Why HomeAway is Buying Itself Out Of the Vacation Home Rental Business
Everyone who follows baseball knows about the New York Yankees. For others who don’t follow the game, the payroll the Yankees have for acquiring the best players ranks the highest in the game. Purchases of new players are expected to deliver five, sometimes even ten-fold.
Sometimes players don’t deliver at all, rather the business stays at its current plateau without any growth and only gets a wider distribution that requires more support in return. In baseball terms…the stadium is left with empty seats. It wasn’t until Billy Beane who managed one of the lowest payrolls in baseball was able to deliver a championship quality team.
What does baseball have to do with Vacation Home Rentals?
Buying more players isn’t the answer in most any businesses, especially the vacation home rental business. That’s why having a company that leverages current properties through existing travels in order to create a unique experience is the best solution for the industry’s challenges. And this is where HomeAway struck out. You cannot price yourself out of the league completely.
For HomeAway, buying up inventory is like trying to go after the next big player with decent stats who can deliver runs around the bases or who can bring in the most fans to attend the game. When that happens, the media hype surrounding that acquisition is put under the spotlight and the stakes increase for delivering a return on investments.
Rounding The Bases With Big Acquisitions
In 2013, HomeAway corporation was buying up a lot of vacation rental properties around the globe, and recently expanded into Australia with the purchase of Stayz.com for just under $200 million dollars. As if the 800k properties aren’t enough, they figured buying up the overseas inventory of 33k more properties will help with expansion and grow their profit margin.
For Billy Beane, he was able to figure out how to outsmart the opponent by breaking down the statistics for what creates wins, by using players who did not command high premiums but were able to get on base. He found that paying exorbitant amounts of money didn’t attribute to wins, instead what he found out that through the smallest payroll, he was able to put together a winning strategy by creating a unique bond among the players through a shared experience using players who never met before based on chemistry.
This turned out to be the key, and baseball would never be the same. When it comes to acquisitions, are they really strategy moves? They appear to look like more signs of desperation and despair, and internally the company can’t figure out what else to do.
From this angle, HomeAway’s acquisition of Stayz.com looks more like a sacrifice bunt.
Matt Heady
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