Austin, Texas–based HomeAway Inc., raised $216 million in its public offering by selling eight million shares priced at $27 each. HomeAway shares will start trading on the NASDAQ stock exchange under the ‘AWAY’ symbol on Wednesday, June 29, 2011.

Homeaway

The $27 share price is at the upper-end of the $24 to $27 range, and puts the company’s valuation in excess of $2 billion.

The IPO mania and analyst estimates point to the price climbing quite a bit, at least in the short-term.

HomeAway was created through the consolidation of five vacation rental sites in Europe and the United States in June 2006, and began with a base of 60,000 listings on HomeAway.com.

HomeAway is now the biggest company in the $85 billion vacation rental industry, with 31 websites in 11 languages that attract 9.5 million unique monthly visitors and offer listings for properties in more than 145 countries.  It has 842 employees, of whom 305 are located outside the United States.

HomeAway has grown to 560,000 paid listings with a 2010 renewal rate of 75.9 percent. The base fee is $300 for a yearly listing. These paid listings accounted for 91.1 percent of the company’s $167.9 million revenue in 2010.

HomeAway also earns revenues from Internet display-based advertising on its websites, property management software licenses and commissions for online reservations.

The two main flagship sites for the vacation rental market are HomeAway.com and VRBO.com. VRBO was acquired by HomeAway in November 2006 and is currently getting more than 19 million traveler visits each year. Together, these two sites account for 429,246 property listings—not to mention 632 barn rentals, 555 castles, 9 cabooses and even a shell house.

HomeAway also has the bed and breakfast listings market cornered via BedandBreakfast.com, which it acquired in 2010. All told, HomeAway has made 17 acquisitions financed by an astounding $404.3 million in equity investment in the last five years and $110.5 million in bank debt. See the full listing of all HomeAway websites and brands on its IPO prospectus (page 98).

The eight million shares put out in the market amount to only 10 percent of the outstanding common stock, so this leaves room for dilution for current shareholders. Vacation rentals (used by one in 10 U.S. travelers) are vastly overshadowed by the hotel industry, and there are seasonal drops in paid-listing renewals. There’s also a very real possibility of harsher regulation of short-term rentals by popular destinations.

HomeAway is also slightly behind on the technological curve, since travelers who want to book a listed property need to contact the property owner or manager. It does provide a free ReservationManager tool which facilitates online transactions between the property owner/manager and the traveler.

But that’s still not as convenient or quick as other sites, such as Airbnb, which offer direct bookings online. HomeAway’s social network presence and integration of social features on its sites has had to be bolstered via the recent acquisition last month of social vacation rental site Second Porch Inc.

Once the IPO-fueled momentum is gone, and if this growth by acquisition strategy cannot be pursued further, it will be interesting to see whether AWAY can continue to soar or will fall below its current opening share price of $27.

Photo – HomeAway

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