Eric Breon, co-founder and CEO of Vacasa, appeared at the Skift Global Forum in New York City September 27, 2017. The company has just announced a $103 million round of Series B funding. Skift
Skift Take: Vacasa spent years building a business before venture capital came along for the ride at this level. Its fate now depends on how well it executes the sometimes-cumbersome task of on-boarding new properties at scale, and whether it can avoid hubris.
— Sean O'Neill
Venture capital has awoken in a big way to the potential of vacation rental property managers.
In the largest round ever in this facet of the vacation rental industry, Vacasa, a vacation rental property management company based in Portland, Oregon, has secured a $103.5 million Series B found of financing.
The $103.5 million injection comes as Airbnb likewise is trying to make inroads in the property management sector with the release of a set of new tools for property managers.
Riverwood Capital led the round. Past investors Level Equity and Assurant Growth Investing also participated, along with a fresh investor, NewSpring.
Vacasa manages rental properties on behalf of homeowners, covering everything from marketing the property on sites such as VRBO and Airbnb to orchestrating the housekeeping and guest interactions. Its inventory in 15 countries includes properties ranging from modest cottages to $17 million homes.
Founded in 2009, Vacasa closed its first venture capital round of $40 million 18 months ago. Since then, the private company says it has nearly tripled its revenue.
With more than 1,600 employees and newly bulked up resources, Vacasa plans to hire a hundred more employees in the next year.
Eric Breon, the startup’s co-founder and CEO, discussed his company’s business model at Skift Global Forum in New York in September. He explained the various ways that his company’s technology has been wringing inefficiencies out of an old model.
Race for more properties
Breon said in an interview this week that the primary constraint on his company’s growth is how quickly it can add new properties.
Breon said his company’s strategy has recently been roughly split between pursuing growth organically and through acquisitions of smaller property-management companies. “We’ve launched the majority of our markets organically,” he said.
He added: “We have great coverage in the western U.S. and southern U.S. but have big gaps in its map otherwise, and this funding will let us fill in those gaps.”
Vacasa hopes to expand its coverage to up to 20 countries by the end of next year. Breon said his long-term goal is to have properties in “every place Vacasa’s guests are going worldwide.”
Breon said he feels pretty good at how cost-effectively Vacasa can acquire customers digitally via channels like Airbnb, HomeAway, and TripAdvisor.
The company feels confident enough that it charges property owners commissions and fees that are at the high end for the sector — closer to 35 percent than the under-20 percent that its rivals collect.
Breon said that the typical client in this market is not looking for the cheapest offering, but wants the most comprehensive service instead.
Overall, technology from multiple companies has upended the sleepy sector of vacation rentals at several touch points, as Skift Research has reported. Management companies are letting go of their offline business practices and looking for data-based judgments when it comes to setting rates, along with secure and speedy payment options.
Venture capital is making significant bets on vacation rental management.
Other players whose services somewhat overlap with Vacasa’s in the U.S. include the less-well-funded Turnkey (which has raised more than $41 million), Evolve ($19 million), Pillow ($16 million), StayAlfred ($15 million), and MyBookingPal ($10 million).
Another set of competitors includes the legacy hospitality companies, such as Wyndham and Marriott, which have significant vacation rental property networks. The largest of these is Wyndham.
Breon claimed that Wyndham and Vacasa together have about 1 percent share of the revenue generated by independently managed properties in the U.S.
Often, it’s the small, local vacation rental managers that are the fiercest competitors in the many fractured markets at resort locations worldwide.
Breton claimed he doesn’t worry that one of the large consumer players might decide to compete with the property management companies like Vacasa by getting into the sector to manage properties themselves.
There would still be enough other sites for distribution, he said.
Vacasa’s latest fundraising likely means more acquisitions are in the offing. It is the third-largest round in the vacation rental sector to date if you include the rounds raised by consumer marketplaces Airbnb and HomeAway.