. They aren't the landlord. They
are just the connector. So they take a fee for
connecting you, but they're not responsible for
what happens after. They take the fee for the
connection, but they disavow the result of the
connection. But when you were owned by Expedia
and running those glossy ads, that defense rings
very hollow to a consumer who just lost their
vacation front. It creates a massive dissonance,
and Trustpilot reviews suggest this isn't an
isolated incident. There are patterns of people
feeling like the guarantee is more of a marketing
slogan than an insurance policy. But money is
one thing. Losing money hurts. But there are
things that are scarier than losing money. We
need to talk about the privacy lawsuits. This
is the stuff of nightmares. This is where the
stranger's home aspect gets really dark. In 2022,
there were lawsuits filed regarding hidden cameras.
And we aren't talking about a ring doorbell on
the front porch to check for package thieves.
No. We are talking about cameras found in private
areas. Living rooms. Okay. Bedrooms. Oh no. That
makes my skin crawl. It's horrifying. The reports
mention that police actually found images of
undressed guests on homeowners' computers. I
don't even know what to say to that. It completely
shatters the illusion of privacy. You go to a
rental to relax, to be intimate, to be with your
family. The idea that someone is watching. And
this brings up a crucial structural difference
between a hotel and a vacation rental. A hotel
is a highly regulated public space. Right. There
are professional staff. There are security protocols.
There is strict corporate oversight. If a Marriott
put a camera in a bedroom, the CEO would be on
CNN apologizing within an hour. But a vacation
rental. It's just someone's house. You are sleeping
in a stranger's house. And while 99 .9 % of hosts
are decent people, the platform model relies
on decentralized inventory. Verbo cannot inspect
every single bedroom for a pinhole camera. It
is physically impossible. They can't. They have
2 million listings. So you are rolling the dice
on the ethics of the homeowner. And when that
roll goes wrong, the consequences are severe.
These lawsuits highlight that risk. It challenges
the entire premise of the home -sharing economy.
Is the comfort of a home worth the risk of amateur
security and privacy violations? That is a heavy
question. And it's not just guests asking questions.
It's cities, governments. This brings us to the
regulatory wars. This was inevitable. You cannot
drop thousands of unregulated hotel rooms into
residential neighborhoods without the local government
eventually waking up and getting angry. And Los
Angeles decided to pick a fight. Big time. In
2022, the city of Los Angeles sued Vrbo. What
was the specific charge? Noncompliance with rental
laws. Specifically, L .A. has a short -term rental
ordinance. They require hosts to register with
the city to prevent party houses and to protect
housing stock for actual residents. Right. You
need a permit number to list your home. You do.
And the city accused Vrbo of allowing hosts to
use the platform without that registration, effectively
facilitating illegal businesses. And what did
the data say? Was it a small problem? City Attorney
Mike Fuhrer was very aggressive on this. He claimed
that, get this, 29 % of bookings in a recent
30 -day period appeared to violate city rules.
Nearly a third. Nearly a third. Imagine if a
third of the cars on the road didn't have license
plates. That is a regulatory failure. And this
highlights the ongoing tension between platform
capitalism and municipal governance. Always.
Uber did it. Airbnb did it. Vrbo is doing it.
Their business model relies on frictionless growth.
And regulation is friction. Regulation is friction,
so they often ignore it or fight it until they
are sued into compliance. The L .A. lawsuit is
just one battle in a global war over who gets
to control our neighborhoods, the people who
live there or the platforms that monetize them.
It's fascinating how we started this conversation
talking about a guy in Colorado just wanting
to rent his ski condo. It seemed so innocent.
It was innocent. That's the garage phase. But
once you inject billions of dollars in corporate
imperatives, the incentives change completely.
So let's zoom out. We've gone from 1995 to the
present day. We've seen the tech changes, the
rebrands, the scandals. What is the big takeaway
here? For me, the big picture is about the tradeoffs
of the platform economy. We as consumers gained
access to 465 ,000 plus homes. We can stay in
a castle in France or a cabin in the Rockies
with a few clicks. That is a miracle of technology.
It is. I love that access. I use it all the time.
But we inherited the risks. We inherited the
risk of dealing with individual owners regarding
refunds. We inherited the privacy risks of staying
in unregulated spaces. And we inherited the community
destabilization that comes with turning homes
into hotels. It's not a free lunch. It never
is. And as we wrap up, I want to leave the listeners
with a thought to chew on. We talked about how
Vrbo is now fully integrated into Expedia Tech
Stack, Loyalty Program, everything. Yes. As platforms
like Vrbo integrate deeper into these massive
corporate stacks, do they lose that by -owner
spirit that started in 1995? And does that distance,
that corporate insulation, make them less accountable
for what actually happens inside the homes they
list? That is the multi -billion dollar question.
If you are just an algorithm matching a buyer
and a seller, can you wash your hands of the
result? Yeah. Or does the brand imply a promise
of safety that they are failing to keep? Something
to think about the next time you are scrolling
through listings, dreaming of that beach getaway.
Is it VRBO? Is it VRBO? Or is it just a giant
database that doesn't really care who you are?
A cynical, but perhaps accurate, place to end.
Thanks for listening to this deep dive. We'll
get you on the next one. Safe travels.