Home Away Raises $250 Million in Venture Capital

Home Away, the Texas based vacation rental mogul, has raised another major chunk of venture capital this week.  I was amazed to find that the company employs over 300 people in its Austin headquarters; lists over 325,000 properties and has gobbled up most of the big names in vacation rental over the past few years.  I thought it would be interesting to see what the media are saying about this awesome money raising operation.

The UK Financial Times blog suggest that venture capitalists are seeing it in "the same league as another TCV investment, Expedia, which currently has a market capitalisation of $2.4bn and forecast revenues this year of $3bn."

bits.blogs in the New York Times comments that although visits to travel web sites are down 3% from a year ago, more people will be driving to destinations rather than flying in the next year which accounts for the growth in the vacation rental industry as vacationers stay closer to home.

Tech Crunch calls the pre-money valuation of $1.15 billion "absurd" and has doubts about future growth of the company given its takeover of most of the competition already. There’s some interesting comments on this blog too:

"this is a HUGE and growing opportunity. Many second home owners are feeling the squeeze on that vacation home mortgage and there are something like 19 million vacation home owners who do not rent out their second homes….yet. It is a huge growth market and the economic slow down helps the situation."

"While this company may have a valid business, in looking at the site and the amount of money put in it really does smell like a late 90’s dot com scenario all over."

"Their 11 site acquisition isn’t even a snowflake on the tip of an iceberg. Next to porn, vacation rentals has to be the most saturated industry online. I often joke that there’s more vacation rental websites than vacation rentals."

This was a particularly interesting comment:

"If HomeAway can compile a common set of (high standard) services for its portfolio of holiday homes it can lift itself well beyond the localized (country) based competition and use scale to effect the margin.

The owners of these holiday homes do not want to think about the servicing side of the operation, they want to see high occupancy rates and maximum rental returns. "

So, what does this all mean for us?  Well, I don’t think Ontario cottage listing sites are going to be much affected. Most domestic rental clients find their way to one of the localised sites like CottageLINK or Cottages in Canada, and international travellers are more likely to use Google to find ontario cottage rentals or something similar, which will point them in the domestic direction.

I did advertise one of our properties on Home Away this summer and had an very poor response for the $350 price tag. There have been some enquiries but not one of them converted to a booking, so from my minimal experience I would suggest leaving this one well alone. Of course, I would love to hear from anyone with better experiences.