Business Case Study: Expedia And Homeaway

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This acquisition allows Expedia and HomeAway to deliver best-in-class experiences to an even wider set of travelers all over the world. Management team pitched well by giving respect for the HomeAway team and the business they have built. With their expertise in powering global transactional platforms and industry-leading technology capabilities, Expedia look forward to partnering with them to accelerate their shift from a classified marketplace to an online, transactional model to create even better experiences for HomeAway’s global traveler audience and the owners and managers of its 1.2 million properties around the world. Also they added about that they have long had their eyes on the fast growing ~$100 billion alternative accommodations…show more content…
With more than one million paid listings in more than 190 countries, Expedia’s pending acquisition of HomeAway is a game-changer in that it saves Expedia years of building up its own vacation rental supply in an increasingly important lodging sector. The Expedia-HomeAway combination would displace Booking.com as the world’s largest lodging seller in terms of numbers of hotels, vacation rentals and apartments etc. Expedia Inc. would offer at least 1.3 million properties — although Expedia and HomeAway officials spoke of 1.5 million — compared with Booking.com’s 821,400. Though the transaction will dilute Expedia’s earnings per share in 2016, the first year of ownership, it will be accretive over the long run. Also, the company will be able to strengthen its presence in the incredibly profitable vacation rental market and gain competitive advantage against apartment-sharing start-up, Airbnb. Airbnb, in general, provides short-term rentals while HomeAway caters to travelers looking for one-week or longer stays. Therefore, the acquisition will give Expedia the opportunity to expand its options for consumers beyond hotels, boosting its efforts to build a place in the fast emerging alternative accommodations space, a market that Expedia values at around $100 billion. I favored this acquisition because: 1) a deal offers a "compelling" opportunity to increase take rates, 2) the price tag (14x 2017 EBITDA) does not reflect the potential "wild success" of the new fee model, 3) Expedia gains "strategic insulation" from the Airbnb risk. HomeAway is the leading online website for vacation rentals. This acquisition by Expedia should amount to numerous synergies within the company. Expedia's expertise in global lodging and travel platforms and leading technology should help scale and distribution of

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