Online vacation-rental leader HomeAway broadened its reach and inventory mix with the purchase of BedandBreakfast.com for an undisclosed sum.
BedandBreakfast.com adds about 370,000 monthly unique visitors, according to Compete Inc., and about 10,000 inns to the HomeAway empire, which includes access to some 430,000 vacation rental properties across a bevy of domains, including HomeAway.com, VRBO.com, Homelidays.com and about a half-dozen others.
"As the theme of their Super Bowl ad and online video campaign has made clear, the largest player in the online vacation rental marketplace has set its competitive crosshairs squarely on hotels," says Douglas Quinby, PhoCusWright senior director, research, and author of "Vacation Rental Marketplace: Poised for Change." "This acquisition suggests that HomeAway is broadening their mission beyond vacation rentals to encompass more alternative leisure accommodation. Their marketing reach and in particular online marketing expertise should give a nice boost to an alternative category that is often overlooked, given the dominance of hotels in online travel."
Quinby points out that HomeAway uses the high-margins listings model, which avoids the costs associated with transactions, fulfillment and customer support.
In that regard, HomeAway co-founder and CEO Brian Sharples says some innkeepers use BedandBreakfast.com technology for transactions, but the newly acquired business is listings-based at its core.
"Most of BedandBreakfast.com's customers enjoy the ease of the the paid-listing model, just as the majority of HomeAway customers," Sharples says. "The strength of the listing business at BedandBreakfast.com was one of the many attractive aspects of this business that made it a perfect fit for HomeAway."
Expedia's TripAdvisor, too, has a fledgling listings business in the form of TripAdvisor Business Listings for hotels, as well as vacation-rental listings through Expedia's stake in FlipKey.
HomeAway's acquisition of BedandBreakfast.com gets a little sticky because BedandBreakfast.com has distribution relationships for innkeepers with Expedia and Travelocity, although the two online travel agencies' vacation-rental businesses are dimunitive when compared with HomeAway's.
Expedia spokeswoman Katie Deines Fourcin says, "Our relationship with Bedandbreakfast.com is a supply agreement through which Expedia and Hotels.com offer Bedandbreakfast.com properties, and we don’t expect HomeAway’s acquisition to have any impact on the agreement."
Privately held HomeAway is rumored to be mulling an IPO, although the company denies anything is in the works at the moment.
Buying BedandBreakfast.com and broadening its inventory base, especially if HomeAway sticks with its listings model, is one approach to making investors more enthusiastic about a public offering, Quinby says.
Sharples of HomeAway says the company plans to operate BedandBreakfast.com as an independent brand, and he added that the acquired company's 50 employees will not be subject to layoffs. [HomeAway has some 540 employees.]
Asked who HomeAway's main competition is, Sharples doesn't even mention any online travel agencies.
"On the supply side, HomeAway primarily competes with local or regional websites," Sharples says. "On the demand side, we consider our biggest competitors to be branded hotels and resorts."
And, that is what the BedandBreakfast.com acquisition is all about: giving consumers another lodging alternative to hotels and resorts.
Just ask the Griswolds.