U.S. vacation-rental marketplace, HomeAway, Inc. (AWAY), recently announced that it has acquired Stayz Group, a vacation rental site in an all cash deal for $198 million.
Based in Australia, Stayz Group is an online marketplace which allows property owners to list and promote their holiday accommodations. In fiscal 2013 (ended Jun 2013), Stayz generated the majority of its AU$25.4 million revenues through the commission-based business model, HomeAway notes. The company operates under a commission-based pay-per-booking model which is similar to that of HomeAway’s pay-per-booking model.
HomeAway’s pay-per-booking product, introduced in mid-October, allows property owners and managers to list their property on HomeAway.com without paying any upfront fees. They only have to pay 10% of the booking amount once the property is booked.
Per the deal, Stayz Group’s inventory will be integrated into HomeAway’s pay-per-booking inventory in the U.S. and Europe, helping HomeAway generate additional traffic. Management expects the acquisition to expand the company’s pay-per-booking business and thereby accelerate listings growth in the near term.
We believe the deal will help HomeAway to better position itself in the competitive vacation-rental industry. The alliance will boost the company’s extensive vacation rental portfolio by adding approximately 33,000 Australian vacation rental properties. Additionally, the deal will strengthen its presence in the Asia-Pacific region, thereby increasing its overall market share.
The company is investing in international markets because of the higher growth potential of these markets. Last month, the company acquired New Zealand-based vacation rental site, Bookabach, which will broaden HomeAway’s reach within the Asia Pacific market. Earlier in July, the company acquired Asian vacation rental start-up — Travelmob — and invested in China vacation rental player — Tujia.
Moreover, HomeAway has been trying to improve its vacation rental portfolio by entering into a few important alliances. Last month, the company expanded its distribution partnership with Interhome AG to add vacation rental properties to its network through the pay-per-booking product. In October, the company signed an agreement with Expedia.com (EXPE) to expand online travel accommodation options by featuring HomeAway vacation rental properties on Expedia.
We believe these strategic partnerships and acquisitions will help HomeAway to grow in the future.
HomeAway, the world's leading online travel leader, reported a strong third quarter, driven by growth in the overall online travel booking industry. The company reported revenues of $90.1 million, up 4.0% sequentially, 23.3% from the year-ago period and above management’s expected range of $88.6 million–$89.6 million driven by strong performance in both listing and other revenues.
Currently, HomeAway has a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering at the current levels are Regal Entertainment Group (RGC) and SeaWorld Entertainment, Inc. (SEAS). Both these stocks carry a Zacks Rank #2 (Buy).
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