NEW YORK: Home rentals are the hottest part of the online travel-booking industry, and Expedia Group Inc. plans to make it even hotter.
After spending three years upgrading the technology of its HomeAway unit, Expedia is ready to step up its efforts to add more house listings in a bid to catch up with the scale of competitors like Airbnb Inc., Chief Executive Officer Mark Okerstrom said in an interview.
“Phase one was just getting the platform working and getting people online,” Okerstrom said. “Phase two is about property acquisition.”
Though renting homes in beach and mountain destinations has always been popular, Airbnb changed the market by convincing regular people to rent out their own homes in cities. Expedia jumped into the sector in 2015 with its purchase of HomeAway but has had to invest time and money to improve the site’s technology and bring more offerings online.
Okerstrom said Expedia doesn’t have a specific number of listings it wants to add over the coming years, though he hinted at chasing targets his competitors have already hit.
“You could look at what’s out there and some of the other numbers that other players in the industry have mentioned, I think that’s the beginning,” he said. Expedia’s HomeAway has 1.7 million online-bookable listings, while rival Booking Holdings Inc., formerly Priceline, and Airbnb each have about 5 million.
Right now, HomeAway generates about $300 million in revenue a quarter, or about 10% of Expedia’s total. Profit at the unit doubled in the last quarter as the effort to bring listings online and the introduction of a booking fee took hold, Expedia said on July 26. Shares jumped 11% after the earnings report.
Home rentals are hard. They don’t bring the same fat profit margins online travel agencies are used to getting from hotel booking. Signing a deal with a major hotel chain brings thousands of listings onto a platform like Expedia or Booking at once, while adding home rentals often requires going after property managers who may only have a handful listings. The key to success is building a system where hosts can add themselves without much hands-on effort by Expedia.
It’s been a year since the 45-year-old Canadian took over the top job, when his predecessor Dara Khosrowshahi quit to run Uber Technologies Inc. Initially, Okerstrom was seen as someone who would directly continue in his old boss’s footsteps, but he’s already begun to forge his own path.
While Khosrowshahi had largely run Expedia as a portfolio company with different brands that sometimes competed against one another, Okerstrom is working on integrating them.
“The power of Expedia Group is in the collective,” he said. “That’s been a new realization for the organization.”