HomeAway hit back quickly today after seeing TripAdvisor become a new and potentially powerful rival on the European stage as well as in its back yard of North America.
TripAdvisor snapped up UK-based HolidayLettings yesterday in an undisclosed deal.
HomeAway wasn’t asked to give a reaction to the acquisition (just some detail on where HolidayLettings stands alongside HomeAway-owned brand HolidayRentals), but it still sent a lengthy response, perhaps hinting that the Austin, Texas-based company is finally looking over its shoulder.
European president Petra Friedmann says:
“This move comes as no real surprise to anyone following the travel industry – and specifically the holiday rentals space, which we have been dominating over the past five years through rapid growth and acquisitions. Holiday rentals is one of the very few sectors that has experienced strong year on year growth – even during one of the worst recessions on record.”
HomeAway goes on to say how the company has seen annual revenue growth of 95% since it was formed in 2005 and can now boast half a million properties listed worldwide.
“To put that into context, that’s more rooms than the world’s leading hotel chain,” Friedmann says.
She ends:
“If the growth of HomeAway, the world’s leading holiday rental company is to be used as a barometer for the industry, our enquiry, traffic and listing figures suggest that investment in the holiday rentals space is a sound business strategy.”
It would be reasonable to expect any rhetoric from HomeAway in the coming months to consistently use the term “world’s leading holiday rental company”.
TripAdvisor has been in the rental game for a while (FlipKey acquisition in 2008 hinted at things to come), but it is the move into Europe – HomeAway’s extremely fertile region for growth in recent years – that indicates how seriously it is taking the sector.
Neverthless the signs were there earlier this year when TripAdvisor parent Expedia Inc waded in with what looked at the time to be a random comment from its CEO Dara Khosrowshahi.
He predicted HomeAway would go public in 2010 – a suggestion quickly denied by HomeAway.
As one figure close to the situation suggested yesterday: CEOs of Wall Street-listed companies do not make predictions about other companies unless they have a pretty good idea it is going to happen, or they are mischief-making and reminding people of the power they can wield.
Perhaps in this case it was the latter?
Cutting through all the rhetoric about who is bigger and better, is this a good deal for owners?
Yes @andy – of course it is. Anything that adds to distribution of vacation rentals is good for the owners. The listing fees are very small compared to the 30-50% management fees for traditional distribution, so HomeAway and TripAdvisor are generating excellent revenue with lower distribution costs for vacation rental homeowners, even if it is becoming a crowded market like Claus states.
@andy
well, *one* law of the open marketplace and the inevitability of intense competition is that often prices are slashed, so it that way the end-user/property owner may benefit.
alternatively, with two giants of the industry sweeping all before them, you might wonder if you culture/TLC of older independent companies will fade away.
in other words: who knows?!!
HomeAway has done a serious job in sweeping all possible competition up with their dollars, so why the left Holidaylettings on the shelf, I always wondered. Any hotel chain or travel site can with a lump sum buy themself into a prominent position in the holiday rentals market with the acquisition of Holidaylettings.
In other words, HomeAway have now created a monster which could have been theirs, but now it’s in the enemy camp.
I doubt this acquisition will change much from an owners perspective, except that they now will have two big pools to throw themselves into. We run a small rental site in Spain and we hear from many owners listed on the big sites that they feel very small – especially when HomeAway proudly announces in the press that the owner has 500.000 other owners to compete with on HomeAway – that’s a slap in the face.
Pricewise, I doubt the owners will benefit from this?
Claus, HomeAway already owns the #1 and #2 sites in the UK with HomeAway.co.uk and Ownerdirect.co.uk. Why in the world do you think they’d be interested in another UK brand?
I think it’s more likely that TripAdvisor bought it after HomeAway passed.
Gordon, I would not agree with you there. I know all these sites pretty well and I am convinced they own #2 and #3 in the UK but they are missing #1 being Holidaylettings. OwnersDirect have gone down a lot since the acquisition and holidaylettings is much better branded in the UK and more popular among owners than homeaway.co.uk.
So I think that if anyone with the right wallet and infrastructure aquire Holidaylettings they enter Europe with such a good market share and brand that the path is laid to compete almost side by side with HomeAway.
Claus, Holiday-Lettings is certainly not the leader in terms of listings. In England it is a distant number 3 with only 40000 compared with over 200000 on HomeAway. If you look at sites in the EU, it has significantly fewer listings than the leading sites (some owned by HomeAway but not all) in France, Germany, Spain, Italy, etc. It is a good site–no argument there–but it is in no way shape or form number 1 in any market. TA is buying second tier sites; perhaps the strategy is to move them up, but perhaps the strategy is just to be a nice, profitable, number 2. Nothing wrong with that.
Hi Gordon, Well written and I do agree that listings wise HL cannot compete with HA. But reputation wise I think they can.
So with their reputation and the immense traffic of TA, HA might find that a dangerous cocktail. We will see how it goes however. The purchase of Flipkey made some noice in the vacation rentals industry, but after the news storm faded out we did not see much buzz coming out of it. So with the purchase of HL, I think TA now show that they will not settle for a nice 2nd…