Vacasa has raised a $108 million financing round in what the vacation rental management company calls a “smooth” process despite the coronavirus pandemic.
The Series D strategic investment round was led by Silver Lake, with participation from Riverwood Capital and Level Equity - all previous investors in Vacasa’s $319 million Series C round, which in October 2019 valued the Portland, Oregon-based company at more than $1 billion.
Silver Lake’s participation marks the private equity firm’s third high-profile investment in the hospitality market in recent weeks: In April, it contributed to Airbnb’s $1 billion fund - a combination of debt and equity securities - as well as Expedia Group’s $1.2 billion equity investment.
Vacasa CEO Matt Roberts, the former CEO of OpenTable who replaced Eric Breon in February, says that despite the challenges brought on by COVID-19, Silver Lake, Riverwood and Level equity were all “eager” to continue to partner with the platform.
“Like many companies in the travel industry, the pandemic has had a significant impact on Vacasa. To put the company in the best position moving forward, we decided to raise additional financing,” he says.
“Since this was an inside round with existing investors who are familiar with Vacasa, the process was very smooth.”
As for what Silver Lake sees in Vacasa compared to other hospitality brands, Roberts adds: “As a full-service property management company, we provide an added level of control that the home will be expertly clean and safe for our guests - that’s different from what booking sites can provide.”
Cleanliness is key
Roberts says the funds put Vacasa in a strong financial position to capitalize on consumer demand in the wake of COVID-19.
As travel begins to resume as stay-at-home orders are lifted, he believes travelers will gravitate toward professionally managed vacation rentals over hotels as privacy and cleanliness become top priorities.
Indeed, the short-term rental market has placed a heightened focus on hygiene due to concern over the spread of the coronavirus and how measures are communicated to guests.
“Private amenities and hospital-grade cleanliness have become the standard for safe travel in the wake of the pandemic,” Roberts says.
“Professional management companies like Vacasa can offer a greater degree of control over how each of our vacation rentals are cleaned and cared for.”
Recently, the company launched Vacasa Premium Clean, a new program that follows the Centers for Disease Control and Prevention’s recommendations and the Vacation Rental Management Association’s SafeHome guidance.
The Vacasa Premium Clean program includes using EPA-approved disinfectant, providing masks and gloves for its teams and sanitizing high-touch surfaces. All Vacasa housekeepers are required to receive training on proper cleaning procedures and the use of cleaning chemicals, and only one employee is allowed in each home at a time.
Road to recovery
Vacasa has started to see signs of recovery, with guest reservations in May reaching 6X those booked in April.
Its guest bookings have also increased to 723 cities in the United States, up from 357 cities at the height of the crisis. Vacasa’s booking window is also comparable with 2019 averages at 40 days compared to a booking window peak at 142 days in April.
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Vacation rental markets in the Southeast, including Alabama, Florida and Georgia, were the earliest to recover, and the company expects markets in the western part of the country to follow suit as summer travel season gets underway.
Although the pandemic forced the company to lay off and furlough some of its employees in March, many have returned in recent weeks as vacation rental demand has increased. Roberts says Vacasa has also resumed hiring.
Compared to its competitors, Vacasa seems to have been less publicly impacted by the crisis: Airbnb, for example, has received significant blowback from hosts as well as guests over its cancellation policies.
While Airbnb and others are pivoting their models to longer-term stays, Vacasa appears to be betting on its professionally managed services to lure back future travelers for the time being. For one, different states have different regulations around long-term rentals and tenant/landlord rights, which can make the strategy complicated. Vacasa also says that given the demand it has seen in short-term rentals, “long-term stays doesn’t feel like a long-term solution.”
Founded in 2009, the company manages more than 26,000 vacation homes and averages two million guests per year.