Fears of HomeAway, Inc. (NASDAQ: AWAY) new business model do not fade away


Dallas, Texas 10/03/2013 (Financialstrend) –  HomeAway, Inc. (NASDAQ: AWAY) stock has been under a lot of pressure over the past few weeks, with a big question mark around its new business model “ pay per booking”. Analysts from Morgan Stanley had cut its growth forecast recently. It slipped sharply by close to 15% from its September 18 valuations.

The new model gives customers choice of paying a percentage of the rental to AWAY on successful conversion of enquiry into a rental booking instead of the traditional “pay per subscription” on its online rental forum.

In a proverbial shot in the arm rating agency Pacific Crest has released a positive review of AWAY new business model. Its analyst Chad Bartley cites interviews he has had with a host of property managers to opine that “Nearly every property manager we spoke with was interested in, or planned to use, the new pay-per-book solution for at least some of their listings.”

He goes on to predict that AWAY would be able to accomplish a double digit growth by effectively implementing its new business model.  He theorises that unlike the feared cannibalization of existing subscription based user base of AWAY, the new pay-per-booking model will attract all together new set of customers away from local agents. The USP of the new model is linked to specific need of customers who prefer a “success-based paying option for placing vacation rental advertisements”.

On the back of these positive reviews about its business plan HomeAway stock staged a brief rally to gain 1.5% as of close of business on September 26. Since then the stock has not been able to maintain momentum and has further slipped close to 10.4% in last week’s trading. The company has a market capitalization of $2.33 billion with annual sales turnover of $310 million.