Tim Hughes puts the boot into the highs and lows of the online travel business (with an Australasian/Asian bias) with some blogging about consuming and loving travel thrown in.
Tuesday, November 11, 2008
Wow - HomeAway raises $250 million at a $1.15 billion valuation (TechCrunch)
Headline says it all. Wow. TechCrunch is carrying the whole story on this monster sized fund raising round for vacation rental company HomeAway. Makes money raised to date $459mm. TechCrunch state the pre-money valuation is $1.15 billion but does not say what the source is but remember that the biggest online travel company Expedia (EXPE) has a market cap currently of $2.38 billion. To give another example Google bought Youtube (top 5 site worldwide) for $1.65 billion. At first glance it is hard not to agree with TechCrunch's view that this is overvalued. What do you think is the vacation rental space hotter than first thought?
Posted by Tim Hughes at 17:20
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Tim - While I absolutely agree that a $1.15 M valuation is pretty rich, I think the vacation home rental market (at least in the states) is poised for rapid growth.
As evidenced by our current economic crisis the US has a large oversupply of housing, with much of that housing concentrated in popular tourist destinations such as Vegas, Florida and S. California. I think more and more of this excess real estate is going to be moved into the rental pool creating a lot of upside for HomeAway.
I'm surpised they didn't peg this announcement to coincide with a major acquisition, a la Kayak / SideStep.
As they say, when there's blood in the streets, be liquid.
Mr Boot. Am hoping that you'd be ever so kind as to compare valuation and EBITDA versus Sidestep acquisition and let us know what you think (assuming 50m EBITDA figure touted for HomeAway is on the mark).
If $50mm in EBITDA is right then I simply dont get the valuation (assuming true)
Revenue multiple for HomeAway (7.7x) isn't too far off Sidestep (5.7x). Farecast got flogged off to Microsoft for a reported USD75M, Wego was reportedly valued in the region of USD20M, and I wouldn't be surprised if the revenue multiples for both were also in the same range. Traditional DCF goes out the door when it comes to 'sexy' new media businesses (I consider HomeAway to be a media business).
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