13 ms·

Expedia Acquires Airbnb Rival HomeAway for $3.9B

236 points by bsmith 11y ago

rdl 11y ago
I wonder if they were waiting on SF.CA.US Prop F to announce or finalize.
- pavornyoh 11y ago
  I think that is the case :). If so, very strategic and well played by Expedia.
  - toephu2 11y ago
    how so? It wouldn't have had any effect on Prop F passing or not and would not affect the price Expedia is paying for HomeAway since this deal was probably in the works for months.
    - sosborn 11y ago
      It is more about gauging public sentiment. If Prop F passed Expedia would have been wise to reconsider the deal. The last thing you want to do is spend all that money into an industry headed for heavy regulation that was voted in by citizens.
      - toephu2 11y ago
        You act like prop F was a national proposition or somehow international, this was just one city. Even if prop F passed it would not bring airbnb down as they operate in 34k+ cities around the world. Expedia is also targeting the int'l market. I doubt they would reconsider just over SF.
    - pavornyoh 11y ago
      >Given Airbnb’s rapid growth, Expedia probably looked at building its own competing service but decided to use its war chest to acquire HomeAway instead. Oh, I am sure it has been in the works for months. Now considering Prop. F has failed with Airbnb putting in over $8 million to fight it http://sfist.com/2015/09/28/airbnbs_8_million_and_more_sf_campa.php http://sfist.com/2015/09/28/airbnbs_8_million_and_more_sf_ca... I'd say this is very strategic by Expedia thus letting Airbnb and others spend to fight such an action and then promptly announcing it has acquired its biggest competitor. If this isn't strategic, then I don't know what is.
    - lacker 11y ago
      This prevents Expedia from being a target of pro-Prop-F propaganda.
VOYD 11y ago
How is something no one has ever heard of worth $3.9b?
- samwiseg 11y ago
  You've never heard of HomeAway? They and VRBO (which they own) are the 2nd and 3rd biggest players in the home sharing economy, after Airbnb.
  - siquick 11y ago
    The biggest if you actually value real earnings figures over hyped-up VC valuations. Also worth pointing out that HomeAway only offers whole home rentals, they do not offer room-only (like Airbnb) so is not 100% part of the same 'sharing economy'.
    - deleted 11y ago
      [deleted]
  - turar 11y ago
    FWIW, I've had consistently better experience with HomeAway/VRBO than with AirBnB
    - gniv 11y ago
      Same here. For things like vacation houses, VRBO has been much better. I feel that there is a lot of high-end inventory there. Plus, house owners are familiar with the site, so they stick with it, even if the experience is not great. There's untapped potential on VRBO.
    - agf 11y ago
      I've quite literally never had a major problem with AirBnB, and I've used it 20 times over the last 3.5 years. With HomeAway / VRBO, the booking process is a nightmare, and I've had a cancelation with three days notice for a 15 person house booked two months in advance. What did I do? I found a place on AirBnB and was able to book it no problem. So I have a hard time seeing how the HomeAway / VRBO experience could come even close.
jasonwilk 11y ago
This is an interesting deal. There was an article posted on HN a while ago that talked about investors pouring money into publicly traded companies who directly compete with private tech companies who have insanely high valuations. http://www.nytimes.com/2015/08/10/technology/investors-find-ways-to-indirectly-profit-from-valuable-start-ups.html?hpw&rref=technology&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=1 http://www.nytimes.com/2015/08/10/technology/investors-find-... HomeAway Vs AirBnB was specifically mentioned. Turned out well for the guys who made this particular bet.
- _delirium 11y ago
  That's an interesting strategy in light of some of the recent discussion on private tech company valuations. Sam Altman recently claimed [1] that the large valuations of late-stage private tech companies may be more notional than real in a number of cases, because they're extrapolated from the pricing of investment rounds that are nominally equity investments, but are really more like debt instruments in their actual terms. Given that, it might not really be appropriate to consider them as actual valuations in the traditional sense, because the "investor" is doing something closer to making a loan, vs. buying an ownership stake of a company at an implied valuation. The good side of this, in Altman's argument, is that some of what looks like a bubble in that sector might not really be one, because even though the valuations are very high, these valuations in some sense don't even really exist, because people aren't actually buying equity in the companies at those theoretical valuations. So instead all that's happening is that people are improperly computing implied valuations based on things labeled "equity investment" which weren't equity investments. If that's true, but then people are buying into other companies on the assumption that the private tech companies' implied valuations are real valuations, and can be used as a benchmark to value competitor/peer companies, that sounds like at least someone is putting significant real money into investments based on these valuations... but elsewhere. That's at least eyebrow-raising. [1] https://news.ycombinator.com/item?id=10495402 https://news.ycombinator.com/item?id=10495402
- breitling 11y ago
  Time to invest in Lyft :)
damon_c 11y ago
Based on a recent experience, Homeaway's search for properties available between two dates is pretty much a non-working facade. The UI is all there... but after after entering credit card info etc. and attempting to book several different places, only to then receive emails stating that they were not available on those dates despite showing up in search as being available, and "please call us directly because maybe we have something else..." It felt like shopping for NYC apartments on Craig's List... "we don't have the one you want but what about this one?"
- jfoster 11y ago
  Probably due to double-bookings from Airbnb. That sort of thing makes being 2nd place a bit tough. If HomeAway does manage to get substantial share of bookings, that problem will begin to shift to Airbnb, though.
  - atourgates 11y ago
    Homeaway (and VRBO and its other properties) already have the lion's share of the market in some places, particularly more rural vacation areas. Just to take an example someplace we regularly go: In McCall Idaho (central Idaho lake/ski destination), there are 219 rentals listed on Homeaway[1] and just 70 listed with Airbnb[2] (which actually includes a larger area in the same search). Though, it looks like Globally AirBnb has more listings, claiming "2,000,000+"[3] listings compared to Homeaway's "more than a million". Though I'm not sure if that number includes the listings from Homeaway's partner companies. [1] http://www.homeaway.com/vacation-rentals/idaho/mccall/r7311 http://www.homeaway.com/vacation-rentals/idaho/mccall/r7311 [2] https://www.airbnb.com/s/McCall--ID--United-States?guests=&checkin=&ss_id=793k0ubw&source=bb https://www.airbnb.com/s/McCall--ID--United-States?guests=&c... [3] https://www.airbnb.com/about/about-us https://www.airbnb.com/about/about-us
    - jfoster 11y ago
      Interesting that lots of places have more HomeAway listings. Presumably people booking those places tend to check Airbnb first? Difficult to tell, but if there is a discrepancy between where the supply is and where the demand is, that gap probably won't last too long.
chrisacky 11y ago
HomeAway has been positioning themselves to be bought by Expedia for about 12-20 months. If you are in the travel industry you'd not actually think this news is a suprise. The timing is also 3 days after the close of the VRMA (a large travel exhibition for vacation rental managers this year held in New Orleans) I had the severe misfortune of going to last years VRMA. I travelled over from England... anyway, the VRMA (which is suposed to be a somewhat neutral organization looking after managers best interests) decided in their infinite wisdom to give the spotlight to HomeAway's COO (Brent) and CEO (Brian). The keynotes speech shocked everyone!.. Essentially, Brian Sharples turned an event that was suposed to be generic advice for the betterment of the entire industry into a marketing pitch about HomeAway and it's vision for the future. This wasn't abstract advice.. this was specific details about how managers will use HomeAway in the future. This was the KEYNOTE of an event that 800 managers paid several thousand dollars to attend. Anyway, he told all managers that within 24 months they will be on "Instant Book". This is a shock because the transition to Instant Book signalled that they are trying to phase out the listing model.. (The listing model has always been in favour of managers because it meant that they can handle their own enquiries and bookings/payments). Pushing people down the instant book route has always visibly been because they need the numbers to be attractive to Expedia and because after increasing the listing modules from $300 to over $1000 per listing (this is for platinum) they need more ways to increase shareholder value. PS. On return back to England, the forums and community boards were in uproar about this. Our company paid to get the recordings of the event.. guess which speach out of 48 different lectures and presentations were missing... the keynote by Brian Sharples. It's actually obscene that we were paying over $100k per year to HomeAway for platinum listings and then users on a basic listing were being ranked higher than us because they had "Book in Now" enabled on their properties. This is all because transparently, they need the bookings to be processed through their system to prove they are a valuable purchase for Expedia. (It's been no secret that everyone has known it's going to be Expedia buying HA). Further proof/conjecture(?), is that for a long time they stopped providing us emails of enquiries made for our properties through their system. This is as they assure the community because of "phising" fears etc... I've long said, the best thing that can happen to the industry is for Expedia to buy HomeAway. I think this is going to be a really good thing. Expedia is going to force book it now, which isn't practical for managers who can't handle the instant bookings (due to real time availability and calendars issues). Bit of a rant. I've never hidden my criticism of HomeAway. They've always been the gorilla in the room who force you to play by their rules and demand control of the entire booking process. (Keep in mind that they are long before AirBnb. They might not be as glamourous, but HomeAway and VRBO have done amazing things for the short term rental travel industry.... which can't be forgotten.)
kevinbluer 11y ago
Does anyone have thoughts on the impact (positive or negative) the acquisition will on the Austin tech scene, given this is where HomeAway is headquartered?
- ereyes01 11y ago
  If Expedia keeps the company/team intact (which it sounds like it will in the news story), I don't think very much will change in Austin as a result. Homeaway is typically touted as one of the Austin unicorns, and now I guess they will go down in lore as one more success story.
suyash 11y ago
Sold it for way less than what it could have become.
- adventured 11y ago
  That's an interesting question. Growth has been modest the last few years, and has slowed to a crawl in 2015. They've never made much money, with relatively slim operating income margins. Yet they managed to sell for 300 times 2014 earnings (with the first two quarters of 2015 being negative on net income). That's an extraordinary multiple to say the least. They managed to sell themselves for what they might have potentially been worth ten years from now, if you priced them similar to how the market prices Expedia or Priceline. That's assuming the competition doesn't gradually erode them of course.
mcintyre1994 11y ago
I used ownersdirect, a subsidiary of homeaway to book a villa for a holiday - it was fantastic but the experience on their website was poor. It looks like the homeaway site itself is much closer to the airbnb experience though - messaging on site instead of by email, payments on site instead of through PayPal. They seem to charge to make listings though, and to rank listings at least in the first case by how much you paid (subscription level) and to feature listings solely for paying more. I expect airbnb has much better sorting by not having that kind of pay to come up top/be featured mess. https://www.homeaway.co.uk/info/tipsandtools/subscription-levels https://www.homeaway.co.uk/info/tipsandtools/subscription-le... "Your subscription level is the most important factor you can control to appear higher in search results and therefore improve your performance." https://www.homeaway.co.uk/info/tipsandtools/rank-higher https://www.homeaway.co.uk/info/tipsandtools/rank-higher

236 points by bsmith 11y ago

rdl 11y ago

I wonder if they were waiting on SF.CA.US Prop F to announce or finalize.

pavornyoh 11y ago
I think that is the case :). If so, very strategic and well played by Expedia.
- toephu2 11y ago
  how so? It wouldn't have had any effect on Prop F passing or not and would not affect the price Expedia is paying for HomeAway since this deal was probably in the works for months.
  - sosborn 11y ago
    It is more about gauging public sentiment. If Prop F passed Expedia would have been wise to reconsider the deal. The last thing you want to do is spend all that money into an industry headed for heavy regulation that was voted in by citizens.
    - toephu2 11y ago
      You act like prop F was a national proposition or somehow international, this was just one city. Even if prop F passed it would not bring airbnb down as they operate in 34k+ cities around the world. Expedia is also targeting the int'l market. I doubt they would reconsider just over SF.
  - pavornyoh 11y ago
    >Given Airbnb’s rapid growth, Expedia probably looked at building its own competing service but decided to use its war chest to acquire HomeAway instead. Oh, I am sure it has been in the works for months. Now considering Prop. F has failed with Airbnb putting in over $8 million to fight it http://sfist.com/2015/09/28/airbnbs_8_million_and_more_sf_campa.php http://sfist.com/2015/09/28/airbnbs_8_million_and_more_sf_ca... I'd say this is very strategic by Expedia thus letting Airbnb and others spend to fight such an action and then promptly announcing it has acquired its biggest competitor. If this isn't strategic, then I don't know what is.
  - lacker 11y ago
    This prevents Expedia from being a target of pro-Prop-F propaganda.

VOYD 11y ago

How is something no one has ever heard of worth $3.9b?

samwiseg 11y ago
You've never heard of HomeAway? They and VRBO (which they own) are the 2nd and 3rd biggest players in the home sharing economy, after Airbnb.
- siquick 11y ago
  The biggest if you actually value real earnings figures over hyped-up VC valuations. Also worth pointing out that HomeAway only offers whole home rentals, they do not offer room-only (like Airbnb) so is not 100% part of the same 'sharing economy'.
  - deleted 11y ago
    [deleted]
- turar 11y ago
  FWIW, I've had consistently better experience with HomeAway/VRBO than with AirBnB
  - gniv 11y ago
    Same here. For things like vacation houses, VRBO has been much better. I feel that there is a lot of high-end inventory there. Plus, house owners are familiar with the site, so they stick with it, even if the experience is not great. There's untapped potential on VRBO.
  - agf 11y ago
    I've quite literally never had a major problem with AirBnB, and I've used it 20 times over the last 3.5 years. With HomeAway / VRBO, the booking process is a nightmare, and I've had a cancelation with three days notice for a 15 person house booked two months in advance. What did I do? I found a place on AirBnB and was able to book it no problem. So I have a hard time seeing how the HomeAway / VRBO experience could come even close.

jasonwilk 11y ago

This is an interesting deal. There was an article posted on HN a while ago that talked about investors pouring money into publicly traded companies who directly compete with private tech companies who have insanely high valuations. http://www.nytimes.com/2015/08/10/technology/investors-find-ways-to-indirectly-profit-from-valuable-start-ups.html?hpw&rref=technology&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=1 http://www.nytimes.com/2015/08/10/technology/investors-find-... HomeAway Vs AirBnB was specifically mentioned. Turned out well for the guys who made this particular bet.

_delirium 11y ago
That's an interesting strategy in light of some of the recent discussion on private tech company valuations. Sam Altman recently claimed [1] that the large valuations of late-stage private tech companies may be more notional than real in a number of cases, because they're extrapolated from the pricing of investment rounds that are nominally equity investments, but are really more like debt instruments in their actual terms. Given that, it might not really be appropriate to consider them as actual valuations in the traditional sense, because the "investor" is doing something closer to making a loan, vs. buying an ownership stake of a company at an implied valuation. The good side of this, in Altman's argument, is that some of what looks like a bubble in that sector might not really be one, because even though the valuations are very high, these valuations in some sense don't even really exist, because people aren't actually buying equity in the companies at those theoretical valuations. So instead all that's happening is that people are improperly computing implied valuations based on things labeled "equity investment" which weren't equity investments. If that's true, but then people are buying into other companies on the assumption that the private tech companies' implied valuations are real valuations, and can be used as a benchmark to value competitor/peer companies, that sounds like at least someone is putting significant real money into investments based on these valuations... but elsewhere. That's at least eyebrow-raising. [1] https://news.ycombinator.com/item?id=10495402 https://news.ycombinator.com/item?id=10495402
breitling 11y ago
Time to invest in Lyft :)

damon_c 11y ago

Based on a recent experience, Homeaway's search for properties available between two dates is pretty much a non-working facade. The UI is all there... but after after entering credit card info etc. and attempting to book several different places, only to then receive emails stating that they were not available on those dates despite showing up in search as being available, and "please call us directly because maybe we have something else..." It felt like shopping for NYC apartments on Craig's List... "we don't have the one you want but what about this one?"

jfoster 11y ago
Probably due to double-bookings from Airbnb. That sort of thing makes being 2nd place a bit tough. If HomeAway does manage to get substantial share of bookings, that problem will begin to shift to Airbnb, though.
- atourgates 11y ago
  Homeaway (and VRBO and its other properties) already have the lion's share of the market in some places, particularly more rural vacation areas. Just to take an example someplace we regularly go: In McCall Idaho (central Idaho lake/ski destination), there are 219 rentals listed on Homeaway[1] and just 70 listed with Airbnb[2] (which actually includes a larger area in the same search). Though, it looks like Globally AirBnb has more listings, claiming "2,000,000+"[3] listings compared to Homeaway's "more than a million". Though I'm not sure if that number includes the listings from Homeaway's partner companies. [1] http://www.homeaway.com/vacation-rentals/idaho/mccall/r7311 http://www.homeaway.com/vacation-rentals/idaho/mccall/r7311 [2] https://www.airbnb.com/s/McCall--ID--United-States?guests=&checkin=&ss_id=793k0ubw&source=bb https://www.airbnb.com/s/McCall--ID--United-States?guests=&c... [3] https://www.airbnb.com/about/about-us https://www.airbnb.com/about/about-us
  - jfoster 11y ago
    Interesting that lots of places have more HomeAway listings. Presumably people booking those places tend to check Airbnb first? Difficult to tell, but if there is a discrepancy between where the supply is and where the demand is, that gap probably won't last too long.

chrisacky 11y ago

HomeAway has been positioning themselves to be bought by Expedia for about 12-20 months. If you are in the travel industry you'd not actually think this news is a suprise. The timing is also 3 days after the close of the VRMA (a large travel exhibition for vacation rental managers this year held in New Orleans) I had the severe misfortune of going to last years VRMA. I travelled over from England... anyway, the VRMA (which is suposed to be a somewhat neutral organization looking after managers best interests) decided in their infinite wisdom to give the spotlight to HomeAway's COO (Brent) and CEO (Brian). The keynotes speech shocked everyone!.. Essentially, Brian Sharples turned an event that was suposed to be generic advice for the betterment of the entire industry into a marketing pitch about HomeAway and it's vision for the future. This wasn't abstract advice.. this was specific details about how managers will use HomeAway in the future. This was the KEYNOTE of an event that 800 managers paid several thousand dollars to attend. Anyway, he told all managers that within 24 months they will be on "Instant Book". This is a shock because the transition to Instant Book signalled that they are trying to phase out the listing model.. (The listing model has always been in favour of managers because it meant that they can handle their own enquiries and bookings/payments). Pushing people down the instant book route has always visibly been because they need the numbers to be attractive to Expedia and because after increasing the listing modules from $300 to over $1000 per listing (this is for platinum) they need more ways to increase shareholder value. PS. On return back to England, the forums and community boards were in uproar about this. Our company paid to get the recordings of the event.. guess which speach out of 48 different lectures and presentations were missing... the keynote by Brian Sharples. It's actually obscene that we were paying over $100k per year to HomeAway for platinum listings and then users on a basic listing were being ranked higher than us because they had "Book in Now" enabled on their properties. This is all because transparently, they need the bookings to be processed through their system to prove they are a valuable purchase for Expedia. (It's been no secret that everyone has known it's going to be Expedia buying HA). Further proof/conjecture(?), is that for a long time they stopped providing us emails of enquiries made for our properties through their system. This is as they assure the community because of "phising" fears etc... I've long said, the best thing that can happen to the industry is for Expedia to buy HomeAway. I think this is going to be a really good thing. Expedia is going to force book it now, which isn't practical for managers who can't handle the instant bookings (due to real time availability and calendars issues). Bit of a rant. I've never hidden my criticism of HomeAway. They've always been the gorilla in the room who force you to play by their rules and demand control of the entire booking process. (Keep in mind that they are long before AirBnb. They might not be as glamourous, but HomeAway and VRBO have done amazing things for the short term rental travel industry.... which can't be forgotten.)

kevinbluer 11y ago

Does anyone have thoughts on the impact (positive or negative) the acquisition will on the Austin tech scene, given this is where HomeAway is headquartered?

ereyes01 11y ago
If Expedia keeps the company/team intact (which it sounds like it will in the news story), I don't think very much will change in Austin as a result. Homeaway is typically touted as one of the Austin unicorns, and now I guess they will go down in lore as one more success story.

suyash 11y ago

Sold it for way less than what it could have become.

adventured 11y ago
That's an interesting question. Growth has been modest the last few years, and has slowed to a crawl in 2015. They've never made much money, with relatively slim operating income margins. Yet they managed to sell for 300 times 2014 earnings (with the first two quarters of 2015 being negative on net income). That's an extraordinary multiple to say the least. They managed to sell themselves for what they might have potentially been worth ten years from now, if you priced them similar to how the market prices Expedia or Priceline. That's assuming the competition doesn't gradually erode them of course.

mcintyre1994 11y ago

I used ownersdirect, a subsidiary of homeaway to book a villa for a holiday - it was fantastic but the experience on their website was poor. It looks like the homeaway site itself is much closer to the airbnb experience though - messaging on site instead of by email, payments on site instead of through PayPal. They seem to charge to make listings though, and to rank listings at least in the first case by how much you paid (subscription level) and to feature listings solely for paying more. I expect airbnb has much better sorting by not having that kind of pay to come up top/be featured mess. https://www.homeaway.co.uk/info/tipsandtools/subscription-levels https://www.homeaway.co.uk/info/tipsandtools/subscription-le... "Your subscription level is the most important factor you can control to appear higher in search results and therefore improve your performance." https://www.homeaway.co.uk/info/tipsandtools/rank-higher https://www.homeaway.co.uk/info/tipsandtools/rank-higher