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Vacasa IPO: 'We’re insulated from new variants,' CEO of the vacation rental company explains

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Vacasa CEO Matt Roberts speaks with Yahoo Finance Live about the vacation rental home company going public via SPAC with a $4.4 billion valuation.

Video Transcript

- All right. Looks like we have the CEO of Vacasa the vacation rental management platform going public today on the NASDAQ via SPAC with TPG paste solutions. The company was initially valued here with a market cap of about 4 and 1/2 billion stock. Coming under a little bit of pressure here in its Wall Street debut, but we're happy to have Matt Roberts joining us live from the NASDAQ.

Matt first off, congratulations. You know, I've been reporting on this company since its beginnings and it's nice to see it finally become a mature public company, but I wonder how much Omicron is and its potential impact on the travel industry. How much of that is playing into the kind of reception that Vacasa is receiving today on Wall Street?

MATT ROBERTS: Well, I can't speak to specific stock movements when you know, one minute to the next, but I will say that you know, our booking behavior is still continues to be very strong. We're not seeing any impact from the Omicron variant. Recall that you know, we posted amazing Q3 results when the Delta variant was spiking at its all time high.

Is partly because we're domestic focused and whole homed. So you know, if anything we're really quite insulated from any new variants, and we're growing significantly. I mean, we're going to beat our original projections by $120 million for the year. So I think the business continues to perform exceptionally well.

- And hey Matt, I wanted to ask you, why did you choose to go public via SPAC with TPG as opposed to traditional route?

MATT ROBERTS: Yeah, I mean we could have clearly have gone a traditional route. The business is at scale growing 3o plus percent on the top line with the leading company in the category and the nation. You know, the end result is the same. We're independently listed company today.

What we got with TPG solutions is you know great business partners, some great travel industry expertise Carl Peterson will be joining our board of directors, the co-founder of hotwire. So we got capital some and plus some business partnerships but in many ways, it looks like a traditional IPO. There's no selling shareholders, there's no warrants, there's a really low sponsor promote. So at the end of the day, you know, we're just continue to build the business from here and enjoy this milestone event.

- You know Matt as demand increases, I know that supply in some of the hottest markets can be somewhat problematic. I mean unlike hotels, which only depend on the ups and downs of the hospitality market, you also need to have your eye on the residential market and short-term rental operators. Are you having any challenges getting the inventory that you need right now to meet that demand?

MATT ROBERTS: No, we're not actually. We're -- because of the value proposition that we have for second home owners to actually earn them more money without them do-- with them doing less work, it's a pretty compelling sales proposition and we're growing our supply at a really rapid rate as well. It's what we're set up to do. It's what we do use our technology and build that supply platform because as you mentioned, the industry has got a lot of demand, plenty of demand but it doesn't have necessarily as much supply as it needs to fuel that demand.

- I'm wondering how you know-- I'm wondering how as you have more and more people working remotely, they may be moving into their second homes. Homes that they may have rented. So I was wondering if maybe you're coming across some of that and also what about labor shortages, are you having a hard time finding some of the folks to manage these properties and also clean the properties?

MATT ROBERTS: Sure. Well, I'll take the first one first in the beginning of the pandemic, we had more people using their second homes but the markets were actually more shut down at the time. We've actually seen that boon in interest in second homes is fueling an entire new group of people coming in and purchasing second homes.

Their second homes have gotten more expensive and a way to support that increased cost for people is to start to rent out their homes. So Vacasa actually plays an important role in allowing a second homeowner to afford to stretch and actually pay more for a new property. Our usage by owners is not up, it's actually very similar to historical trends.

So it's not a headwind in any way shape or form for us. And like I mentioned, we continue to post really great strong results. As far as the labor situation goes, yeah, it's tough to find people throughout. I'm incredibly proud of the way that the team executed. We had thousands and thousands of people over the summer months and we're able to keep up with the incredible demand we had for reservations.

- And I want to ask you, you'll get about 340 million in proceeds from the SPAC deal. What do you intend to do with the capital from that? And then how you invest it, you have quite a large portfolio so please explain to us where your properties are and how many there are.

MATT ROBERTS: Sure. We have over 35,000 properties on the platform today operating in over 400 destinations principally domestic. There is an international opportunity that's quite significant as well, but in the near term, we're going to be continuing to be focused on domestic market as well.

So where there's 5 million vacation homes in the US alone. So we're just 1% penetrated against that opportunity. And if you look globally, there's 20 million second homes.

So massive runway for us to grow the business. The way that we're going to be using the proceeds is to continue to invest in our best of breed technology. We're going to triple the dollars spent on our technology and to add more properties to the platform. Roughly half of our sales and marketing line item is dedicated to adding new supply onto the platform.

- And Matt, where are people looking to vacation right now? I know that Omicron seems to have taken hold in Europe a little bit more strongly than it has in the US and I'm wondering if you're seeing interest shift to be more domestic at this point. What are some of the hottest market?

MATT ROBERTS: Well, for us we've been very domestic focus because that's where our supply is. I think there was a reopening of the international markets that has supported some of the destinations, some of the ski destinations in particular. We are seeing that this is the ski season so we're seeing a lot of skiing, but I think people are very much eager to get ahead of their spring break train planning. Even the summer-- even fall of next year, people don't want to miss out. They're not wanting to risk that they don't have that perfect vacation home that they can rent.

- All right, we will have to leave it there Matt Roberts, Vacasa CEO. Congratulations on your debut at the NASDAQ.