- Expedia Group is to expand its activity in the short-term rental market after acquiring hospitality startups Pillow and ApartmentJet;
- The deals will help Expedia compete with home-sharing giant Airbnb, but above all highlights the rising demand for short-term rental bookings;
- Expedia has not been shy to invest in and acquire control of startup businesses, but has not disclosed the financial terms of these latest deals.
Expedia says the deals will “help unlock urban growth opportunities that, over time, will contribute to HomeAway’s ability to add an even broader selection of accommodations to its marketplace and marketplaces across Expedia Group brands, ensuring travellers always find the perfect place to stay.”
HomeAway represented Expedia’s first step into this alternative accommodation space, but it didn’t come cheaply with a USD3.9 billion price tag for its portfolio of travel brands. Expedia has not been shy to invest in and acquire control of startup businesses, but has not disclosed the financial terms of these latest deals.
It has been a slow development process for Expedia as it has worked to ensure it had the platform correctly tuned for the public and these second phase acquisitions clearly show it is ready to compete hard in one of the industry’s fastest growing sectors. HomeAway already has recorded revenues of more than USD300 million for Expedia, according to financial analysts, with profits doubling in the last quarter.
This strong performance is creditable, but the huge background issue remains that its 1.7 million online listings are just a third of those offered by the likes of Booking.com and Airbnb. The acquisition of the venture capital-controlled Pillow and ApartmentJet will go some way to closing that gap.
San Francisco-based Pillow was founded in 2013 and is a software company that provides a solution that enables residents to list their apartments as short-term rentals while complying with local regulations and without violating lease terms. ApartmentJet, established in 2016, meanwhile, runs a short-term rental platform that allows multifamily owners and operators to rent vacant units.
“Both solutions enable owners to set limitations on short-term rentals in their buildings, such as limiting the number of total rental nights per year for units or for an entire building,” explains Expedia. “Both make it easy for multifamily owners to know exactly who is staying in their buildings and when,” it adds.
The short-term rental market has been growing quickly, especially in urban locations across the United States of America (USA) where Pillow and ApartmentJet are both active. “Through the acquisition of these innovative companies, we gain technologically advanced solutions that will help us give travellers new options for great places to stay in popular destinations while benefitting residents, owners, managers and local tourism,” says Mark Okerstrom, president and CEO of Expedia Group.
Airbnb has reported substantial growth within the last five years. Summer travel through their site has grown 353 times over and in the last summer alone, nearly 17 million guests stayed in an Airbnb rental, says data from Pillow, which has been acting as one of its preferred partners ahead of the Expedia acquisition. Future growth estimates expect Airbnb’s room nights to increase to around 500 million within the next five years and potentially to one billion by 2025, according to a 2016 survey from Cowen Group.