BELLEVUE, Wash. (KCBS) — Expedia is buying vacation rental site HomeAway for $3.9 billion dollars.

Austin, Texas-based HomeAway (AWAY) is the leader in alternative vacation rentals with 1.2 million properties around the world, a marketplace that Bellevue, Wash.- based Expedia (EXPE) says has grown to $100 billion dollars.

A big threat to HomeAway is San Francisco-based Airbnb with its home and apartment rentals, although HomeAway maintains that its different in that its focus is secondary home rentals.

HomeAway makes most of its money from the fees that property owners pay to list their rentals. Last year, however, HomeAway allowed owners to list their properties for free and pay only when they book a rental, which is how it’s done on Airbnb.

Despite the change, paid listings on HomeAway have continued to grow and are featured more prominently than the free listings.

HomeAway investors love Expedia’s move, which sent HomeAway shares soaring 25 percent. Expedia’s shares also ended higher by just over three percent.


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