Expedia Acquired HomeAway For $3.9B

Expedia Inc. today announced that it has agreed to acquire the publicly traded vacation rental service HomeAway and its brands (including VRBO.com) for $3.9 billion in cash and Expedia common stock.

Vacation Rental market is currently split into fee-based (leaded by Airbnb) and free sites such as HomeEscape. Although the paid or fee-based sites are the current leaders of the market, the growth of free vacation rental sites may challenge their lead in the future.

Expedia, the world’s largest online travel services company by bookings, said it offered $10.15 in cash and 0.2065 per share of its own stock for each share of HomeAway it acquires.

Expedia, which recently closed a deal to acquire Orbitz Worldwide Inc, said it expects the HomeAway deal to close in the first quarter of 2016, subject to regulatory approval.

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HomeAway says it currently features more than a million paid vacation rental home listings in 190 countries on its site. The company also owns a portfolio of other rental sites, including VRBO.com and VacationRental.com in the U.S., as well as similar sites in the UK, Germany, France, Spain, Brazil, Australia and New Zealand. It also operates BedandBreakfast.com.

Today’s announcement puts Expedia, which owns sites like Hotels.com, Hotwire.com, Travelocity, Orbitz and Venera, in direct competition with Airbnb. Given Airbnb’s rapid growth, Expedia probably looked at building its own competing service but decided to use its war chest to acquire HomeAway instead.

“We have long had our eyes on the fast growing ~$100 billion alternative accommodations space and have been building on our partnership with HomeAway, a global leader in vacation rentals, for two years,” said Dara Khosrowshahi, the CEO of Expedia in today’s announcement. “Bringing HomeAway into the Expedia, Inc. family and adding its leading brands to our portfolio of the most trusted brands in travel is a logical next step.”

Expedia’s biggest competitor, Priceline Group, doesn’t currently own a dedicated vacation rental site, but its Booking.com brand is slowly moving into this space.