Rentals and SPACs spotlighted as Vacasa goes public at $4.4B valuation

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.

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

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“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.”