The vacation rental industry is booming, and companies like Airbnb aren’t the only ones benefiting. Online property-management site Vacasa recently announced a $319 million strategic investment round led by Silver Lake, making its total investment to date more than $500 million, and valuing the company at upwards of $1 billion.
The main players in the vacation rental sector include Airbnb, VRBO, and HomeAway. Vacasa operates in the same sense that it connects customers to rentable homes all over the world, but it differentiates itself from its competitors with its business model – it manages vacation-rental homes on behalf of their owners.
“What we do for homeowners is, we take care of the entire property,” Vacasa CEO Eric Breon told Yahoo Finance. “So if you imagine somebody, they have a second home, they don't necessarily need to be in the business of renting it out room by room or listing it for guests on VRBO or Airbnb. We take care of the whole property, rent it out, find the guest, do the housekeeping, basically everything related to that to make their life easy and to make better space for our guests.”
The vacation rental market has been growing rapidly; in a note published earlier this year Piper Jaffray estimated total “global alternative accommodation bookings” at around $150 billion in 2019 and expect it to grow to roughly $250 billion by 2025 – a growth rate more than double that of the global hotel industry.
Investors are also taking a liking to the real estate aspect of Vacasa, which bought Wyndham Vacation Rentals from Wyndham Destinations this year. The Portland, Ore.-based company currently runs more than 23,000 vacation home rentals, and more recently began allowing homebuyers to use the site as a tool to identify homes as a rentable investment. “Historically, if you think about second homes, you didn't know how much you were going to make from buying one,” Breon says. “If you bought a commercial property, the [capitalization] rate would be published right in the listing.”
Vacasa may be among next group of tech unicorns to enter the IPO market; Airbnb said it intends to go public in 2020. Breon told Yahoo Finance the company is looking to debut on the public market in about “18 to 24 months” and will continue working on the expansion of Vacasa on the real estate front.