Here’s Why HomeAway Might Turn Out To Be One Of The Most Profitable Acquisitions For Expedia
Expedia’s December 2015 acquisition, HomeAway–the world’s largest vacation rental marketplace–might be one of the biggest growth drivers for the company in the future due to the introduction of its booking fee in 2016. With its 1 million properties, HomeAway made Expedia one of the leading accommodation providers in the world. Expedia, in turn, started transitioning HomeAway’s model from a traditional listing one to a full-fledged online transactional model.
(Source: Expedia Investor Presentation)
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In early 2016, HomeAway, started imposing a booking fee to the tune of ~6% of the rental amount excluding taxes and any refundable deposits for its vacation rentals. Though HomeAway faced customer dissatisfaction due to this, this decision might make HomeAway one of the most profitable platforms for Expedia.
In Expedia’s Q4 2015 call, the management stated that HomeAway is expected to generate around $350 million in EBITDA in 2018. According to industry analysts, this might be a conservative estimate and the figure could go up to anywhere between $450 million to $600 million. In fact, the analysts also claim that the booking fee revenue may reach around $985 million by 2018, from zero booking fee in 2015.
Though the levied charges might give a competitive advantage to Priceline’s booking.com as it is the only major accommodation booking platform that doesn’t impose a booking fee for alternative accommodation, yet, with its market reach and brand prominence in the vacation rental segment, it seems like HomeAway might bring greater growth to Expedia in the future.
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