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Short Term Vacation rentals are here to stay. The following is an interesting article that appears in Barrons.com explaining about how and why Expedia is getting into the Short Term Vacation Rental arena.
Many travelers now consider home rentals and hotel rooms in the same vein, and Expedia is increasingly doing the same.
Executives from the online-travel company spent considerable time on the company’s latest earnings call discussing plans to better integrate HomeAway — Expedia’s competitor to Airbnb — within its larger platform.
To start, Expedia is also trying to get more HomeAway customers to book online, so that all communications between renters and hosts take place on its platforms. The company has also been working on making more of its HomeAway vacation rentals available for booking on its core site. It grew the number from about 20,000 last quarter to 60,000 this quarter, with more to come. The company has 1.5 million “online bookable listings” in total.
Asked about the conversion rates so far of HomeAway properties that are listed on the main Expedia site, CEO Dara Khosrowshahi said he was seeing “good early signs” on an admittedly small base.
Piper Jaffray analyst Michael Olson wrote Friday that while “it remains to be seen if adding alternative accommodations alongside hotel booking options will prove cannibalistic,” he expects that showing more options and inventory on the main sites will increase conversion rates on the whole.
Expedia’s investments in HomeAway seem to be yielding results and the company has more planned. Bookings for the segment grew 45% during the quarter and revenue rose 31%, relative to a year ago. The company is trying to improve HomeAway’s profitability, though Olson thinks that will be a bigger factor next year.
In general, Expedia beat overall earnings expectations and management said it was seeing a healthy global travel market. Investors liked what they heard and sent shares up 3.4% Friday.
Big Picture: Expedia’s investments in its HomeAway business are yielding results, and investors on the whole like where the company is going.