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Expedia Acquires Airbnb Rival HomeAway for $3.9B (techcrunch.com)
236 points by bsmith on Nov 4, 2015 | hide | past | web | favorite | 59 comments

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.


HomeAway Vs AirBnB was specifically mentioned. Turned out well for the guys who made this particular bet.

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

Time to invest in Lyft :)

Lyft is not publicly traded.

GSV Capital (ticker: GSVC) is an investor in Lyft. As of June 30, its investment in Lyft represented 2.9% of its portfolio.

Alibaba (ticker: BABA), Rakuten (which is listed on the Tokyo exchange) and Tencent (which is listed on the Hong Kong exchange) are also investors in Lyft.

I believe GSV Capital participated in Lyft's Series D, while the others were Series E investors.

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?"

This is no different than AirBnB and infact AirBnB is worse IMO.

AirBnB has "instant booking" for like 10% of listing but for all the rest you click "request to book" and you've instantly committed to giving the host 24 hours to respond. If they respond in the positive you're booked. In other words, once you pick one place you're on the hook for it. You can't go looking for other places just incase the host says their place is not available.

Worse, the UX has 2 buttons "Request to Book" and "Contact Host". THEY DO THE SAME THING!!!! If you click "Contact Host" it will just send a booking request. The host can charge your credit card even though you only clicked "Contact". How do I know? It just happened to me

This isn't quite true.

Contact Host allows you to send an enquiry to the host and is in no way a booking request. You should always do this before committing to a booking to ensure the place is actually available.

Request to Book commits you to a booking and your card is charged there and then, regardless of if the host accepts your request. It then takes up to 7 days to get your money back if the host declines - pretty frustrating.

Instant Book means the host can't decline your booking without their search ranking score being negatively affected.

I used "Contact Host" and was still booked. Steps

    1) Enter dates
    2) Pick Place
    3) Pick "Contact Host"
    4) Host says place is as available
    5) Get message from AirBnB saying I've been approved by host
    6) Get message from AirBnB saying host has charged my card
At no time did I pick "Request a Booking". I thought it would stop at #5 and I'd have to then login to AirBnB to finalize the details but no, the host was able to do that without me even though I never picked "Request a Booking"

This isn't the expected behaviour because step 5 would mean that the host had sent you a Pre-Approval - this usually requires you to take action to confirm the booking and reach step 6.

(source: I'm both a host and traveller on Airbnb)

Between 4/5 the host pre-approves you for booking (without you requesting to book) that should be the case.

Have been using AirBnB for stays since 2012 and hosting since 2014. Never had an un-requested booking.

+ Host does not have a way to charge you

I've used AirBnB 18 times in the last 2.5 years. It happened. Give me your credit card. I'll go through the process and see if I can get you booked. I'll video all of it.

Or if you're from AirBnB, give me a fake account and all make it happen again. If you think this is how it works I'm telling you there's a bug in your system

> Request to Book commits you to a booking

It doesn't quite commit to you to a booking: at any point before the host accepts the request, you can cancel the request penalty-free [1]. So if you find something better in the meantime and change your mind on the AirBnB place, you can just cancel. It is however a bit risky, since there's always a chance that the host will accept RIGHT as you were about to go cancel. And having two requests outstanding bears the risk that you'll get unlucky, and they'll both accept so close together that you have no time to cancel the other one.

[1] https://www.airbnb.com/help/article/90/can-i-cancel-my-reser...

So now we need to create a web service to send multiple requests and auto-cancel when the first one is accepted. The chance of auto-accepting within the minutes needed to respond should be small, unless you sent to the same host multiple requests.

Agree - it's really frustrating when your preferred options are unavailable and you're just trying to see which of the remaining options are actually free for your dates. But you have to pick one and commit for a longish period, then repeat.

Airbnb should really build a quick-response app for hosts with a fat button for instantly denying a booking. Make it so that it's trivial to see a request and confirm/deny. Give the ability for renters to set a timeout on their requests too, or queue them up.

One of the most recent times I tried Airbnb in Venice, CA, I gave up and found something on VRBO that was cheaper and quickly available.

What I want is the ability to reserve multiple options at once, the first one who says yes is booked and the rest automatically get cancelled. Most cities have quite a number of good options so I'm pretty indifferent to the one I get, what I'm worried about is spending a day each time to hear no and slowly running out of options.

You can however message multiple hosts, and if they can accommodate you then they can "invite you to book" which is a 24h window for an effectively instant booking.

I work in this space (Smart Host - market intelligence for vacation rentals) and this is a common practice. Owners and managers keep their calendars open because they treat a channel like HomeAway/VRBO as a lead source.

So if you inquire on a property that's booked, they will attempt to place you in a similar place within their inventory.

Only ~30% of bookings that happen on HomeAway are actually processed through their payment system. Airbnb handles the payments, so the calendar availability is typically more accurate on Airbnb.

A simple solution would be penalising managers who use the platform as a lead generation tool through search rankings and /or fees.

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.

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

[2] https://www.airbnb.com/s/McCall--ID--United-States?guests=&c...

[3] https://www.airbnb.com/about/about-us

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.

HomeAway and VRBO were the pre-AirBnb. For a long time, if you wanted to rent a vacation house, they were the option.

Sure, but on the consumer side of thingsthey've been overtaken by Airbnb. I'm suggesting that it's only a matter of time until the supply follows the demand onto Airbnb.

Unlike the hotel space (GDS), the VR space does not have a real time availability system.

There are attempts to create one of course, but it requires all the players working together rather than trying to dominate the space and cut everyone else out.

HomeAway partners with tens of property management software providers who handle instant online booking and real-time availability.

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

I think that is the case :). If so, very strategic and well played by Expedia.

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.

>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_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.

This prevents Expedia from being a target of pro-Prop-F propaganda.

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.

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.

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.)

This is very interesting, especially the part about the keynote. That said, I disagree with this point:

> 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).

Having used HomeAway / VRBO before, this seems like the sensible approach. Instant booking provides a much better experience for the user - I don't want to have to email a bunch of places to determine which are available. They definitely should be ranking these higher than other listings.

If you want those ranked higher, fine, but they're basically lying to the people that buy preferred listing. At that price level it's disgusting.

Indeed, that's a lot of money to spend for no benefit. If you let people pay to adjust search order it's always a conflict of interest, though. It's just that in this case, they preferred the little customer (who pays for the bookings) instead of the big customer.

That's very interesting.

I can see how as a property owner paying for a listing but handling bookings yourself would be appealing.

As a travel-consumer, a more integrated (find the property, get accurate availability and pricing immediately and book it now) experience is more appealing, and I wondered why so many properties went with HomeAway and VRBO instead of AirBnB.

The two experiences are different...

So HomeAway has a lot of professional managers. These are managing companies that handle guest arrivals, cleaning etc on behalf of a home owner.

My partner in my startup also runs an agency/manager business with about 600 properties. (Some exclusive, some non-exclusive). I probably should have added a disclaimer on my initial post about my involvement in the industry.

Now anyway, on the exclusive properties, he controls the calendars. The company knows exactly if a property is bookable and they don't have to go to the property owners to check availability before taking a booking.

Of these 600 rentals, let's say 150 were actually marketed on HomeAway. You would pick a good spread of rentals so that you optimize your enquiries... You want as many enquiries as possible, EVEN if the properties are unavailable... This is because it wouldn't be cost effective to list everything. In one destination, he has about 90% of the entire locations rentals. Why pay for more listings when you are going to be getting any enquiry from an individual anyway. Keeping in mind these listings are anywhere from 700-1000$ per year.

The problem however, is when your 100k investment is actually used as a pivot for the company to subsidise the transition to a different business model and the inevitable buyout. HomeAway performed the biggest bait and switch in the history of marketplaces.

They decides that this listing model which previously ranked properties based on subscription level, is now going to only be part of the equation. Anyone who has been on a subscription model has seen a huge decrease in enquiries over the last year. This is because the visibility of their listings has also decreased as HomeAway push other forms of revenue ahead of them... (They already have your subscription revenue.. why bother sending guests to you when we can send them to rentals who have instant book enabled).

> Paraphrasing what the account manager told us....

"Based on our consumer feedback, we know that most of our guests want a book now experience, so if you don't have book now with instant booking enabled on your rental you won't have an optimized ranking score."

We even have PDF's that they produced to explain to people how to get the highest ranking on HomeAway. The biggest factor coming in to play was enabling instant booking.

(This means that people who aren't paying a subcription will out rank you regardless if they are even on a paid subscription level).

The other irony, is that the company that they use for their instant bookings to handle payments gives HomeAway a kickback of a percentage for providing the merchant facilies. (Plus HomeAway take a booking comission).


AirBnb is great for instant bookings and for businesses just starting out (this is because they can adapt their business to suit themarketplace). However, for managers who are established, moving to a "Instant Book" model means either increasing their rates by 12-15%, or taking more comission from the owners of the rentals.

Where-as there pay to list model didn't have these problems.

Hope that shed's some light on why AirBnb and HomeAway aren't true-rivals. Professional managers will always find it hard to use AirBnb because they won't neccessarily control the calendars and real time availability. (This is the same reason why some people refuse to use Booking.com, because of extremely burdonsome booking conditions that are enforced on them).

Secondly, as a large manager, cashflow becomes a huge issue. Marketplaces won't pay you until the guest has left. This means that you have millions of euroes/dollars/pounds locked up for 6-9 months of the year.

Your points are valid, but don't forget also that "what does the customer want?" is valid too. If people want a click-and-book experience, the site should optimize for that. It seems that they could have done a better job of managing that transition on your side of the business, but it's a valid direction for them to push towards.

I think the crux of the issue is that HomeAway is attempting to replace the managers (middle man) you mention being inconvenienced. Does it suck for the property managers you describe to be funding HomeAway's expansion? For the managers. Its a boon for consumers and HomeAway though.

It's a boon for customers if prices go up?

If customers are served as well or better than before? Of course!

You're assuming it's managers as an aggregate against Expedia/HomeAway. It's not. It's AirBnB vs Expedia's HomeAway. Property managers are just fodder in the fight between booking behemoths.

My preferred approach to finding listings on VRBO/HomeAway is actually to immediately click past the first few pages of results. "Platinum listings" on VRBO can be much more expensive than other properties without a corresponding difference in quality.

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.


"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

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?

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.

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

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.

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

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.

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'.

FWIW, I've had consistently better experience with HomeAway/VRBO than with AirBnB

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.

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.

Anyone who has been watching the sector knows who homeaway is.21 acquisitions, public under the AWAY symbol.. 5 rounds of funding including Google Ventures.

Weird, that's what my friend said about Minecraft.

A different answer: because someone was willing to pay $3.9b for it.

gee, thanks for all the downvotes.

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