The exclusive world of luxury vacation rentals just keeps getting bigger.
Since the launch of its stand-alone site Luxury Rentals from HomeAway in Oct. 2013, HomeAway has become the industry leader in rentals of castles, villas, and estates. In one year its luxury portfolio has grown from 800 properties to more than 4,500 high-end listings in 40 countries. But those pricey digs only comprise less than one percent of HomeAway’s vast inventory of more than 1 million active vacation rentals. To put it in perspective: HomeAway’s nearest competitor TripAdvisor (TRIP) lags behind with 630,000 listings.
HomeAway (AWAY) had $346.5 million in revenue in 2013. Though it doesn’t break out segmented sales figures, the company projects income this year will be $450 million, a 30% increase, as vacationers are opting for a home away from home instead of hotel stays. And a recent report from MMGY Global reveals that 20% of wealthy travelers say they are planning to take even more vacations than they did last year. According to the report, “travelers who earn $250,000 or more annually took an average of 6.2 leisure trips in 2013.”
Luxury Rentals is just one of dozens of rental sites in a highly competitive niche market that HomeAway CEO Brian Sharples says is steadily growing. And the reason more wealthy people are renting out their second homes? They’re paying down mortgages during a slow recovery. “The biggest driver is that far more rentals are available now. We went through this cycle where there was a tremendous amount of overbuilding in vacation markets around the world and then the economy took a dive. People built big grand houses that are very expensive to maintain. Now you can go online and rent a six bedroom villa on a beach or on an island somewhere, and at a price that’s not that wacky considering what you get,” Sharples told Fortune.
HomeAway has been on an acquisition tear since it was founded in 2005, buying 21 companies, most of them outside of the U.S as it expands its global reach. Its portfolio of 14 brands include VRBO and VacationRentals.com as well as international versions of HomeAway.com. Earlier this year the company acquired Glad to Have You, a tech startup that created a mobile app for HomeAway users, which Sharples says puts everything renters need right into their pockets. “It shows you how the stereo systems works, saves the lock codes for the house, gives you local restaurant recommendations, and more.”
For last year’s launch into luxury, HomeAway sought the expertise of a third party to hand pick the properties that would truly qualify as “exceptional.” In the past, Sharples says, any homeowner who wanted to list a rental property as luxury could do so by checking a box. “One person’s idea of luxury could be very different from everyone else,” he admits.
To better curate properties, HomeAway partnered with the experts at travel newsletter Andrew Harper to evaluate listings, which must meet certain criteria on price, location, and amenities to qualify as luxury. For anyone willing to plop down $57,000 per night for the use of Musha Cay, it’s helpful to know what you’re getting.
But don’t expect any discounts. The average daily rate for luxury rentals on HomeAway is $1,800, while non-luxury rates average $225 per night. Just because there’s an abundance of properties on the market doesn’t mean homeowners are cutting prices anytime soon.