by Jeff Yoshimura, VP of Marketing
Tom Taulli recently blogged about another subscription economy success story, HomeAway, which had its IPO this morning, rising more than 40% over its opening share price. HomeAway helps subscribers market their home for a vacation swap – think of trading a home in Southern California for an apartment in Tokyo for a month. Like the ZipCar model challenges the automotive industry, the HomeAway model has the potential to challenge the hospitality industry.
In his post, Tom points to HomeAway, Zuora and salesforce.com as examples of subscription revenue models that investors like so much. Subscription Economy IPOs have been some of the highlights of the resurgent IPO market, with LinkedIn and Pandora debuting strong in recent weeks. Why? Because Wall Street loves recurring, predictable revenue streams and strong cash flows, especially from businesses that can expand on this formula through add-on services.
That is one of the key advantages of subscription commerce – delivering value-added services on top of your core offering that help engage subscribers for the long term. For example, HomeAway offers subscribers related services, such as credit card/check acceptance, property damage protection, travel insurance and tax planning. By adding services, HomeAway becomes a trusted partner which keeps renewal rates high and opens up new revenue opportunities. And HomeAway is part of a growing number of subscription commerce companies that are combining online convenience with high-touch, in-person connections to help on-board new subscribers and build loyalty from existing ones.
Don’t believe me that HomeAway could challenge hotel chains? Try staying in a home next time you vacation and tell me what you think. And then look at how the hospitality industry has teamed with New York, Paris and other top locations to ban apartment rentals to tourists. Like I have said before, if the service trumps the product, consumers are going to flock there.