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  • 1. Homeaway.com Jc Magnin Jeanchristophe.magnin@essec.fr Business sectors ‘The largest investment from an internet The vacation rental market is estimated to 48 company in the last 8 years’6 (Wall Street US$ Billion for US and Europe only. It is Journal): Institutional Venture Partners (that spliting in two segments: Rent-by-owners (56%) ponied up $45 million)7, Technology Crossover and professional Properties Managers (44%)1. Ventures and Redpoint Ventures raised a total of $250M in order to acquire Homelidays in Homeaway is positionned on both segments and February 20098. is specialized in Online vacation rentals2. In 2007 it generated 12% of the overall vacation Business model rental revenue. More than 17% are expected by As a company that offers vacation rentals 20103. The company targets leisure customers. Homeaway competes on Consumer Services Industry (by operating like any other travel Geographical overview of operations agency), but also in the Leisure (by providing Homeaway started its operation in United States, lodging offers) and Media (by collecting and and expanded it through European countries delivering information) industries9. including France, United Kingdom or Germany. Nowadays, the company is offering vacation Homeaway's business model is based on online rentals in 145,000 locations in 118 countries. subscriptions paid by homeowners and property managers10. Hence, the company’s challenge is Key developments in the company's to acquire as much as possible owners listings. history Thus, Homeaway connects homeowners and In 20054 Austin Ventures and Redpoint properties managers with travellers who then Ventures raise $49M in order to FeWo-direkt.de can browse hundreds of thousand destinations in (December), Holiday-Rentals.co.uk (February) more than a hundred countries11. TripHomes (February), A1Vacations (February), GreatRentals.com (February), and CyberRentals BUT by becoming the world’s leader of the (February). Online Vacation Rentals companies, HomeAway also attracts attention of direct ‘2006 Fund raising record on the internet competitors such as Forgetaway.com12, sector’5: Institutional Venture Partners and 13 14 Hotels.com , and Group RCI . The competition Trident Capital raised $160M to acquire also includes independent Property Managers, VRBO.com, November 2006. In 2007 Homeaway OwnersDirect.co.uk (July), VacationRentals.com (May 2007) and Abritel.fr 6 (January 2007). HomeAway in the News 2008, HomeAway.com, HomeAway website, 2008, http://www.homeaway.com 7 HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, 2009, http://www.businessweek.com 8 HomeAway company Profile, CrunchBase, 2009,http://www.crunchbase.com 9 HomeAway.com competitors, Hoovers, Hoovers website, 2009, 1 Vacation Rental Marketplace: Poised for Change, PhocusWright, 2009, http://www.hoovers.com 10 http://www.phocuswright.com Some companies (like Wal-Mart) thrive despite recession, Brian Sharples HomeAway 2 HomeAway vacation Rentals, Homeaway.com, 2009, http://www.homeaway.com Chief Executive, 2008, http://www.usatoday.com 3 11 2008 TripAdvisor, blog flipkey.com, http://blog.flipkey.com How do the sites work?, Online Press Kit, HomeAway, HomeAway website, 2009, 4 Homeaway.com acquisitions, CrunchBase, CrunchBase website, 2009, http://www.homeaway.com 12 http://www.crunchbase.com Forgetaway.com deal only by rent-by-owners, http://forgetaway.weather.com 5 13 HomeAway Secures Record $160 Million in Financing, Venture Capital News, Venture http://www.hotels.com Capital Reporter website, 2006, http://www.venturecapitalreporter.com 
 14 Group RCI focus on Vacation Exchange & Vacation rental, http://www.grouprci.com
  • 2. Real Estate companies, and new entrants in the products (including dogs allowance)22. Finally it market that represent potential threats15. provide more space and amenities than generally available in Hotel rooms23. Key partnerships In 2006, Homeaway has formed a partnership So why consumer would use Homeaway’s with news and information USAToday in order website? Simply because vacationers can use the to increase its traffic16 and create more visibility site to browse listings and user reviews, view for properties owners17. pictures, and check pricing and availability. As Brian Sharples underline it, "We want to make it Hence, consumers can access to Homeaway as easy as booking a hotel room", and "We throught USAToday (via the adress invested pretty heavily in staff and technology to http://usatoday.homeaway.com). But according scrutinize the listings". to the currently Homeaway’s homepage design, this page looks outdated. Moreover, neither Moreover a more detailled attention much advertising nor announcement still stands for describe whom the company targets. A March any partnership. 2009 snapshot of HomeAway Unique Visitor ranking let appear that there is a total of 831,734 More recently, another known partnership of the unique visitors24, increasing of 11,6% from the company is the ‘The HomeAway.com Credit month before and 60,6% comparing to last Card Acceptance Program’ developped by year’s same period25. Payment Processing, Inc.18 allowing Properties Owners to accept credit card payements such as A February 2009’s Audience Makeup shows bookings and deposits fees. In order to fully that there was 583,800 people who viewed implement this service, Homeaway develops its 15,3M of HomeAway website pages. Moreover, own tools allowing owners to manage 55% are female, 35% are 50= (29% are 35-49, reservation and payement processes easily. That and 24% are 18-34), 91% pf visitors are is, rentors can access to these services via caucasians, 66% has no kids between 0-17 years HomeAway Connect website19. old, 35% earn more than $100K, and 17% went to graduate school when 43% went to college. According to a constantly growing expansion, mainly by acquisition Homeaway did not let Finally visitors also use bookit.com, books appear any further partnerships. lodging at bedandbreakfast.com, and consults travelpost.com26. Why would a consumer use the system? Why would a supplier allow its Consumer who is seeking value will find it in inventory to be sold over this system? the vacation rentals20. Homeaway highlights first The business model of Homeaway defines factor of choice, as rental prices are often suppliers as Rent-by-Owners as well as cheaper than staying in a hotel21. But vacation Properties Managers. Thus, the first factor that rentals are also based on a privacy approach, and would conduct these suppliers to use it is definitely a familly & groups oriented Homeaway’s website is first of all because renting can bring extra money27. 15 HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, 2009, http://www.businessweek.com 16 22 Business Wire Why Vacation Rentals?, Homeaway, HomeAway.com website, 2009, 17 HomeAway.com selected by USATODAY.com to Power its Online Vacation Rental http://www.homeaway.com 23 Classifieds, Press Releases, HomeAway website, 2006, http://www.homeaway.com Why would I choose a vacation rental home over a hotel?, Online Press Kit, 18 Credit Card Acceptance Program in partnership with Homeaway.com, Payment HomeAway, HomeAway website, 2009, http://www.homeaway.com 24 Processing Inc., https://www.paypros.com The Unique Visitors metric only counts a person once no matter how many times they 19 HomeAway Connect services & tools, Homeaway Connect, Homeaway Connect visit a site in a given month 25 website, http://www.homeawayconnect.com HomeAway site analytics, 2009, http://siteanalytics.compete.com 20 26 HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, Business Week February 2009’s HomeAway quantscast, 2009, http://www.quantcast.com 27 website, 2009, http://www.businessweek.com HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, 2009, 21 Some companies (like Wal-Mart) thrive despite recession, USAToday, USAToday website, 2008, http://www.usatoday.com 
 http://www.businessweek.com
  • 3. Homeaway average rental price is $236 per With its last fund raising, the company had night28, while homeowners pay $275 annually to strengthed its business, mainly by retiring its list their property for a whole year. remaining debt. Brian Sharples announce that it will also be used to companies acquisition, melt Therefore, in order to sold their inventory the down the company strategy (by hiring Mike company use different chanels: First Homeaway Butler, the former chief marketing officer of T- is able to brings travelers through nearly Mobile USA (DT), or launching advertising 200,000 search terms on main Search Engines. campaign with Publicis). The challenge is pretty More than tjis, every month 1.3 million travelers clear "We want to have a $10 billion market worldwide receive the Homeaway Traveler capitalization in five years"32. Newsletter. Then, the company is regularly highlighted in the press (475 publications Recently, a company investor declared that this including USA Today, National Geographic funding is "A statement of 'game over' for Traveler, New York Times, Wall Street Journal, competitors"33. And from a structural point of Money, and Travel & Leisure since 2006)29. view Homeaway planed to geographical expand in Asia and South America34. Methods of Operation Homeaway does not distribute products. The As Douglas Quimby, senior director of research platform provides a service in order to connect for PhoCus Wright said, "It's an unbranded Renters with Owners and Property Managers, world, the biggest challenge Homeaway have to throught its distribution channels (competitors overcome is in safeguarding its customer and companies that she bought). In these experience"35. processes no outsourcing appears. But according to its recent partnership with Payment Processing Inc. in order to develop financial services to its customers30, some outsourcing aspects could evolve in the coming years. More, as well as other Online selling platforms such as eBay or Amazon.com who operated on similar fragmented markets, the company fulfills its customer’s proposition by providing a “Make it easy” and “Self catering reservations” system31. Comparing to its traditional street competitors, being an online company give to Homeaway the opportunity to reduce its structural costs, to make its visibility constantly growing and increase its reactivity to the market variation, mostly throught its 12 (inter)national websites. Key Strategic direction 32 HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, Business Week website, 2009, http://www.businessweek.com 28 33 Aren't vacation rentals all luxury properties and expensive to rent?, Online Press Kit, Venture Investors Bet $250 Million On Vacation‐Rental Site HomeAway , Ted HomeAway, HomeAway website, 2009, http://www.homeaway.com McMahan, Wall Street Journal, 2008, WSJ.com 29 34 The HomeAway Network, HomeAway.com website, 2009, Some companies (like Wal-Mart) thrive despite recession, Updated 12/5/2008, http://www.homeaway.com http://www.usatoday.com 30 35 Credit Card Acceptance Program in partnership with Homeaway.com, Payment HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, Business Week Processing Inc., https://www.paypros.com website, 2009, http://www.businessweek.com 31 HomeAway: A Find in Online Vacation Rentals, Spencer E. Ante, Business Week website, 2009, http://www.businessweek.com