HomeAway, a vacation rental marketplace, just raised $250 million in their latest round of financing. HomeAway previously raised $209 million which was used to acquire eleven vacation rental sites including VRBO, VacationRentals, CyberRentals, A1Vacations, GreatRentals, Holiday-Rentals.co.uk, OwnersDirect.co.uk, FeWo-direkt.de and Abritel.fr.
With $150 million in yearly revenues the funding will likely be used for additional acquisitions in the vacation rental front – a $24 billion industry. This bodes well for Boston based FlipKey which offers verified vacation rental reviews.
With this round HomeAway was valued at $1.15 Billion – using the basic Bizak revenue valuation you get approximately $600 Million. According to Michael Arrington of Techcrunch this was an “absurd valuation” that won’t likely produce positive returns for the investors. He says:
It’s also clear that the round was seriously overvalued. Ebay was rumored to have mulled over an acquisition earlier this year at $1.5 billion, but it never came through with a firm offer. It’s not clear who else could be a buyer at this valuation. Also, since HomeAway has acquired just about everyone in the market, there’s little room for additional growth via acquisitions. 20x ebitda is a public company valuation for a company with real growth potential. Our guess is these new investors may take a bath. Source: Techcrunch
Only time will tell if the deal is bound for failure but either way there will be some very happy entrepreneurs who are more than willing to take a piece of that $250 million.
This is an Interesting topic and I wanted to reflect more on the growth side of the by-owner vacation condo / lodging rental market.
I have been on both sides of the by-owner transaction having rented many condos for my family’s vacations from their owners and visa versa as the owner of a Keystone Resort condo rental in Keystone Colorado (Summit County.) The general public has a growing appreciation for the value of both the actual rental units as well as the unique owner’s perspective that is often shared during the reservation process. This unique owner’s perspective gives the prospective guests much deeper insight into the vacation or destination area’s attractions, local’s favorites, and other tips to make their vacation a greater experience.
I know that often when I as the condo owner speak with guests, they appreciate the extra insight into different logistics, discounts, shopping, directions, etc, not to mention the extra conveniences of having this information ahead of time to reduce vacation expenses especially in these economic times.
So the by-owner vacation value is much deeper than the value of the actual condo rental (lodging rental) size / cost per night – it extends intricately into the rest of their vacation experience. I and other owners certainly hope that more people will recognize these extras and continue to help the by-owner vacation rentals flourish. We hope that their feedback makes it to the big corporations like HomeAway and not strictly move to automated transactions that would strip these extra personal touches that would be lost.
-Guy Schlacter (gschlact)
http://www.GreatRentalKeystone.com
click for info:
Keytone condo rental for your vacation – http://www.GreatRentalKeystone.com
Terrific feedback Guy – thank you for your comment. I always prefer renting by-owner and when (and if) I make it to Keystone, Colorado I’ll look at your place.
All the best,
Tom O’Keefe