Vacation-Rental Site HomeAway Said to Be Choosing Bankers for Possible IPO

HomeAway.com Inc., the vacation rental website, is choosing bankers for an initial public offering, two people with knowledge of the plans said.

No time frame for a decision was provided by the people, who declined to be named because the talks are private. Companies planning to go public hire banks before filing a prospectus with the U.S. Securities and Exchange Commission.

HomeAway has raised about $500 million in private capital since it was founded in 2005. More Web companies may be preparing to go public following last month’s IPO filing by LinkedIn Corp., the business-networking site that disclosed plans to raise $175 million in a share sale. IPOs picked up in 2010 after the biggest two-year drought in at least 38 years.

Eileen Buesing, a spokeswoman for Austin, Texas-based HomeAway, declined to comment.

The company has more than 540,000 vacation rental listings in 120 countries, according to its website. Homeowners pay an annual fee of about $300 to list, and the site is free for renters. In addition to HomeAway.com, the company runs Vacation Rentals by Owner, or VRBO.com, and VacationRentals.com.

Austin Ventures, also based in Austin, and Redpoint Ventures in Menlo Park, California, first invested in HomeAway in 2005. Redpoint, along with Palo Alto, California-based Technology Crossover Ventures and Institutional Venture Partners, invested $250 million in 2008.

Super Bowl Ad

Todd Chaffee, a partner at Menlo Park-based Institutional Venture, said at the time that the financing “gives HomeAway significant resources to accelerate both organic growth and growth through strategic acquisitions.”

HomeAway gained notoriety this week after running a Super Bowl advertisement that depicted a family fighting for space in a hotel room. The scuffle resulted in a fake baby being launched into a glass wall and sliding down with a smushed face. HomeAway later apologized and removed the ad from its website.

“We created the ‘test baby’ campaign to highlight pitfalls when families squeeze into small spaces, and to shed light on the benefits of space, value and privacy of vacation rentals,” Chief Executive Officer Brian Sharples said in a statement. “We feel we made a mistake in judgment, and for that all of us at HomeAway are truly sorry.”

Last year, HomeAway bought Escapia Inc. and Instant Software Inc., providers of software for vacation rentals, which together represent almost 1,700 property-management customers, HomeAway said in October. The acquisitions lifted the company’s workforce to 735.

Competition is emerging. Airbnb Inc., a San Francisco-based startup, has customers renting property in more than 9,000 cities in 170 countries, according to its website. The company, founded in 2008, received $7.2 million in funding late last year from Sequoia Capital and Greylock Partners. Unlike HomeAway, Airbnb customers list their property for free, and the company makes money by taking a cut of each transaction.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net

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