Expedia's Bet on Home Rentals Is Finally Starting to Pay Off
(Bloomberg) -- Expedia Group Inc.’s 2015 purchase of HomeAway, meant to help it compete with online home-rental upstart Airbnb Inc., is finally starting to pay off.
After years of updating the company’s aging technology, introducing a guest booking fee and persuading reluctant hosts to handle transactions online, HomeAway’s profit doubled in the second quarter from the same period a year ago. The performance of the unit helped push Expedia’s earnings, excluding some items, to $1.38 a share, the Bellevue, Washington-based company said Thursday in a statement. Analysts had projected 89 cents. Shares jumped about 11 percent in extended trading.
Expedia bought HomeAway for $3.9 billion after Airbnb ushered in a new era of travel by convincing millions of homeowners to let strangers stay in their houses. HomeAway, and its subsidiary VRBO, are mostly focused on traditional vacation rentals, but under Expedia the unit has pushed into the urban areas dominated by Airbnb. It’s part of a three-way battle in the fast-growing market that also includes Booking Holdings Inc. HomeAway added about 100,000 new listings in the quarter, and now has 1.7 million in total.
Revenue increased 11 percent to $2.88 billion in the quarter, in line with the average estimate of analysts, according to data compiled by Bloomberg. The number of room nights booked through Expedia gained 12 percent from the same period a year earlier, outstripping the 8 percent estimated by Susquehanna Financial analyst Shyam Patil. Gross bookings, the total amount of travel booked through Expedia’s many websites and apps, were $25.9 billion, compared with $22.8 billion last year.
Earlier, Expedia’s shares closed at $125.80 in New York. The stock has gained 5 percent this year.
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