Wednesday, November 15, 2006

Homeaway Acquires VRBO

Well, it finally happened: Homeaway, already the largest Vacation Rentals company on the internet, finally acquired VRBO for an "undisclosed" amount. However, Homeaway have raised an amazing $160m in financing to help fund the deal.

Will this be good for vacation rental owners? Already, Homeaway has gotten mixed reviews for it's acquisitions, including Cyberrentals , Greatrentals, A1Vacations and Holiday-Rentals.com. Although Homeaway has tried to offer additional benefits, such as discounted packages on several sites, high profile advertising and new features, many vacation rental owners have complained that they are not seeing the same quantity and quality of renters since those acquisitions, at least partially due to being "lost" among the vast numbers of listings on the Homeaway sites.

Now that VRBO has also been acquired, will that get even worse? Won't the competition on the Homeaway sites get even tougher, with all those extra VRBO listings to compete with?

What about the owners currently listed on VRBO : how will they feel about this acquisition? For many owners, being listed on VRBO was viewed as necessary, but expensive. Despite the often criticised user interface and marginal customer service, VRBO by and large got results. Will this continue to be the case under the management of Homeaway?

You also have to wonder, are the investors in Homeaway getting good value for their purchase? Let's assume that only half of the $160m that Homeaway have raised is going to fund their purchase of VRBO and that most of the vacation rental owners currently listed on VRBO will stay with Homeaway. This still works out at more than $3,000 per listing: that at least 10 years worth of subscription fees, which seems expensive to me.

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