Expedia announced last week that it has entered an agreement to acquire HomeAway for $3.9 billion in cash and Expedia common stock. HomeAway is also responsible for VRBO.com, VacationRentals.com, and BedandBreakfast.com.
But some in the travel industry are wondering if Priceline is going to make a counter-offer before the transaction is closed. The acquisition puts Priceline at a disadvantage in the vacation rental market, a market that’s grown in popularity with services like Airbnb. If the transaction goes through, Expedia will be at an advantage to compete with Airbnb while still offering other types of lodging.
Expedia CEO Dara Khosrowshahi said, “Giving travelers the choice of hotels, vacation rentals, and even urban apartments, which Expedia is working on, increases Expedia Inc.’s addressable market.” On the one hand, it shows the importance of using OTAs as a part of your online presence but on the other hand does it negatively impact independent properties when there’s less competition within the OTA industry?
Expedia has also recently added Travelocity and Orbitz to its asset portfolio but this newest addition is in contrast with its traditional hotel and lodging offerings. Though the transaction with HomeAway may not be complete until early 2016, it does shed light on the changing landscape of OTAs and the effect Airbnb has had on the lodging industry.
HomeAway CEO Brian Sharples says that Airbnb isn’t an apples-to-apples comparison with the Expedia and HomeAway merger. Sharples said, “…The comparison is about as relevant as comparing Walmart to Nordstrom because 90 percent of HomeAway’s vacation rentals are second homes while probably a similar percentage of Airbnb’s rentals are primary homes.”
Khosrowshahi believes this is positive news for Expedia’s hotel and independent lodging partners as there will be more demand on the site for vacation accommodations. He said, “…we add in more supply to a destination so the conversion of that destination increases. When the conversion of a destination increases, we’re able to market it more aggressively… We do anticipate HomeAway being a positive factor there.”
While Expedia considers this move a positive factor, we’ve come up with a few positive recommendations for you to implement at your property to drive direct bookings to compete with the OTAs:
- Promote a “Best Rate Guarantee” for those guests who book direct.
- Take advantage of PPC programs, not just AdWords or Bing Ads but also programs like TripConnect.
- Launch a book direct campaign where you target OTA bookers and offer a 10% coupon on their next stay if they book directly with you.
- Provide incentives to guests who book direct, such as free WiFi, dining credits, free breakfast or parking, or any other perk you can think of.
- Create and promote a page on your website explaining the benefits of booking direct.
What do you think of the merger of Expedia and HomeAway? Tell us in the comments section below!