The FINANCIAL — Expedia Inc. agreed to pay $3.9 billion to buy vacation rental site HomeAway Inc., capping a string of increasingly expensive acquisitions and moving more directly into competition with Airbnb Inc., according to Nasdaq.
The deal comes about a month after Expedia, whose websites include Hotels.com, Hotwire and Trivago, closed its $1.3 billion takeover of rival Orbitz Worldwide. Earlier this year, Expedia spent $280 million to buy smaller U.S. booking site Travelocity.
HomeAway, whose brands also include VRBO.com and VacationRentals.com, makes most of its revenue from charging property owners to list their properties on its sites. Unlike Airbnb, which lets residents rent out their homes for brief stints, HomeAway’s listings tend to be managed properties and second homes rented out for most of the year. HomeAway said on Wednesday that its sales rose 11% to $375.6 million for the nine months ended Sept. 30, but that growth has lagged behind its peers.
Buying HomeAway gives Expedia more control of the lucrative market for apartments and vacation homes as Airbnb moves on traditional booking sites’ territory. It also gives Expedia more inventory in vacation-rental destinations dominated by companies like Priceline Group Inc. and TripAdvisor Inc.
The cash-and-stock offer is valued at about $37.86 a share based on Expedia’s closing price on Wednesday. That represents an 18% premium over HomeAway’s last closing price. The deal, subject to regulatory approvals, is expected to close in the first quarter of next year.
HomeAway Chief Executive Brian Sharples said his company had made some headway listing urban homes and apartments on its platform, though he acknowledged questions about how quickly the company could expand in cities might have held back its stock in recent years. “You’ll see some more activity from us there over the next few years,” Mr. Sharples said.
HomeAway has its roots as an offline destination for vacation home listings and has struggled in recent years to turn itself into a service for handling booking transactions. Expedia said it could help the company capture more business by combining.
“We do think we can bring substantial expertise to the HomeAway team,” Expedia Chief Executive Dara Khosrowshahi said. “We think we can help them avoid a bunch of the mistakes we’ve made” learning to handle bookings online.
On November 4, HomeAway said it would start charging some travelers fees to book properties on top of the commissions it already charges homeowners. The fee copies the structure Airbnb uses to collect revenue, though Mr. Sharples said HomeAway would seek to undercut its rivals’ overall charges.
“We’re in a brand game and a brand battle and we’ve got another competitor out there that’s been a poster child of the sharing economy and has been getting a lot of press,” Mr. Sharples said.
Though executives didn’t rule out cuts at HomeAway, Expedia plans to give the vacation rental site relative autonomy to operate from its Austin, Texas, headquarters. Expedia has absorbed other brands like Travelocity in the past, replacing much of their management and technology with its own platform.
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