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How HomeAway Wins, Even When It Loses

We booked a vacation rental in Hawaii for the Christmas holiday. Only this time, we didn't use HomeAway (Nasdaq: AWAY  ) , the booking service that aggregates properties in much the same way that Expedia and (Nasdaq: PCLN  ) consolidate available hotel rooms for busy travelers booking quick stays.

You'd think that would be a problem. Why on earth would I choose to book outside the engine I've so richly praised here at and inside our Motley Fool Rule Breakers service? Two reasons:

  1. The property we booked wasn't listed with
  2. Yet, it was both affordable and in the vicinity of where wished to stay.

And that, indeed, would be bad news if the story ended there. Fortunately it doesn't. The property manager we've since been dealing with directly -- we're planning a return trip at the end of 2012 -- uses HomeAway Connect, a free service that includes a rental calendar, guestbook, payments processor, and tax support network. Each service is integrated across the entirety of HomeAway's network of rental sites covering more than 625,000 listings.

See the beauty? Like Google, HomeAway is creating services that enhance its ability to market, and in the process is making its network more valuable for listing property managers, the audience it cares about most. As a result, revenue has grown at about the same 40% pace as in each of the last three quarters. Margins are up over the same period.

My research found no similar alternative to HomeAway Connect offered by peers AirBnB and TripAdvisor's (Nasdaq: TRIP  ) FlipKey, though a new TripAdvisor analytics service called Management Dashboard promises a host of features for measuring property performance. Exactly the sort of service the industry needs, and built in the spirit of what HomeAway Connect already provides.

Therein lies the beauty of technology. There's just as much opportunity in refitting old industries as there is with creating new industries, and we're seeing more of both with the rise of cloud computing. Interested in taking advantage? The Fool recently produced a video that will help you do exactly that. Entitled "Two Words Bill Gates Doesn't Want You to Hear," the tutorial is free for a limited time. Click here before the offer expires -- it's 100% free to watch.

Add HomeAway to My Watchlist for up-to-the-minute Foolish coverage of the stock and your entire portfolio.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Google at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of TripAdvisor and Google. Motley Fool newsletter services have recommended buying shares of, Google, and HomeAway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2012, at 9:28 AM, AndyVIP wrote:

    Homeaway isn't the only tool in the box. There are lots of smaller sites competing for space and you need to cast your eye beyond the obvious to find a nugget.

    Like in the UK for example. Busy tidying up in Europe while Homeaway sits in its own backyard.

  • Report this Comment On October 13, 2012, at 3:59 PM, TMFDukenewkirk wrote:

    Priceline's helped my sister and her husband find private accommodations all across Europe and they found it easier than through Home away. Their accommodations were of the same variety as we found through the same period through Homeaway. That was my biggest concern. That they are working together does suggest there's room for both in this space. I haven't checked the added services over the last 4 months but as I did book all through Europe and was very happy with the service just some months ago, I didn't see any use beyond booking and paying with Paypal which pretty much assures legitimacy no matter whom you do your transactions with.

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