Homeaway

HomeAway’s Story

HomeAway’s journey began in 2005 in Austin, Texas, where it was founded under CEH Holdings. The company quickly recognized the untapped potential of the vacation rental market and set out to consolidate several existing websites into a single, comprehensive marketplace. HomeAway.com was officially launched in 2006, offering travelers a suite of vacation rental properties, from cozy cabins and condos to luxurious villas and castles.

In the platform’s early years, HomeAway focused on establishing a strong foothold in the United States while actively pursuing growth opportunities through strategic acquisitions. The company raised $250 million in venture capital funding from prominent firms, such as Austin Ventures, Institutional Venture Partners, and Redpoint Ventures, fueling the company’s expansion efforts.

Acquisitions and Global Expansion

Over time, HomeAway acquired numerous vacation rental websites across various countries and regions, allowing the platform to tap into new markets and cater to diverse traveler preferences. Some notable acquisitions include:

• Vrbo (Vacation Rentals by Owner) in 2006, a leading vacation rental platform in the United States.
• Holiday-Rentals.com in the United Kingdom and FeWo-direkt.de in Germany, strengthening HomeAway’s presence in Europe.
• Abritel.fr in France and Homelidays.com, further expanding HomeAway’s European footprint.
• RealHolidays.com.au in Australia, establishing a presence in the Asia-Pacific region.

HomeAway’s initial public offering (IPO) made the company a publicly traded entity in 2011.

The Expedia Group Acquisition and Rebranding

The Expedia Group, a leading online travel company, acquired HomeAway for $3.9 billion in cash and stock in 2015. The acquisition gave HomeAway access to Expedia’s vast resources and broader travel ecosystem.

Following the acquisition, HomeAway underwent a significant rebranding effort. In 2020, the company consolidated HomeAway’s various brands, including the flagship HomeAway.com and the popular Vrbo (Vacation Rentals by Owner) platform, under the single brand name Vrbo. The strategic move aimed to unify the company’s vacation rental offerings and establish a more cohesive brand identity in the minds of travelers.

Evolving Business Models: From Subscriptions to Pay-per-Booking

Through the years, HomeAway’s business model has evolved to adapt to changing market dynamics and consumer preferences. Initially, the company relied on an annual subscription fee model, where vacation rental owners paid a fixed fee to list properties on the platform. The model provided a steady stream of revenue for HomeAway but presented challenges about scalability and aligning incentives between the platform and suppliers.

In 2013, HomeAway introduced an optional pay-per-booking model, allowing owners to pay a commission based on the total booking value rather than an upfront subscription fee. The approach aimed to align the interests of HomeAway and suppliers by incentivizing both parties to maximize bookings and revenue.

In 2016, HomeAway fully embraced the pay-per-booking model, eliminating the company’s tiered subscription pricing and focusing primarily on commission-based revenue. HomeAway introduced service fees for travelers in 2016 to enhance the overall traveler experience and cover the costs associated with providing customer support, site features, and marketing efforts.

Then, the company introduced the “Book with Confidence Guarantee” to provide travelers with added peace of mind when booking through the HomeAway platform.

Integration with Expedia’s Ecosystem

One of the advantages of HomeAway’s acquisition by Expedia Group has been the integration of vacation rental inventory and booking capabilities with the latter’s other travel brands, such as Expedia.com, Orbitz, and Travelocity. The move has allowed Expedia to offer a more extensive range of accommodation options to customers, combining the company’s vast hotel inventory with HomeAway’s diverse selection of vacation rentals.

By espousing Expedia’s extensive distribution network and marketing resources, HomeAway/Vrbo has gained an expanded reach and attracted a broader audience of potential travelers. The acquisition has benefitted both companies, specifically Expedia, which tapped into the growing vacation rental market while providing HomeAway with increased exposure and booking opportunities.

Key Trends

Industry Growth and Competition

Private accommodations represent less than 20% of total lodging in the United States, presenting a substantial opportunity for further expansion and market penetration.

Supplier Relations and Business Model Adjustments

HomeAway has focused on improving communication, providing more tools and resources to help suppliers succeed on the platform, and adjusting certain policies based on feedback from the supplier community.

Technology and Innovation

HomeAway has introduced various features and tools, such as secure messaging, virtual reality tours, and revenue management solutions, to streamline the booking process and provide valuable insights to property managers.

Simultaneously, HomeAway/Vrbo is exploring the potential of emerging technologies like blockchain to improve transparency, security, and efficiency.