It seems a big part of vacations is changing. According to a survey by TripAdvisor, 67% of respondents indicated they had plans to stay in a vacation rental home in 2016, up 8% from 2015 and 15% from 2014. So, what’s the reason for the growing interest in vacation rental homes as opposed to hotels, motels, or resorts? It most likely can be attributed to the increased convenience of vacation rental home websites like Airbnb, which on its own, has the lion’s share of the market with 173,000 units in the U.S.
When news spread about the $35 million in funding Portland-based company Vacasa received in 2016, word got around about Airbnb’s new competition. If you were to ask Vacasa CEO and co-founder Eric Breon about this comparison, however, he’d tell you that, “We see Airbnb as the eBay of our industry, while we view ourselves as the Amazon of our industry.”
The reason why Breon and the other leadership at Vacasa would be quick to shoot down this comparison is because Vacasa is indeed fighting to be quite different from its supposed competitors. While the basic premise of enabling homeowners to rent their properties out as vacation homes is the same, and the pricing algorithms both companies use are similar, that’s where the comparisons really should end. A true apples-to-apples comparison would pit two companies offering the same exact vacation solution against one another, and that’s not what we have here.
The Full-Service Vacation Rental Solution
Cliff Johnson, Vacasa’s co-founder and Chief Development Officer, explained, “At Vacasa, we offer a truly full-service vacation rental solution to homeowners worldwide. That means that we take care of the entire process of listing vacation rentals—from housekeeping to maintenance, to marketing—so our homeowners don’t have to.”
The main driver behind this is to ensure that guests all around the world receive a consistent and professional experience, regardless of which home they rent out for their vacation. And to take the burden of that chore off of homeowners who are just trying to earn some extra money.
In order to accomplish this, Johnson elaborated, “Vacasa hires and grows local teams to manage day-to-day operations.” So, unlike a company like Airbnb that leaves that responsibility in the hands of the homeowners, this is something that Vacasa takes on, which is more of how a vacation rental property treats their business.
This may also be a contributing factor in why Vacasa’s global reach hasn’t quite reached a level that can rival that of Airbnb. Currently, Vacasa has a footprint in 16 U.S. states, 9 countries, and over 5,000 homes. However, they do have plans to expand their 1,400-person team and services over the next few years in order to extend their reach.
In addition, Johnson added, “Vacasa will continue to evolve its full-service business model—for example, this year we added an owner insurance option—to provide even more comprehensive services to homeowners and guests.”
In terms of providing a truly full-service vacation rental solution, Vacasa is well on their way.
The Technology Differentiator
One of the other comparisons one might draw between Vacasa and Airbnb is the technology aspect.
The pricing tool that Airbnb and VRBO (another vacation rental site) use is called Beyond Pricing. Rather than leave it up to homeowners to decide how much their rental property is worth and to set their own price, this tool does the smart calculations for them. Vacasa has its own proprietary pricing tool called Yield Management 2.0 (codenamed “Alan” after Alan Turing) that:
“Uses machine learning to effectively set and reset pricing for the vacation rentals in our portfolio.” According to Johnson, this is “based on availability and forecasting for multiple variables such as market rates, home size, location, timing, and luxury classification. Vacasa’s technology also monitors booking curves by evaluating actual to predicted data for all future dates, adjusting rates on an automatic and as-needed basis.”
The goal is two-fold: to always have a competitive edge in pricing for guests as well as to maximize the profit homeowners make. Johnson does say, however, that “Vacasa homeowners [make] an average of 34% more revenue than competitors in their first year with us.”
That being said, when it comes to the pricing technology piece, Vacasa and other vacation rental websites are pretty much on a level playing field.
Now, what really sets Vacasa apart from others in this space is the technology they use behind-the-scenes to fuel their administrative and rental property maintenance work. “From our housekeeping app that schedules cleaning based on home proximity, housekeeper rating, and the level of cleaning difficulty, to providing instant booking on all homes, technology is what makes managing 5,000+ homes possible,” concluded Johnson.
While Vacasa is still the new kid on the block, the massive amount of funding they received last year to grow their enterprise is promising. By establishing themselves as a peer (instead of a competitor) with vacation rental solution providers like Airbnb and VRBO, they’ve been smart about carving out a unique niche for themselves in this space, and it’ll be interesting to see where they go from here.