Web startup targets online vacation rentals

BOULDER, Colorado (Reuters) - Trying to make some extra money during the recession, Michael Joseph decided to rent his South Lake Tahoe, California vacation property. After being frustrated by the online options available to him, Joseph designed his own rental booking website.

"If an owner wants to maximize their exposure by advertising on lots of different travel sites, they have to build a separate ad on each site which takes 30 to 45 minutes and costs between $100 and $700 a year," said Joseph, who founded Boulder, Colorado-based Vacation Rental Partner (www.vacationrentalpartner.com) in 2009. "Most of these vacation rental owners don't have the time to build these ads much less research which of the sites will actually give them a good return on their investment."

Joseph said his company targets owners already renting their properties online, but who want to make more money and save time. He hopes to lure owners using vacation rental management companies, which take anywhere from 30 percent to 50 percent of the owners' revenues.

"We can help those people by saving them money and allowing them to keep more of their income," Joseph said, adding homeowners pay a 3 percent credit card transaction fee, while guests are charged a processing fee between $10 and $20, depending on the cost of the reservation. Additionally, owners are charged 15 percent for last-minute listings.

When a guest submits an inquiry, Vacation Rental Partner generates an automated quote and sends it to the owner for approval. In a few clicks, Joseph said, the owner can approve the quote by email or smartphone and then the guest can complete the booking process online.

Vacation Rental Partner graduated last year from Boulder's startup incubator program TechStars, which gave the company $18,000 in exchange for small equity stake.

The company also received about $325,000 in seed funding from a small group of angel investors, Joseph said, adding he plans to raise another round of funding over the "next several months."

THE PITCH

The U.S. vacation rental market is expected to grow by more than 13 percent in 2011, according to a recent study by Vacation Home Rentals, which represents more than 12,000 properties in the U.S. and around the world. Online vacation rental revenues were expected to reach $4.6 billion in 2010, according to a report by travel industry research firm PhoCusWright.

"As we build our user base, we believe we have a product that people will pay for," said Joseph, adding his site made $20,000 in 2010 - all of it in the last two months of the year. He added that his three-person company is looking to partner with other travel companies and plans to hire over the next year, mostly in engineering and marketing.

The growth in the vacation rental space is being driven by the housing crisis, Joseph said.

"The decline in the housing market has increased the number of vacation rentals that are on the market because a lot of people who had second homes and purchased second homes without the intention to rent them have needed to rent them to pay the mortgage," he said.

Joseph said his startup compliments listing sites such as Craigslist and Vacation Rentals By Owner (VRBO.com), which he referred to as "advertising venues," noting Vacation Rental Partner manages reservations and bookings.

The company's biggest challenge is reaching homeowners, Joseph said, calling them "a very disaggregated" group, but he hopes his business will grow the industry.

"What we're doing is really going to change the vacation rental industry and revolutionize that business and make it a whole lot easier for owners to manage their vacation rentals and for guests to reserve."