[Updated, 4/12/16, 10:21 a.m. See below.] If you’ve had the good fortune to rent a vacation home recently, you know there’s room for improvement in the process. Portland, OR, company Vacasa announced a $35 million funding round to expand its new approach to a large sector that’s still up for grabs.
Level Equity led the Series A financing, providing $25 million. Another investor is not being named. Vacasa, founded in 2009, had been self-funded until now. The new capital will help accelerate its growth and expand its service into new geographies such as the East Coast and in Europe, the company says.
Vacasa already has listings for some 3,500 units in 14 U.S. states, Mexico, Belize, Panama, Italy, and elsewhere. [An earlier version of this paragraph mentioned Australia as a Vacasa market. While Brisbane, Australia, was listed on the company’s vacation rentals locations page, a company spokeswoman now says, “We have plans to expand into Australia but currently do not have any homes in that region.”]
The company entices vacation rental owners to list their properties on its site with a proprietary pricing algorithm that it says offers them maximum returns, and services including marketing, management, taxes and permits, and even property maintenance to reduce the hassle of a rental. Vacasa earns money by charging property owners a commission on rental revenue they receive through its service. It ranges from 35 to 50 percent.
The pricing algorithm, developed by Vacasa, crunches variables including “weather forecasts, location-specific holidays and events, competitor pricing and occupancy, lead time, current sales and promotions, regional demand trends, proximity to area landmarks, and seasonal demand curves,” and updates rental rates for each property four times a day, says Eric Breon, Vacasa co-founder and CEO, via email. [A Vacasa spokeswoman clarifies that the company’s pricing algorithm “can update prices more than or less then four times daily, depending on the situation.”]
Vacasa employs large numbers of local property managers, housekeepers, and guest services staff to assist renters on the ground.
“This way, we are able to provide a standardized and consistent experience to guests, which is unlike an Airbnb experience,” Breon says. He adds, “The level of service we provide is far closer to that of a hotel than a listing site.”
The company has nearly 1,000 employees. About 200 are at its Portland headquarters. Another 100 people work at an office in Boise, ID. The remainder are in the field.
Vacasa is trying to distinguish itself in a crowded field. In addition to Airbnb, competitors include HomeAway, which has consolidated several vacation rental brands, including VRBO and Dwellable, a Seattle startup that focused on mobile vacation rental searching. Then there’s Wyndham Worldwide, which Breon says is the current leader in the vacation rental management market.
“The vacation rental industry is so fragmented that even though Wyndham is No. 1, they only have 1 percent market share, which highlights the huge market opportunity we have,” Breon says.
There’s plenty of business to go around. Vacasa cites market research from ReportsnReports.com predicting a global vacation rental market worth $169.7 billion by 2019.
