Analysis: HomeAway Should Push Harder to Consolidate And Compete as a Global Lifestyle Brand

March 24, 2016

Analysis by: Luke Bujarski

As HomeAway deploys lifestyle branding to compete with alternative accommodations frontrunner Airbnb, the company should also push harder to consolidate its portfolio of locally branded websites and mobile apps. The online vacation rental giant currently operates within a fragmented patchwork of thirteen different family brands that it had acquired since launching in 2004.

This patchwork structure once served a purpose. Now, in an era of sophisticated global competition, rapid innovation, and smart lifestyle branding, the HomeAway family should think about unifying under a singular and globally recognizable messaging strategy that transcends product quality and function.

Catering to a global audience via social networks, word-of-mouth, email marketing, and broader efforts in understanding the customer base can become difficult with a multi-brand approach.

Consolidation also makes sense from an IT and marketing budget perspective, particularly in those markets where it operates both the local and HomeAway domain website. Some of this integration has already begun and with financial backing from now parent Expedia, the company should be in better shape to make these investments.

Deeper analysis suggests that user traffic remains heavily fragmented across the HomeAway patchwork of brands. Meanwhile, brand messaging across web and mobile app ecosystems is inconsistent. This type of misalignment could impact user adoption, as travelers look for inspiration and identity with their travel brands, in addition to utility.

Tale of two booking platforms

Airbnb and HomeAway launched just four years apart but took two very different approaches to growth. HomeAway emerged in 2004 and quickly turned into a success story of expansion through acquisition. Its founding company, CEH Holdings, capitalized on a fragmented and nascent online market and smartly began to aggressively scoop up local vacation rental brands.

First came,,,,, and before officially launching in 2006. Then came the VRBO takeover and a handful of other purchases that positioned the HomeAway "Family" as the world's leading aggregator of vacation rental listings.

Revenue generation came from premium subscriptions paid for by the property owners and managers. This opened the door for a new kind of competitor.

Airbnb came on the scene after this initial wave of consolidation and adjusted its model to allow hosts to list their primary residences, spare bedrooms, as well as second homes with no up-front fees. It coupled this inventory generating strategy with a powerful brand message used to sell the world on the idea of "sharing" as a lifestyle choice, a statement and bigger movement aimed at bringing travelers closer to the communities that they visit.

It did this with the help of branding and about US$ 2.4 billion in startup capital that it used to acquire numerous technology companies, aimed at improving its mobile booking platform.

Fast forward to today and Airbnb has arguably prevailed in the homesharing space. One global marketplace, one logo, and one popular message of community and "sharing" have propelled the company to over two million listings, 60 million users, and a valuation surpassing US$ 25 billion.

HomeAway Family of brands

Meanwhile, HomeAway continues to operate via a patchwork of branded websites and mobile apps. Globally, the HomeAway domain (across all of its extensions) accounts for about one third of the group's total desktop and mobile web traffic. Remaining traffic is distributed across the VRBO (vacation rental by owner) website and eleven other uniquely branded websites.

Share of Global Web Visits By Brand

Source: Similarweb; Desktop and mobile web traffic; average over last 6 months

Traffic Breakout of "Others" Category

Source: Similarweb; desktop and mobile web visits; average over last 6 months

The HomeAway family logo is present on all of its global websites, but branding remains localized. In Spain, HomeAway is also known as Toprural. In Germany, Fewo-Direkt. In France, Abritel and Homelidays. In New Zealand, Bookabach. In Australia, Stayz. In Brazil, Alugue Temporada. In the U.K., Owners Direct.

Whether the company does away with local branding entirely is not yet clear - but likely, particularly in those markets where it operates both the homeaway.x domain and the local domain. In certain countries, the local website branding remains strong. These include France, Germany, Australia, and Brazil.

The biggest brand split exists in the U.S. where and account for about 65 percent of total Family traffic (see figures).

While further brand equity research is needed, we believe that this brand fragmentation could pose obstacles to HomeAway's future growth on at least two levels:

1) User adoption as a result of weaker resonance as a lifestyle brand relative to the competition. Airbnb's thunderous global adoption rate is attributable to the brand's global uniformity and strong brand message focused on sharing and community. HomeAway can compete on product and user experience all day long, but the battle will ultimately be won in the hearts and minds of the consumer. A mismatch between desktop and mobile app branding also exists. For example, the desktop and mobile web version of German site Fewo-Direkt differs from what is available in the Apple App Store. This could be viewed as lost opportunity to connect with travelers through consistent messaging and branding.

2) Higher costs as a result of redundant IT infrastructure, slower pace of technology roll outs and marketing campaigns customized for local site branding. The pace of innovation and upgrades in features now being deployed for online travel services is relentless. Airbnb releases global updates for both its traveler and host components on a regular basis. Operating on multiple technology platforms and IT infrastructure could slow the pace of global upgrades and feature rollouts, and cause problems down the line with partnership based initiatives.

Historically, the "patchwork-of-brands" configuration allowed HomeAway to build on existing momentum of locally recognized brands. During the period of its acquisition-led growth (2005-2013), local markets may still have been unaccustomed to adapting and accepting foreign consumer brands. Localization in branding may have made more sense during this time period. 

Operating as independent brands under the HomeAway family also likely saved the company cash on expensive investments in IT infrastructure and development services. At the time, the company was more focused on acquisition led growth, rather than technology investments. Now, with support from Expedia, HomeAway will need to play catch-up and deliver on further IT consolidation.

Brand fragmentation also helps to prop up the complex inner-workings of HomeAway's subscription based revenue model. Subscribers still need to pay an additional "global bundle" fee to guarantee that their listing gets published across all sites. In other words, property owners and managers must pay-to-play. Unifying the "family" could undermine this revenue generation model, particularly as the company moves toward a global marketplace.

Three recent changes to HomeAway's revenue model and search algorithm suggest that the company is moving towards a platform that more closely resembles Airbnb. 1) Its recent introduction of the no-fee-upfront commission based listing option that it made available sometime in 2015 2) introduction of its "best match" search component that aims to improve results based on traveler preference and property listing profile, as a complement to ad spend 3) the introduction of a traveler based fee and the lowering of host commissions.

Revenue model and brand consolidation will likely move forward at a coupled pace.

 Other Conclusions

HomeAway and Expedia are not alone. Priceine faces similar branding issues within the homesharing space, as it moves to grow and as it contemplates/negotiates a possible TripAdvisor acquisition. TripAdvisor could also be in the process of consolidating its FlipKey, Holiday Lettings, and Niumba brands into the TRIP booking platform. Overall, the online travel space has recently gone through a significant period of consolidation in terms of ownership.

Brand consolidation could be the next story...