Expedia Follows Demand for Alternate Lodging, Buys HomeAway

Expedia will buy HomeAway, a vacation rental site, for $3.9 billion. With this acquisition — its largest since buying Orbitz in 2014 for $1.3 billion — Expedia will compete more directly with Airbnb.

Airbnb, through which people rent their homes to travelers, has become more popular in recent years, both with consumers looking for a cheap place to stay and with those seeking to make some extra cash. Airbnb is expecting its bookings to double to 80 million nights in 2015. HomeAway offers a comparable service. Although Expedia is online’s largest travel agency by bookings with 150 million bookings in 2014, it expects the growing demand for alternative accommodations to continue and possibly to cannibalize the hotel industry.

Build on Your Success

What can the middle market player learn from this deal? If, like Expedia, your business is successful or even the market leader, don’t get too comfortable. Success can easily slip away with disruptions in the market, changes in consumer demand, and new competitors. My point is that if you’re not growing, you’re dying – even if you don’t realize it.

Now is always the best time to build on your success and strengthen your position. You should proactively explore and evaluate all your growth options rather than wait until you are backed into a corner or feel pressured into hasty decision-making.

In addition, although acquisition is usually much faster than building a solution from the ground up, it still takes time to execute successfully. The entire process of crafting an acquisition strategy, finding the ideal markets and prospects, negotiating the deal, and finally signing on the dotted line typically takes about one year.

The first step to take now is to observe your market environment and customers. What do your customers want today? What will they want in the future? Think about meeting the needs of both current customers and customers you have yet to capture. You may decide to stay on your current path. Or you may find that you want to enter into a new market. Either decision is fine, but it should be made deliberately.

Photo Credit: Michael Coghlan via Flickr cc

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