HomeAway Lands $250M for Vacation Rentals
By Azam on November 11, 2008
HomeAway the largest online vacation rental marketplace announced it has completed a massive round of $250 million equity capital raise. The capital round was led by Technology Crossover Ventures (TCV) and with existing investors Institutional Venture Partners (IVP) and Redpoint Ventures, this financing represents the largest minority investment of a U.S. Internet company in the last eight years, according to Venture Source.
HomeAway will use proceeds from the investment to fund additional strategic investments, eliminate all debt and provide working capital for increased marketing and promotions. The company will also introduce a share repurchase program for certain shareholders including tenured employees.
The Market
Travelers are increasingly looking for alternatives to hotels stays have helped grow the vacation rental market to a $24.3 billion industry, according to a new study by travel research group Phocusright. The study forecasts the online vacation rental booking will nearly double between 2007 and 2010. The study shown that over the past year 40% of leisure travlers considered or booked a vacation rental I the past year.
Brian Sharples Founder and CEO of HomeAway
“The success of HomeAway and the growth of the vacation rental industry are being driven by travelers who seek affordable accommodations, and by owners who have learned that they can earn significant income from their vacation home investments,” says Brain Sharples. “However, there are nearly 14 million vacation home owners in the U.S. and Europe, and most are still not aware of how easy and profitable it can be to rent their homes, even if for just a few weeks each year. We plan to increase our marketing substantially over the next couple of years to further the awareness of the industry.”
Home Away the Company
The 3 year old company’s s revenue has increased 58 percent (through 3Q) over the same period last year, and sales will reach almost $100 million this year. It’s profitable, although it won’t say how profitable, and it’s cash-flow positive, according to Brian Sharples
It makes most of its money through listing fees, about $300 a year for homeowners who want to rent their properties. It also gets some money from ads on the site, Brian Sharples said. And in the next couple of months, it will roll out an online platform renters can use to pay homeowners, a service that can generate more subscription fees for the company.
HomeAway was founded in 2005 with $49 million in equity from Austin Ventures and Redpoint Ventures. That initial investment funded the acquisition of five of the world’s leading vacation rental sites, including CyberRentals.com in the U.S., Holiday-Rentals.co.uk in the UK and FeWo-direkt.de in Germany. In 2006, IVP and Trident Capital led a $160 million financing round that funded the company’s purchase of VRBO.com. The acquisition meant that, along with its flagship site HomeAway.com, the company also operated the largest rent-by-owner site in the U.S.
HomeAway acquired VacationRentals.com, Abritel.fr and OwnersDirect.co.uk in 2007 and now has 11 vacation rental sites in its portfolio, as well as EscapeHomes.com, which connects buyers and sellers of second homes and resort real estate.
HomeAway, in total the company has raised $459 million and it has 11 vacation rental sites in its portfolio. HomeAway is funded by Austin Ventures, Institutional Venture Partners, Redpoint Ventures, Technology Crossover Ventures and Trident Capital. The company is based in Austin, Texas and has offices in London and Ashtead, Surrey in England; Kassel, Germany and Marseilles, France.
Reading List
Austin Statesman Austin-based HomeAway gets $250 million
NYT Bits Vacation Rental Site Raises $250million
TechCrunch Monster Round For HomeAway: $250 Million, At An Absurd Valuation
VentureBeat Vacation rental site HomeAway gets $250M to buy up the world’s travel sites
WSJ Venture Investors Bet $250 Million On Vacation-Rental Site HomeAway
Tags : Abritel.fr, Brian Sharples, CyberRentals.com, EscapeHomes.com, FeWo-direkt.de, Holiday-Rentals.co.uk, HomeAway, OwnersDirect.co.uk, VacationRentals.com