Barclays Thoughts On HomeAway Pricing Changes

Expedia Inc (NASDAQ: EXPE) recently introduced a price change for HomeAway subscription customers, simplifying the earlier multi-tier pricing structure.

Barclays’ Christopher D. Merwin maintained an Overweight rating on the company, with a price target of $120.

Price Structure

The price structure has only two options: $349 for online booking-enabled listings and $499 for offline bookable listings.

“The hope, of course, is that subscription customers will opt for online-booking enabled listings that would allow HomeAway to attach a traveler fee to the booking,” Merwin mentioned.

HomeAway is the only platform that still allows offline booking and payment for listings and the analyst expects Expedia to move to only online payments over time.

Growth Already In Place

Barclays’ tracker revealed that online payment-enabled listings increased to 72 percent of the total in 2Q, from 65 percent in Q1, keeping pace with HomeAway’s guidance of “closer to the 90-100 percent range” by the end of 2016.

In addition, online payment-enabled listings rose to 62 percent of the total during Q2, from 58 percent in Q1.

“These listings are particularly important, since only they can accept a traveler fee,” Merwin stated.

The analyst expects traveler fee revenue to ramp in 2H16, with an inflection in Q3, during the summer vacation season.

“Based on data from our tracker, we estimate 46 percent of total listings currently have a traveler fee, which causes us to lower our 2Q traveler fee revenue estimate to $50M from $79M,” the analyst said.