Web travel agent Expedia Inc. will be making its entrance into the home rental market with a $3.9 billion purchase of HomeAway Inc. The deal comes as HomeAway is reworking its business model to resemble the more favorable economics of rival Airbnb Inc., and the buyer suggested that it’s experience with online booking would ease the transition. HomeAway shareholders would receive $38.31 per share, with $10.15 in cash and the remainder in Expedia stock. Shares of HomeAway gained $7.77, or more than 24%, to $39.81 on Thursday morning. Expedia rose $4.90, or 3.65%, to $139.07. While HomeAway has a network of 1.2 million whole-home rentals spanning 190 countries, the company’s economics lag. The vacation house rental site generates about $500 million in sales from $15 billion in gross bookings, a take rate of about 3%. Cowen & Co. analyst Kevin Kopelman noted that Airbnb’s rate is about 10% and that online hotel booking rates are typically above 15%, in a recent report. The company is shifting to online booking, an industry standard that should allow it to improve customers’ experience. The move to online transactions will also enable the company to charge travelers a fee when they book trips. The new fees from renters will more than offset a planned reduction in fees that HomeAway charges renters.
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