Expedia says it has acquired short-term home rental startups Pillow and ApartmentJet as it looks to expand accommodation options and compete with Airbnb
Aisha Al-Muslim / Wall Street Journal :
Context & Ripple Effects
This deal is the third act in Expedia's long-running attempt to build an Airbnb counterweight through M&A: it paid $3.9B for HomeAway in 2015, and its CEO said at the time he expected direct competition with Airbnb within a few years. By mid-2017, Expedia and Priceline were both racing to add home-rental supply, with Booking.com growing vacation rental inventory 50% year over year.
Pillow and ApartmentJet are tuck-ins rather than another mega-deal — they bring management software and relationships with apartment-building operators, giving Expedia a channel into professionally managed urban units that HomeAway's vacation-home base doesn't cover.
First-order effects
- Apartment-building owners and managers working with Pillow and ApartmentJet gain a direct path onto Expedia's booking platforms, expanding the accommodation inventory Expedia can offer travelers against Airbnb's listings.
Second-order effects
- Airbnb now faces an incumbent funneling professionally managed apartment supply into search results alongside hotels, pressuring its host-acquisition pitch in urban markets where Expedia and Priceline have been boosting rental inventory.
Third-order effects
- The bet on bolt-on software acquisitions as a shortcut to home-sharing scale ultimately failed — Expedia shut down the resulting short-term rental business in 2020 (per Skift), a cautionary data point showing that supply networks built on host relationships resist being acquired the way hotel inventory can be.
The trend: Online travel agencies are pursuing Airbnb through acquisition-led inventory expansion, but the eventual shutdown of this very business shows the strategy keeps colliding with how hard home-sharing supply is to buy outright.