Helping You Book Vacation Rentals: FlipKey CEO T. J. Mahoney (Part 4)

SM: How did you initially populate your reviews? Did you crawl the Web for those as well?

TM: No, the reviews came from guests. We had created the accounts for the property managers, but in order for them to use our service effectively they had to upload guest records, which allowed us to invite guests via a personal email to provide a recommendation of the exact home that they stayed in. That is the service we were offering to the industry.

SM: If you offered all of that free, what was your business model?

TM: Property management companies had been operating for decades renting their homes. In Europe, over 50% of the population will stay in a vacation rental this year. In the United States the same figure is 10%. The adoption rate is significantly lower in the United States because of trust.

Our proposition was that by getting guest reviews, they would be able to convert more guests quicker and at higher prices because of the trust we provided. The idea was that if we could amass enough content and reviews, FlipKey.com itself could become a marketing resource. If we began providing guests, we would then be able to charge for premium marketing services. No property managers using our service who want to actively market their properties on FlipKey and TripAdvisor pay us a fee for every call or email we generate from an interested traveler.

SM: So you started off free, and you are now charging for marketing?

TM: We started off free, which is when we created great content and amassed great reviews. Now we are able to get paid for quality referrals.

SM: What was the time between your free offering and your revenue generation phase?

TM: In March it was totally free. We had about 50,000 homes and were able to pull in their reviews. In August TripAdvisor took a majority stake in FlipKey.

SM: What were the statistics at that point?

TM: We had 70,000 homes and 10,000 reviews. We were slowly getting organic search results. Site traffic was minimal but slowly growing. In March of 2009, TripAdvisor launched vacation rentals on TripAdvisor.com. It took us six months to integrate our content onto TripAdvisor, but we did have a totally free service. That opened us up to 32  million TripAdvisor users.

We were still offering the service free to let property managers not only see the value of letting us do the reviews but also to show them how those reviews can market their properties. In May of 2009, we began restricting access to where everyone can still have their basic FlipKey account and collect reviews free.

However, if they want to be on TripAdvisor or have premium marketing, then they have to pay a fee. Independent owners pay a subscription fee of $249 per year. Property managers with multiple properties are charged on a cost-per-action basis. Every time we send a qualified lead in the form of a phone call or email, then we are paid incrementally for those leads.

This segment is part 4 in the series : Helping You Book Vacation Rentals: FlipKey CEO T. J. Mahoney
1 2 3 4 5 6 7