Expedia’s strengths in mobile will boost HomeAway’s profile
Expedia is adding another online travel agent, HomeAway, to its digital repertoire, as it aims to compete with Airbnb by offering hotel accommodations as well as forms of private lodging to mobile-savvy travelers.
Expedia is hoping for the transaction to be finalized by early 2016 in a deal that would see the travel giant acquire the Airbnb competitor for $3.9 billion. Following Expedia’s recent additions of Travelocity and Orbitz, the move suggests that the travel conglomerate is aiming to cement its status as top dog in the mobile booking sector, which grows incrementally each day.
“The HomeAway acquisition is strategic and will strengthen Expedia’s mobile position in the vacation rental market in a number of ways,” said Thom Jordan, CEO of Ping Mobile, New York. “First, it provides Expedia with a greater foothold in the vacation-rental market via the HomeAway digital and mobile assets.
“Currently, Expedia can only showcase a portion of HomeAway’s properties; the acquisition would allow it access and control to the complete 1.2 million HomeWay listings and enable it to share technology, resources and expertise to increase the listing inventory,” he said. “Second, this would allow Expedia to compete more effectively with the home-sharing startup Airbnb, which has two million listings.
“Third, this acquisition also blocks its main competitor, Priceline, from increasing its mobile presence in the vacation property listing market. Without HomeAway, Priceline is at a severe disadvantage against Expedia and Airbnb in the vacation property market. Until the acquisition of HomeAway by Expedia is complete, I would not be surprised if Priceline makes a counter-offer in an attempt to outbid Expedia.”
Accumulating digital assets
Expedia is likely hoping to compete directly with Airbnb, especially when targeting on-the-go mobile users. The increasing amounts of consumers booking flights, accommodations and activities via their smartphones means online travel agents have a lucrative and massive sector to reach.
However, Expedia is trying a different approach with this particular acquisition. Instead of seamlessly transitioning HomeAway into its umbrella of travel brands, it is planning to allow the company to manage itself almost autonomously out of its Texas base.
Additionally, the news comes on the heels of HomeAway’s announcement that it is planning to alter its business model to now charge users a fee, which could add several percent to transactions. Its previous model centered on charging consumers who listed their properties for rent, but the brand aims to lessen commission rates for these users as well.
The acquisition is set to offer HomeAway a slew of new expertise from Expedia, especially regarding mobile offerings, a sector in which the company has made significant strides.
HomeAway’s Android app
This past June, Expedia boosted its mobile momentum with a series of new app features, including the ability to book rental cars, a “Book Now, Pay Later” functionality and a redesigned launch screen (see story).
Together, the brands may be able to fend off some competition from marketplace Airbnb, which has been gaining traction among digitally-savvy travelers. HomeAway does specialize in vacation rentals, however, whereas Airbnb is more focused on short-term leasing for properties.
The acquisition will also aid Expedia in boosting customer traffic. During the official announcement, the company revealed that one in four United States travelers now prefer to book private accommodations for their trips, as opposed to hotels.
This broadening shift to alternative forms of lodging means that Expedia will be able to offer more options to its wide array of consumers, thanks to HomeAway’s experience in this area.
In turn, HomeAway posits that it will be able to increase conversion with Expedia’s backing. The brand has experienced some challenges with issues such as mobile optimization, usability, conversion and digital payments, with which Expedia will likely step in to help.
Highlighting financial benefits
HomeAway will reap strong financial benefits from the acquisition, perhaps most notably the increased exposure that comes alongside with being under a major corporate umbrella. Expedia’s brands also include Hotwire.com, Trivago, Orbitz Worldwide, Travelocity and Hotels.com.
It will also be able to invest more in marketing channels and optimize conversion in a way that creates more revenue for suppliers as well as users.
Expedia’s experience in marketing automation is another benefit to reaching on-the-go travelers.
Expedia can complement the booking process with a slew of activity options
An Expedia executive at the Mobile Shopping Summit 2015 claimed that mobile marketing automation enables the brand to personalize push notifications, emails and in-application messages, enhancing the shopping journey and driving additional sales (see story).
“This acquisition immediately provides Expedia’s competitive market share in the vacation property listing market, a growing segment of the digital travel sector, and at the same time blocks Priceline from doing the same,” Mr. Jordan said. “Expedia can now compete head-to-head in this market with Airbnb via HomeAways’ top-notch digital UX and robust inventory to connect property-owners and renters.
“The acquisition also puts Priceline at a disadvantage by effectively locking it out, at least for the time being, from these vacation property listings while at the same time cannibalizing revenues. It will be very interesting to see how Priceline reacts to this threat.”
Alex Samuely, staff writer on Mobile Commerce Daily, New York
Alex Samuely is editorial assistant on Mobile Commerce Daily, New York. Reach her at email@example.com.
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Tags: Airbnb, Expedia, expedia acquisition, homeaway, homeaway acquisition, mobile, mobile booking, mobile commerce, mobile travel, Ping Mobile
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