The Takeoff Episode 02: How Startups Can Adapt and Pivot Sponsored This content is created collaboratively with one of our sponsors.
HomeAway is not about to be another Booking.com, but Google is going to get a new and large global customer when the vacation rental site ramps up its search engine marketing, probably next year.
Airbnb has a true frenemy in HomeAway as the vacation rental company’s CEO, Brian Sharples, said the two businesses share the goal of pursuing “fair regulation” in cities that would enable people to make money off their real estate investments.
Sharples, speaking during HomeAway first quarter earnings call today, characterised the regulatory environment as “contentious” in large cities such as San Francisco, New York City and Paris, adding that HomeAway is deeply engaged in promoting its regulatory agenda.
“We can’t predict what the outcome will be,” Sharples said.
Sharples’ comment about seeking regulations where people who invested in real estate would be able to make money off their properties applies more to HomeAway than to Airbnb, which is commonly used by lots of renters. HomeAway also has less proportional representation in cities than does Airbnb.
Sharples noted that the furor over short-term rentals impacts Airbnb more than it does HomeAway, but both competitors would like to see regulatory changes that would allow for short-term rentals.
The HomeAway CEO, however, did point to other differences between Airbnb and HomeAway, arguing that Airbnb faces more liabilities from municipal authorities than does HomeAway because Airbnb is a merchant while HomeAway’s owners collect the money from guests directly.
Google Gets a Global Customer
In other news, now that HomeAway has a substantial number of vacation rental listings (227,144) where owners compensate the company based on bookings instead of paying subscriptions, HomeAway is beginning to test search engine marketing, and will likely be a big Google customer on that front in the future.
These performance-based listings amount to around 24% of HomeAway’s total listings, and are predominantly used by property managers, and not vacation rental owners.
Sharples said HomeAway’s testing of paid digital marketing, geared to to drive conversions for its pay-per bookings listings, has been going well, although it has primarily been concentrated in the U.S. so far.
The testing will expand to Europe later this year, he said.
Sharples said HomeAway will likely not have to spend as high a percentage of gross bookings on search engine marketing as some competitors might because HomeAway is the is the organic search, or SEO, leader in the vacation rental category in most markets.
Still, Sharples said, HomeAway is making substantial investments. He explained that the largest part of HomeAway’s marketing investment in 2013 is for adding employees, particularly in its search engine marketing group.
Lots of Money for Acquisitions
In other news, HomeAway officials revealed that the company had $770.5 million in free cash flow at the end of the first quarter — and it can be used for additional acquisitions and investments.
So you can expect HomeAway to continue to expand its geographical presence in 2014 by acquiring vacation rental sites, as has been its habit for years.
Sharples also said HomeAway continues to test selling vacation rentals through Expedia.com, with HomeAway currently focused on development work to render more of its listings distribution-ready.
Both Expedia and HomeAway share the goal of adding more vacation rentals to the testing sooner than anticipated, he said.