Four months
after
announcing
plans to go public
via a special purpose acquisition company (SPAC) created
through a business combination with TPG Pace Solutions, vacation rental
management platform
Vacasa
begins trading today, under the ticker symbol VCSA.
The Portland-based
company, founded in 2009, debuts with a valuation of $4.4 billion and more than
$340 million in gross cash proceeds, coming off a
strong
Q3 earnings report
when the company reported revenue of $330 million and
adjusted EBITDA of $57 million.
“The short-term rental industry has been
professionalizing over the last few years. We have been seeing and expect to
see further consolidation in the industry as consumer demand and expectations
from vacation rentals grow,” says Charuta Fadnis, Phocuswright’s senior vice
president of research and product strategy.
“By 2025, Phocuswright projects that larger hosts and
property managers managing 50+ units will account for over half of short-term
rental gross bookings. Vacasa is one of the largest players in this market and
going public will allow them to fund continued growth.”
In the past
year, several travel industry companies have announced plans to go public via a
SPAC, including
Sonder
and – just last week –
American
Express Global Business Travel
. But Vacasa becomes one of the first to
list, just behind
Singapore-based
Grab
, which debuted on the NASDAQ on Thursday and Germany-based
HomeToGo
,
which listed in September.
Along with
TPG Pace Solutions, Vacasa’s existing investors, including Silver Lake,
Riverwood Capital, Level Equity, Altos Ventures, Adams Street and NewSpring
Capital, together with founder Eric Breon and management, will roll 100% of
their equity to retain an 88% ownership of the company.
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Vacasa CFO
Jamie Cohen says the company has two priorities that will drive how it uses the
new capital: adding supply and developing its technology and product.
Vacasa
currently has about 35,000 whole-home vacation rentals on its platform in 400
destinations, primarily in the United States but also in Canada, Mexico, Costa
Rica and Belize. Cohen says the company wants to add supply in existing markets,
to enter new markets in those countries and, eventually, to grow
internationally.
“As we look in
the medium- to long-term, international is definitely an enormous opportunity
for us. As we think about the addressable market, there are 20 million global
vacation homes, five million of those are in the United States,” she says.
“We are less
than 1% penetrated in just the U.S. alone, but three-quarters of the homes
exist outside of the United States. So we are going to be very measured and
deliberate in terms of how we decide and when we decide to enter into
international, but that is an enormous opportunity for us as well.”
The company
adds supply using two strategies: signing up individual homeowners and
acquiring small property management companies. Along with the
acquisition
of Turnkey Vacation Rentals in March
for $618.8 million - $45 million in
cash and $573.8 million in Vacasa common stock, according to the company’s Q3 SEC
filing – Vacasa made 22 acquisitions in the first nine months of this year, up
from 10 in the first nine months of 2020.
One of the things that really differentiates us from some of the other companies going public right now is that we have a very experienced management team.
Jamie Cohen - Vacasa
“We have
business development reps that are constantly cultivating relationships with
various property managers and just talking to them about opportunistically when
it might be the right time for them to sell their business,” Cohen says.
Along with
adding supply, Cohen says Vacasa will focus on developing its technology and
product, with a goal of getting every property equipped in the next year with “smart
home” technology such as door locks, thermostats and noise-monitoring devices.
Cohen says the platform is being built off technology Vacasa gained through its
acquisition of TurnKey, which had already enabled smart home technology for all
of its properties.
Along with
these goals, Vacasa is testing new marketing strategies to attract homeowners
and travelers. The company hired its first CMO in May and is now running a brand
advertising campaign in select markets using audio, cable and broadcast television,
digital advertising and podcasts.
“We are
doing this at the local level to test and see exactly what the ROI is of our
campaigns so we can calculate how big this could be for us in the future,”
Cohen says.
“But I do think
this is an enormous opportunity that Vacasa has never done in the past, so
there is a lot of opportunity to drive awareness for our brand.”
For the
first nine months of 2021, Vacasa saw $1.5 billion in gross booking value for 4.1
million nights sold. Cohen says about a third of the bookings come directly to
Vacasa and about two-thirds come through partners including Airbnb,
Booking.com, Vrbo and Marriott Homes & Villas.
“Our goal is
to make as much money for our homeowners as we can and ... one of the ways we
can do that is by listings across all of these different sites,” she says.
“If somebody
books those nights on Airbnb, for example, we have these dynamic APIs that instantaneously
update the availability across all of the sites. ... We would not want to prioritize
direct and as a result not be able to maximize revenue for our homeowners.”
Vacasa also
operates a small real estate brokerage, making it easier for the company to
keep homes on its platform during a change in ownership.
Asked if
becoming a public company will create new challenges for Vacasa, Cohen says she
and the other executives have the experience to manage it effectively.
“One of the
things that really differentiates us from some of the other companies going
public right now is that we have a very experienced management team,” she says.
“I was a
public company CFO before this; Matt Roberts our CEO was a CFO and CEO of OpenTable, which was a public company, and a number of folks on our executive team
also have public company experience. I think we are uniquely set up to manage
the investor community and Wall Street and not distract the rest of the business
with it.”