Over the years, my family and I rented many vacation homes around the world, enjoying the space, amenities and flexibility to bring friends, too. However, I found the experience of finding and booking a home online difficult. It was out of this frustration the idea to build the world’s largest online vacation rental marketplace was born. In February 2005, I co-founded HomeAway by acquiring CyberRentals.
com, GreatRentals.com, A1Vacations.com, TripHomes.com and the leading U.K. site, Holiday-Rentals.co.uk. Shortly thereafter we launched the company’s flagship website, www.HomeAway.com, in 2006.
Since the beginning, it has been our mission to make finding and booking a vacation rental as easy as a hotel, and a big part of that is to give travelers as much choice globally as possible. To accomplish this, our approach is to acquire the market-leading holiday home rental businesses in new geographies that we believe are or will be profitable and have high-quality inventory. If there isn’t an acquisition target that would make sense for us, then we look at organically building our business in that market.
Today, HomeAway's leading network includes approximately 50 websites with 773,000 listings in 171 countries. However, that is less than 12 percent of the estimated existing 6.1 million homes being rented in just the US and Europe, an $85 billion industry.
I believe HomeAway’s success proves there's significant demand for larger spaces with multiple bedrooms and kitchens for traveling families and groups. Not only do travelers recognize the value of vacation rentals, but owners also enjoy their homes as a lucrative investment. HomeAway estimates it facilitates more than 80 million nights booked annually worldwide, which translate to owners collectively generating nearly billions in rental revenue. Specifically, owners who list on HomeAway.com with a subscription, which starts at $350 per year, earn an average of $28,000 in rental income by renting their property for 19 weeks per year – an 80x return on investment.
One of our key objectives is to keep our customers extremely happy, which means delivering better performance, not the same or worse, by balancing supply and demand. Therefore, we work hard to improve both the traveler and owner experience and strive to grow listings, with our current goal of achieving an overall annual listing growth rate of 15 percent.
At the end of 2013, HomeAway introduced its transaction-based model known as pay-per-booking. We view the new payment model as an opportunity to provide owners and property managers with more control over listing their property. It is additive to the business, attracting new segments of property owners who are either new to the market or only need to rent their properties for a few weeks per year. Pay-per-booking also improves penetration with property managers who, in general, prefer a performance-driven model because it's more consistent with how they operate their businesses.
Renting a vacation rental as an alternative to a hotel is not new in the US and Europe, where the industry is 60 and 100 years old, respectively. However, this is still a very new concept in Asia Pacific and we believe it has great potential. In fact, economists have predicted more than 100 million people will enter the Asian middle class each of the next several years, which has significant implications for not only travel but also for the purchase of homes, both of which we see as drivers for HomeAway’s growth.
Over the last few years, HomeAway has made major investments in the Asia Pacific region. In 2011, the company purchased the vacation rental business from REA Group Limited in Australia and subsequently launched HomeAway.com.au, and in 2012 made a minority investment in China-based vacation rental company, Tujia.com. In 2013, HomeAway acquired majority control of short-term rental site travelmob.com in Singapore, a majority purchase of New-Zealandbased vacation rental site, Bookabach, and, most recently, a US$198 million purchase of Stayz Group, the publisher of Stayz.com.au and the leading online vacation rental marketplace in Australia.
Now we’re working to expand in South America and Eastern Europe. We already own and operate AlugueTemporada, the biggest vacation site in Brazil and we're building a base in Argentina. While we haven't had much activity in Eastern Europe, there are a lot of vacation rentals, for example, in Russia and Turkey.