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Trivago Looks to HomeAway Vacation Rentals to Regain Some Mojo

This move could be a modest win-win for Trivago and HomeAway, which both fall within the broader Expedia Inc. orbit. But Airbnb and Booking.com remain fierce competitors for rental search, with Google waiting in the wings.

Trivago rose to prominence as a website to search for hotels — and just hotels. But the Expedia-backed company is expanding into vacation rentals. It’s all part of a bigger trend which has metasearch sites and online travel agencies blurring their differences and adding a hodgepodge of accommodation types.

Trivago now reveals that it has begun testing searches for vacation rental listings from HomeAway, — which is the vacation rental brand owned by Expedia Inc. and the largest rival to Airbnb outside of China. Trivago has been testing vacation rentals for some users and destinations in Germany, Italy, Canada, the UK, and the U.S. It plans to slowly add more HomeAway inventory over the next year.

The move is not a surprise. Since acquiring HomeAway in 2015, Expedia has added up to 95,000 HomeAway properties to 28 of its points of sale as of the end of September.

While Expedia doesn’t call all the shots at Trivago, it owns a controlling stake in the company, which went public in 2016. HomeAway does not perform as well in Europe and Asia as in the Americas, and exposure to Trivago’s audience, which is still in Europe, should help HomeAway with global growth.

Trivago’s action is part of a catch-up move in a global chess game between Expedia and its rival Priceline Group. The latter’s Booking.com brand has been listing apartment hotels and vacation rentals since 2013, and they now account for a huge chunk of the European listings on that site.

Likewise, a source said that Trivago has higher net promoter scores — a measure of customer satisfaction — than HomeAway does. That means Trivago could help boost the number of referrals for HomeAway.

Adding Texas-based HomeAway’s content to Trivago presents a technical challenge for the Dusseldorf-based search company.

Johannes Thomas, managing director and chief revenue officer at Trivago, acknowledged this: “Presenting both hotels and alternative accommodations in one search is challenging from a user experience perspective. We don’t want to confuse hotel bookers. We want to only display vacation rentals when they are relevant to our users.”

More than 150,000 of HomeAway’s vacation rental properties are available in the test markets. Trivago is preferring to list properties that are “instantly bookable,” meaning guests aren’t subject to a waiting period to get a confirmed reservation.

The move comes as part of a broader context. In May, then-CEO of Expedia Inc. Dara Khosrowshahi said HomeAway and Trivago were “the superchargers within the portfolio.” He meant that in the first quarter, which ended March 31, HomeAway’s revenue grew 30 percent to $185 million, and Trivago’s revenue leaped 62 percent to $286 million. These brands grew far faster than Expedia’s other brands.

Trivago’s growth has since cooled off significantly and it may have nearly flat growth in early 2018 — as its two largest customers, Expedia Inc. and Priceline Group, have pulled back on spending per acquired customer.

In contrast, HomeAway’s revenue grew 45 percent, to $305 million, in the third quarter.

The addition of HomeAway inventory suggests that Expedia Inc. is still looking to the two brands to help boost its growth.

Expedia has signaled that it will boost its marketing expenditure to promote HomeAway listings in 2018. Now it looks like Trivago will be one of the beneficiaries of that spending. But don’t expect a big effect. To date, HomeAway’s marketing via metasearch has been relatively small so any spending jump will start from a small base.

Not all hoteliers may be pleased by the move. By putting hotels and rentals side-by-side, Trivago is, in essence, making them comparable. Although it’s unclear exactly how Trivago will mix and match hotel listings.

Speaking at Skift Global Forum in September, Expedia Inc. CEO Mark Okerstrom said:
“There are actually only a few situations where there is really cannibalization of hotel business by alternative accommodations. It’s completely separate use cases.”

Competition for Trivago’s foray into vacation rentals also comes from pure-play vacation rental metasearch businesses, with HomeToGo, Tripping.com, and AllTheRooms among the players. Google is testing vacation rentals, too, as Skift Research noted in its 2017 State of the Vacation Rental Market report.

By Sean O’Neill Courtesy Skift

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