Wednesday, October 13, 2010

Homeaway contemplating IPO?

If you are one of the 500,000+ vacation rentals homeowners listed on one of the Homeaway sites, you might be interested in this article from TechCrunch, speculating that Homeaway is planning an IPO, likely sometime in 2011. Homeaway, which has been gobbling up many of its rivals over the last few years, has already raised more than $500m and, according to TechCrunch, has annual revenues of about $200m and annual profits of about $70m.

Earlier this year, Homeaway denied that it had any plans to IPO "at this moment in time", in response to speculation from the CEO of Expedia. However, with an estimated valuation of in excess of $1 billion, it must be tempting for this venture capital backed company to cash in on what has been a very successful investment.

Assuming the IPO goes ahead, what is the likely impact for vacation rental owners listed with Homeaway?

On the plus side, the increased publicity and exposure should increase Homeaway's public positioning as the leading player in the vacation rental industry, particularly important now that Tripadvisor seems to be shaping up as a serious competitor.

However, it is also possible that the IPO might prove a distraction to Homeaway management as they seek to continue to build features and capabiity to their offerings. Also ,the pressure of keeping Wall Street happy with quarterly earnings may impact on the process of building the long term business.

On the other hand, maybe Homeaway will offer IPO shares at a discount to any owners listed with them?

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