Expedia buys HomeAway for $3.9B because Airbnb

Travel booking site Expedia has agreed to buy publicly traded vacation rental company HomeAway for $3.9 billion, the companies announced today. It’s a big deal partly because it validates the growth of rapidly expanding startup Airbnb.

HomeAway operates vacation rental site VRBO, which some people think of as an alternative to Airbnb. Now Expedia is getting the technology to offer an even more full-service experience — essentially, providing alternatives to hotels.

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“We have long had our eyes on the fast-growing $100 billion alternative accommodations space and have been building on our partnership with HomeAway, a global leader in vacation rentals, for two years,” Expedia chief executive Dara Khosrowshahi said in a prepared statement. “Bringing HomeAway into the Expedia, Inc. family and adding its leading brands to our portfolio of the most trusted brands in travel is a logical next step.”

Last month, HomeAway bought Dwellable, a startup with a modern, mobile-friendly app for finding and reserving vacation rentals.

San Francisco-based Airbnb now carries a reported $25.5 billion valuation. Not unlike privately held Uber, Airbnb has been drumming up controversy and landing itself in the midst of regulatory scrutiny. But the scale of Airbnb cannot be overlooked. The company was expecting to have 80 million nights booked this year, Reuters reported in September.

Of course, Austin-based HomeAway is different from Airbnb, but Expedia is a big, profitable company — it could invest to make the service better and more appealing in big metropolitan areas where Airbnb has built up usage.

Last year Airbnb started testing out “experiences” that went beyond just nightly rentals. That might well have caught the attention of Expedia, whose site allows users to book hotels, flights, vehicles, and even cruises.

Expedia stock was down slightly in after-hours trading.