HomeAway: A Find in Online Vacation Rentals

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Sharples says the cash infusion will put the company in a position to strengthen its business. Before this round, HomeAway had raised $405 million in equity and $110 million in debt. Of the $250 million, $88 million has been used to retire remaining debt, much of it incurred amid the acquisition spree. The rest will be used to buy more companies, strengthen marketing, and create a stock buyback program for a small number of longtime employees. To devise a new marketing strategy, the company earlier this year hired Mike Butler, the former chief marketing officer of T-Mobile USA (DT). Two weeks ago it brought on Publicis (PUBP.PA) to help craft a new advertising campaign. "We want to have a $10 billion market capitalization in five years," says Chaffee.

Global Reach

Following the purchase of five of the 10 largest vacation-rental sites in the U.S. and several in Europe, Sharples wants to expand into South America, Canada, Asia, and Eastern Europe. "Travel is worldwide business," he says. "To lead this category we have to make sure we have homes all over the world and travelers from all over the world."

Like eBay (EBAY) or Amazon.com (AMZN), HomeAway is trying to create a simple yet efficient consumer experience on the Web in a highly fragmented market. Homeowners pay $275 annually to list their property for one year. The company expects to end 2008 with 325,000 paid listings, up from 250,000 last year. Vacationers use the site to browse listings and user reviews, view pictures, and check pricing and availability. The site also guarantees transactions up to $5,000 in case of a rip-off. In the next few months, Sharples says, the company is going to introduce a payment service that will allow consumers to pay for the rental through the site with a credit card or via eBay's PayPal.

"We want to make it as easy as booking a hotel room," Sharples says. "We invested pretty heavily in staff and technology to scrutinize the listings."

With a dead market for initial public offerings, Sharples says HomeAway is not interested in selling shares to the public soon. But he did say an IPO in five years could happen. "My best guess is this funding will take us through an IPO," he says. Asked if he was open to being acquired, Sharples simply says, "No."

Ante is an associate editor for BusinessWeek.