InvestmentA Manager’s Lesson: Beware of Price Gouging in Vacation Rental Software

Everyone likes to make a profit.  It’s perfectly fair and reasonable to do so and a founding principle of the capitalist society we live in.  When that profit is unearned or unwarranted to the point of damaging trust then I’d call it “gouging ” and a poor model for a service business.  We just stopped a poor example of this practice when it comes to vacation rental software, retold here as a salutary lesson to owners and property managers alike – don’t believe what you are told in the sales pitch.

Luxury Simplified Retreats is one of our business streams that provides management and concierge services for short-term or vacation rental properties mainly in downtown Charleston and on Folly Beach.  We pride ourselves on the quality of the properties we manage, the service we provide to our homeowners, and how we care for our visitors.  By this way we try to differentiate ourselves from a busy marketplace.  The first quarter of this year brought installation of a new property management platform providing visibility and flexibility to set our business apart from the crowd and provide a great service for our clients, homeowners and renters alike.   The system (Escapia, from Home Away) does not readily interface with all the major competitive vacation rental platforms on the market, instead relying on third party vendors to provide the interface and continuity.  The vendor recommended to us during our setup and training phase was Red Awning. 

Red Awning provides its own booking platform and passes booking data to and from the major competitive sites of VRBO and Air BnB, among other players.  We were told that Red Awning added a “small but variable booking fee ” to cover costs, site management and the like, but they could not be specific as it varied throughout the season.

Our exposure to the practices of Red Awning came in two steps.  Firstly their implementation was flawed in that a series of false promises and missed “go live ” dates never did reach a conclusion.  This happens, and is maybe not the end of the world.  It did however result in us passing property data to Red Awning ready to accep bookings from them.  Missed go-live dates caused us to investigate our properties as advertised by Red Awning on their own platform.  Take for example “Sea La Vie “, a 4-bedroom family vacation rental on Folly Beach that we manage for a client. The data below reflects prices advertised on Red Awning’s site vs. ours.  

Booking dates:  06/24/2017 – 06/30/2017

Weekly rental fee:  LS Retreats $5,700; Red Awning site $7,040

Cleaning fee:  LS Retreats $250; Red Awning site $455

So in essence, their stated “small variable fee ” turned in to a massive $1,545.00 per week in additional charges, or about $25,000 pro rata over the 16 week summer season for a single house.  This is without our knowledge and consent, or that of our clients. Our contract with Red Awning was terminated 2 hours after failing a satisfactory explanation – we know BS when we hear it.

The lesson here for anyone managing their own property or offering such a service to others is never to fully trust the sales person and always to verify the final charges when up and running. Our alternative vendor now charges a 4% flat fee which is reasonable for the service offered. 

Note: As an investor and property owner, always do your research before working with vendors and property managers.  Our Luxury Simplified Retreats team utilizes various platforms to market their clients’ property in order to fill occupancy at top rates. They also keep an eye on moving pieces and much more … see what they can do for you.