Even a decade ago, finding and renting a vacation home online wasn’t always a smooth process. It was equally difficult for homeowners to expose their properties to potential guests.
But the experience has improved with better technology — and now one vacation rental management company just raised a giant investment round to tackle what it calls an “enormous” opportunity.
Portland, Ore.-based Vacasa today announced a $103.5 million Series B round led by new investor Riverwood Capital, with participation from NewSpring and previous investors Level Equity and Assurant Growth Investing. Blooomberg reports that the financing round doubled Vacasa’s valuation, though the company did not disclose terms.
Vacasa bills itself as the “largest U.S. vacation rental management company” and offers various services — marketing, rate optimization, reservations, guest services, housekeeping, maintenance, etc. — to help homeowners earn money off their property. It has more than 6,000 vacation homes listed on its site across 17 U.S. states, Europe, South and Central America, and South Africa. Revenue and total home count has nearly tripled in the past 18 months.
The company is similar to platforms like Airbnb, which is valued at $31 billion, and HomeAway, which was acquired by Expedia for $3.9 billion in 2015.
But Vacasa has a few key differences — namely, it is a “full-service property management company,” helping homeowners manage the entire booking process from start-to-finish. In addition to 400 people working out of offices in Portland and Boise, the company employs 1,200 people across its markets for on-the-ground “field-based roles” — housekeepers, reservations agents, local managers, etc.
“We take care of every home,” Vacasa CEO and co-founder Eric Breon told GeekWire.
Airbnb and HomeAway, meanwhile, facilitate a “sharing economy” or “peer-to-peer” marketplace and handles marketing and booking, while leaving much of the operational work to homeowners.
If Airbnb is more akin to peer-to-peer marketplace like eBay, Breon said his company wants to be like the Amazon of the vacation rental industry.
“People aren’t inherently looking for peer-to-peer,” Breon explained. “People are just looking for that accommodation that isn’t available through traditional channels. Yet at the same time, they very much want the professionalism that comes with the hospitality industry. They want it to be perfectly clean; they want to know that when they pick up the phone, somebody will answer. That’s how we see the similarity.”
Breon doesn’t consider Airbnb, HomeAway, Booking.com and other sites as direct competitors — in fact, Vacasa partners with these companies by listing some of its properties on their sites to maximize bookings.
However, Airbnb and others are moving onto Vacasa’s turf. Airbnb bought a company by the name of Luxury Retreats for about $300 million earlier this year. Luxury Retreats, which has about 4,000 properties, describes itself as a full service villa rental company, offering “24/7 personal concierge service to assist with details big and small.”
Targeting more professionally-managed vacation rental listings could be one way for Airbnb to better prepare itself for an IPO, Skift noted in August. The company also unveiled new tools for vacation rental property managers on Monday.
Even so, Breon said he sees the traditional local mom-and-pop property management offices as its main competition — some of which Vacasa has already acquired.
“There’s so much that goes into doing a great job, from driving booking to making sure every house is clean,” Breon said of managing vacation homes. “A lot of work goes into that and it’s pretty difficult for them to excel across all those different points.”
Vacasa’s platform is powered by lots of technology; it uses proprietary yield management software that updates price rates daily based on hundreds of variables like weather, events, competitor pricing and occupancy, regional demand trends, season demand curves, and more. The idea is to maximize revenue for property owners that list homes on Vacasa.
The $103 million investment round is the largest for a Portland-area company in more than a decade, according to data from PitchBook, and largest in the Pacific Northwest since OfferUp’s $120 million round last year. For context, Portland-area companies had collectively raised $180 million in venture capital money through the first three quarters in 2017.
Vacasa has been around since 2009 and bootstrapped until taking its first outside investment last year with a $40 million Series A round.
Now the company is more equipped to tackle a $100 billion vacation rental industry and expand its service around the world. It expects to add another 160 people to its Portland and Boise offices over the next year.
“We are very much through the challenges,” Breon said. “Every part of our business is now scalable.”
As a result of the funding, Jeff Parks, founding partner at Riverwood Capital, has joined Vacasa’s board.
“Travelers globally have continued to show increasing demand for vacation rentals,” he said in a statement. “Vacasa delivers a solution that drives significant value to both homeowners seeking to rent, and guests seeking to stay in a vacation rental.”
Another Pacific Northwest tech startup in this industry was Dwellable, a Seattle-based vacation rental platform that was acquired by HomeAway for $18 million in October 2015. HomeAway was later acquired by Seattle-area travel giant Expedia.