Skift Take

Expedia doesn't really care about the noise coming from some disgruntled vacation rental owners. The company is focused on scaling HomeAway's vacation rental business, and having online bookable properties is the formula for the future.

Unpopular with some vacation rental hosts, Expedia’s moves to emphasize online bookings and to prohibit guest-host communications that might have previously occurred outside company channels seem to be working for HomeAway.

Expedia officials, speaking during the company’s second quarter earnings call Thursday, were upbeat about the prospects for HomeAway, which Expedia acquired in 2015 for $3.9 billion.

During the quarter that ended June 30, HomeAway’s revenue jumped 31 percent year over year, although adjusted earnings before interest, taxes, depreciation, and amortization  — or EBITDA — edged up just 3 percent to $39 million.

That’s OK, though, because Expedia is emphasizing HomeAway’s growth, and is redirecting revenue back toward investments, including for marketing, hiring and technology, officials said.

Expedia CEO Dara Khosrowshahi said HomeAway is on track to reach its previously stated goal of achieving $350 million in EBITDA by 2018.

“So far, so good,” he said, referring to the way HomeAway properties, which are now on 11 Expedia points of sale in addition to HomeAway’s own sites, are doing in terms of conversion.

HomeAway Unshackled

Among the steps that Khosrowhshahi said are working are mandating that all HomeAway subscription renewals be for online bookable properties and requiring all guest-host communications to occur on the platform. The HomeAway team has also been enabled to place higher in the sort order properties that are online bookable, have hosts that are responsive to guest inquiries, and feature positive guest reviews.

These are all “positive factors in conversion,” Khosrowshahi said, adding that these are still early days in efforts to optimize vacation rentals on Expedia and HomeAway sites.

HomeAway’s data scientists now have “more freedom” to test and learn, helping in those optimization efforts.

Khosrowshahi said HomeAway’s focus this year is on growth in the U.S. while 2018 will be all about global growth.

He cautioned, though, that while he and CFO Mark Okerstrom would be reluctant to turn down an attractive acquisition, the majority of HomeAway’s growth is expected to be organic.

Expedia thinks “we can step on the gas” to further HomeAway’s growth, Khosrowshahi said.

Trivago Keeps Growing, Profits Will Come Later

In other developments, Trivago achieved a milestone in the second quarter — the hotel-metasearch site exceeded $1 billion in revenue in the trailing 12 months for the first time.

In the second quarter, Trivago saw its adjusted EBITDA fall 78 percent to $2 million, but the Expedia subsidiary is emphasizing growth. Trivago saw its revenue jump 64 percent in the second quarter to $328 million.

A bunch of that growth is coming from TV and other advertising. Expedia Inc. reported that in the second quarter, direct sales and marketing expense rose 25 percent to $1.44 billion. The majority of that spend was on behalf the Expedia and Trivago brands, officials said.


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Tags: expedia, otas

Photo credit: A property listed on VRBO, a HomeAway site, in Como, Colorado. The listing has a "Book Now" button, a requirement for appearing high on a page on HomeAway sites. VRBO

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