Expedia Is in No Hurry to Start Selling Vacation Rentals From HomeAway

Speed and innovation usually characterize successful and growing companies, but when it comes to the prospect of starting to offer HomeAway’s vacation rentals on Expedia.com,  Expedia Inc. is noncommittal and taking it all extremely slow and easy.

The two parties announced a partnership last October, and today, during Expedia Inc.’s fourth quarter earnings call, CEO Dara Khosrowshahi said the company has just started to experiment with HomeAway’s vacation rentals, but won’t gather enough data about it until the second half of 2014.

Expedia will study how adding vacation rentals to its accommodation mix impacts conversions, and will expand the offering to the extent that consumers show they are interested, Khosrowshahi said.

Khosrowshahi said the company’s emphasis will continue to be in growing its hotel business, although it is optimistic about the HomeAway partnership, which is in the early stages of testing.

“But it is really too soon to call” how the partnership will take shape, Khosrowshahi said.

Expedia clearly sees hotels as where its biggest margins are. And vacation homes certainly have far fewer rooms than hotels.

Still, Expedia wants to compete with Booking.com, which offers a broad range of lodging offerings, but Expedia is making no commitments at this stage about what its vacation rental offering will look like.

In other matters:

Acquisition Strategy and Trivago

Expedia officials were very bullish about the performance of its Trivago business, which saw its revenue grow more than 85% in 2013, contributing about 4 percentage points to Expedia’s revenue growth for the year.

With the Trivago acquisition paying off and fueling Expedia’s growth, Khosrowshahi said Expedia will continue to look to grow through acquisition, and will be “opportunistic” about such opportunities.

Paid Links Scheme

In response to an analyst’s question, Khosrowshahi declined to discuss Google’s punishment of Expedia for SEO bad practices. “We are not going to comment on speculative articles about our Google trends,” Khosrowshahi said, adding that Expedia’s traffic from Google organic and paid search is growing annually.

He therefore didn’t address the impact of Google’s punishment so far in the first quarter of 2014, with some analysts pointing to Expedia’s SEO presence taking at least a 25% hit.

Khosrowshahi said Expedia constantly audits its SEO practices to make sure they are industry-leading, although that’s a dubious premise given recent events.

Travelocity

Expedia implemented its partnership with Travelocity, providing the back-end to its U.S. site in December, and will have Travelocity.ca up and running on the Expedia platform in the first half of the year, Khosrowshahi said. The implementation had no significant impact on Expedia’s financial results in the fourth quarter.

CFO Mark Okerstrom said there are a lot of question marks about how the Travelocity partnership will work out. He said Expedia doesn’t know what the conversion rates will be on Travelocity websites as they operate under Expedia’s power as it is an unknown how consumers will react to seeing something different on the Travelocity sites.

In addition, the success of the partnership depends on how much marketing spend Travelocity will put into the effort, and that is “outside our control,” Okerstrom said.

“There is a whole lot of uncertainty about that,” Okerstrom said.

Travelocity’s parent, Sabre, after all, is trying to pull off an IPO and clean up the bottom line so it’s unclear what priority it will give to the Travelocity-Expedia partnership.

Expedia Traveler Preference

Officials said nearly 45,000 hotels have implemented the Expedia Traveler Preference program, which enables them to offer Expedia consumers the options of prepaying for hotels using the merchant model, or paying at the hotel, which brings reduced commission to Expedia.

Okerstrom says the program removed two barriers to the growth of Expedia’s hotel business: hoteliers who didn’t want to work with Expedia because they didn’t want to participate in Expedia’s merchant model program, and consumers who were only interested in paying at the hotel.

Said Okerstrom: ETP “is a very positive catalyst for our business.”