With privately held Airbnb attracting a $30 billion valuation, compared with Expedia Inc.’s smaller $18.6 billion market cap, you’d think that would anger Expedia CEO Dara Khosrowshahi.

And perhaps, deep down, it does.

Asked at the Skift Global Forum last month whether Airbnb was going to “eat Expedia’s lunch” in the alternative lodging sector, Khosrowshahi quipped right back, “Not yet. I’m well-fed.”

But during Expedia’s third quarter earnings call Thursday, Khosrowshahi saw a lot of positives for Expedia in Airbnb’s $30 billion valuation. He said there are currently only two big players in alternative lodging — presumably he meant Airbnb and Expedia’s HomeAway — while Booking.com is up-and-coming in the sector.

Khosrowshahi said it would be “a very big opportunity” if Expedia could turn HomeAway into one of those handful of big-scale players in alternative lodging — maybe something on the scope of an Airbnb.

He said the opportunity for Expedia in alternative lodging is a major opportunity and not just an “incremental” thing.

Toward that end, Expedia is investing in HomeAway’s technology and marketing, and began integrating HomeAway vacation rental inventory with hotel results depending on the “logic” of the customer’s lodging query in terms of the number of desired days of the stay, for example, and other factors.

Expedia CFO Mark Okerstrom explained how HomeAway is phasing out premium subscriptions for listings and is drilling down on online-bookable listings, which now number more than 1 million on HomeAway sites, and see the owners paying a commission only when a booking is made.

“Progress is pretty good,” Okerstrom said, referring to HomeAway and adding, “The way we’re getting there is focusing on the online piece and investing.”

In other words, Expedia wants to ensure that those vacation rental bookings take place on the HomeAway platform and not offline between owners and customers.

Expedia will be piloting that integration of HomeAway inventory with Expedia.com and Hotels.com properties through the first couple of quarters of 2017, and Khosrowshahi said owners should expect an uptick in demand, especially from urban areas.

That message could find a receptive audience among some vacation rental owners and property managers if it becomes reality as many were angered when HomeAway imposed a booking fee for consumers in the first quarter, a development that negatively impacted demand.

Down Quarter for Expedia

Apart from the optimism about HomeAway’s potential for Expedia, the third quarter was basically a subpar one for the company as its core businesses under-performed compared with recent history.

Expedia Inc.’s room night growth was 17 percent, a deceleration from 20 percent in the second quarter. And only 11 percent of that 17 percent in room night growth came from Expedia’s core businesses — with the other 6 percent coming from Orbitz Worldwide, which Expedia acquired in 2015.

Expedia’s earnings per share of $2.41 missed analysts’ expectations by 6 cents although the company’s revenue grew 33 percent to $2.58 billion, beating analysts’ forecasts.

Were the critics correct?

When Expedia went on its buying spree in late 2014 and 2015, acquiring Wotif, Travelocity, Orbitz Worldwide and HomeAway, among other pickups, critics argued that Expedia would trip up because mergers and integrations can be distracting and difficult.

Some of that criticism seems to be on point. Expedia had a subpar second quarter when it had difficulties integrating Orbitz Worldwide and Expedia appears to have felt some of that hangover in the third quarter, as well, given the weakness in room-night growth and the under-performance of core brands such as Expedia.com and Hotwire.

“Q3 was definitely a step in the right direction for the company,” Khosrowshahi told analysts, adding, that the Orbitz migration is largely complete and room-booking trends improved in September.

Citing Expedia’s execution track record over the past five years, Khosrowshahi said, “It feels good to be back to our operational formula.”

Khosrowshahi said the “speed bump” that the company hit in recent months “is proving out to be temporal,” not structural. “We don’t take anything for granted.”

He admitted that the second quarter “taught us a little bit of a lesson in humility that everyone can use every once in awhile.”

It remains to be seen whether more humility will be required in upcoming quarters as the competition is poised to take advantage.

Photo Credit: Expedia believes that it can turn HomeAway into a unicorn in terms of global scale. Pictured is Expedia CEO Dara Khosrowshahi speaking at Skift Global Forum 2016. Skift