Airbnb guests triple, hurting Priceline, HomeAway

Published Mon, Feb 2 20151:03 PM ESTUpdated Tue, Feb 3 20158:51 AM EST

Airbnb, which just surpassed 30 million guests to use the service at the end of last month, is taking over the vacation rental market at a breakneck speed, stealing customers from public companies HomeAway , Priceline and TripAdvisor . "The news is negative for other large vacation rental players, HomeAway in particular, but also Priceline and TripAdvisor," Cowen online travel analyst Kevin Kopelman said in a note to clients Monday. "Airbnb's breakaway growth in 2H:14 increases the risk that Airbnb could run away with the broader category." Airbnb averaged 2 million guests per month in the second half of 2014, 275 percent more than the second half of 2013, estimates Cowen. Growth in guests for the first half of the year was 100 percent. For the full year 2014, Cowen calculates 18 million guests, 75 million room nights and $5.5 billion in bookings for Airbnb, which is still much smaller than its more-established, publicly traded peers. Priceline's bookings in 2014 were up 30 percent to $46 billion and Expedia increased bookings by 24 percent to $20 billion, Cowen estimates. But it's the more profitable vacation rental niche that Airbnb is stealing away from its peers. "At Airbnb's current trajectory, we estimate it will surpass HomeAway bookings in 2016 or 2017. We also believe Airbnb is at a similar scale as Priceline's VR (vacation rental) business, though Airbnb may now be growing faster...While smaller, we estimate TripAdvisor will generate 10 percent of its revenue from vacation rentals in 2014," the note said. Read More February outlook: Retail, energy and a correction? Priceline shares, one-time darling of the bull market, are down 12 percent over the last year. Shares of HomeAway, an online vacation rental marketplace, and TripAdvisor, an online travel research company, are also down more than double-digits over the last 12 months. With these share losses coming during a time when lower gas prices are boosting the income of would-be travelers, the Airbnb disruption offers an explanation for the declines. Despite this fast-moving threat, Cowen still rates Priceline "outperform." HomeAway and TripAdvisor are weighted "market perform," however. On Sunday it became legal to list one's home for a short-term rental in San Francisco, as long as you register with the city. A judge last week threw out a challenge to that new law filed by HomeAway. Airbnb's threat at taking over the vacation rental category has been highlighted by HomeAway's recent lawsuit in San Francisco "alleging new legislation unfairly favors subletting tenants, who are more likely to list on Airbnb, and hurts owners of second homes, who are more likely to list on HomeAway," wrote Kopelman. Read More Hate Yahoo? Still buy the stock: Analyst Many investors are expecting Airbnb, which raised $500 million last April and is valued at around $13 billion, to go public this year in order to cash in before the end of the five-year bull market and before the monster Silicon Valley private valuations come in. The company has made no announcement about an IPO. Correction: This story has been updated to reflect that Homeaway only sued Airbnb in San Francisco.

Airbnb app on an iPhone and iPad.

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