Vacation rental listing provider HomeAway, Inc. just announced it has raised an additional $250 million in minority financing as the company continues to look for growth and consolidate the online vacation listing industry.  Since its formation in 2005 with an initial $49 million raise, (and subsequent $160 million round in 2006), HomeAway has gone on a buying spree, snapping up 11 vacation listing sites including VacationRentals.com and biggie VRBO.com.  HomeAway now claims more than 300,000 lisitings worldwide.

What’s interesting is that The WSJ makes out the investment as if it’s some sort of gamble on a new start-up, describing how new investors are essentially “betting $250 million that consumers will still use Web sites like HomeAway.com to find vacation-rental properties”.  Let’s be honest, this is a vote of confidence investment in the consolidation strategy of highly profitable and growing websites.  The real bet isn’t on the industry or business model, but rather if additional reasonably priced acquisitions are out there and if an intense marketing push can further grow HomeAway’s share of the market.

People tend to visit sites with the most listings and HomeAway appears to have acquired all the online pioneers and current market leaders in the vacation listing marketplace.  HomeAway’s most notable investment was 2006’s $160 million purchase of VRBO, a site that has now been around for thirteen years and in itself claims over 100,000 listings.  The only real current threat is a free listing site such as Craigslist which works great as a classified site for one-time posts, but is set-up poorly as a directory for users who need continual exposure.

Investors are showing they like what HomeAway has done with the first $200 million, essentially cobbling together a high-margin, $100 million business consisting entirely of recurring revenue and feel a further $250 million will corner the industry.  Todd Chaffee, General Partner of investment participant Institutional Venture Partners says the amount of financing is meant to serve as a “statement of ‘game over’” for competitors.  Proceeds are reportedly to be used for overseas acquisitions and to pay down debt.

The real question isn’t whether the business is sound, it’s whether the round’s investors are getting in at a fair valuation.   Hybrid venture capital / private equity firm Technology Crossover Ventures, who is reportedly committing $175 million of the $250 million raise must think so.  However, TechCrunch is reporting the new round has a lofty pre-money valuation of approximately $1.15 billion.  At a multiple significantly higher than 10x revenue, you be the judge . . .