Flat up-front fee Revenue share
Transactional fee Per-unit fee
Tiered monthly fee According to HomeAway Software general manager, Ryan Hutchings, “We have various types of integrations and connections with third-party companies and Escapia. We do not have a standard ‘API fee’ for connecting to our APIs. Instead, we have individual commercial contracts depending on how the partner is using our API and services, and we have an initial fee to get an account set up. In some cases, it’s a revenue-share agreement; in others, it is a block plan based on properties accessed. Most of the programs have tiered pricing structures with larger volumes being discounted.” While most software companies have a partner fee structure in place, some have decided not to charge vendors for API service and usage, including TRACK and Maxxton.
“We don’t currently charge vendors for access to our API. We do this to keep costs low for vendors and our software customers,” said TRACK’s Matt Renner. “We are an API-first software—our architecture is built this way. So whether you are using TRACK for all of your business operational needs or you want to connect with a third-party application, we are open.” Maxxton’s Chris Connar echoed the sentiment: “We do not charge any fees to third parties connecting to our PMS via API. An open API is essential to exceed the increasingly important IT landscape for VRMs.”
However, Barefoot CEO Ed Ulmer pointed out that the client ultimately pays. “We either charge our clients, the partner, or both. In reality, the client is paying one way or the other, but it is typically hidden by most of our competitors,” said Ulmer. “We try to be transparent. As one of the innovators of API and partner programs in this industry, we continue to look at ways to cover our costs and keep it simple and, most importantly, transparent.” Ulmer also brought up an interesting point that the entire burden of connectivity currently rests on the PMS provider. “I sat in the VRMA session about open APIs, and we were reflecting how best to move forward. One of the questions I put back to the committee is that these third parties should also have an open API so that their info flows back into our system—so will they do that for free? Also, with this flow, how do we protect for GDPR issues, which are expensive to monitor?”
As more new tech startups enter the industry, third-party providers are pushing back on some of the higher API fees being introduced into the market by software providers.
“Some [PMSs] are trying to charge as high as 20 percent—i.e., their businesses seem to be building their product on the backs of their partners rather than building their own products,” said one startup CEO. “I would prefer to move to a referral program and instead focus on improving the integrations for our clients. Drawing off so much revenue makes for stagnation on the product development side. Who wants to grow a shared product that takes so much and gives so little?”
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Virtual Concierge Service founder Dana Young added, “We’re not opposed to the monetization of APIs, but moderate ‘pay-per-use’ models are the way they should be done. Look at the way tech industry leaders like Google handle their APIs—pricing is based on monthly usage of requests, with a certain number for free, and volume pricing at high utilization rates. We think that is fair and the way the VR industry players should be structuring their models.”
Challenges Third-Party Tech Companies Face Working with PMS Companies For emerging third-party technology providers, working with software APIs presents multiple hurdles.
“The challenge starts with the sheer number of integrations, given the fragmentation of the market and number of PMS players,” said Young. “Compound that with no standards in place so every integration is custom. Then throw in the navigation of the policies and approval processes involved before you can even get to the technical work.” Another technology provider added: “The legacy systems take sometimes three to five times longer to integrate than the newer systems. Their APIs are just rarely, if ever, updated so everything is a workaround.”
There are some security considerations with API connectivity, as well. “Having the ability to make certain API calls has helped tremendously with troubleshooting API-related issues,” said another technology provider. “However, one thing that could improve is accessibility to different API calls and functions. We’ve seen that access to some API developer environments are ‘all or nothing,’ meaning that you either have access to all the tools and info that an API offers or no access at all. Sometimes, certain API calls lead to sensitive information becoming accessible and also the ability to manage reservations. As you might imagine, this access could be risky if someone troubleshooting is not properly trained and tries to use certain API calls, such as accidently deleting a reservation; especially since there may not be an audit of which specific person [or company] sent the API call.”
Support Challenges Accessing API support from PMS companies can also be a challenge. ICND’s Brandon Sauls explained that while several PMS companies provide his team phone support for API issues, others require them to use a support email that “just lends to a turn in circles trying to resolve issues.” “You have to think—you’ve got three parties involved: our web development team, the client, and the PMS,” Sauls said. “The client does not care who the problem is—they just want it resolved. We catch the brunt end of it often because we are always available and here to take the call.”
Open API Connectivity Is a Priority, But Software Providers Are Still Looking to Build All-In-One Solutions Among vacation rental technology providers, there is widespread agreement that the demand for open and accessible APIs will increase in importance for two reasons: 1) VRMs want to use third-party