Vacation Rental Startup Vacasa Clinches Funding

In what could be termed almost a repeat of investment activity seen earlier in the month, the latest investment tracker showed fund flows of $141.5 million. Of that tally, FinTech was just about … everything, with more than 97 percent of the total.

No deals this week hit the “triple-digit” number of millions of dollars tied to a single transaction. The biggest investment of the week came in the form of 51credit.com, where the Chinese credit card management outfit garnered $84 million from Harvest Capital and Yintai Group.

Bridge2Solutions, which provides software as a service to the loyalty and rewards industry, trailed a bit in terms of deal size but had the second largest deal of the week, with $37 million via credit facility, and that agreement comes with Silicon Valley Bank. The credit facility also allows for the company to access additional working capital.

Thus far into the month, the two weeks have been nearly split down the middle in terms of investment tallies, at about $245 million, and the U.S. came in with 41 percent of the tally, followed by China at 35 percent.

Vacasa Sells Curated, Reliable Vacation Rental Services

This week started off with a bang for Portland, Ore. vacation rental startup Vacasa.

The company announced on Monday that it had rounded out its Series A funding with a contribution from insurance company Assurant, bringing the total to $40 million.

This was one of the larger funding rounds for the travel industry this year, said Cliff Johnson, Vacasa’s cofounder and chief development officer.

Investors seem to see a strong opportunity with Vacasa, thanks to the changes in how people consider and choose their vacation accommodations. “A few years back, less than half of people had ever traveled with a vacation rental,” Johnson said. “Now there a lot more awareness in the general public about what a vacation rental is and how it’s a unique experience from a hotel.” Airbnb was the industry development that really opened up the rental market, he added.

Vacasa’s mission is to provide vacationers with a reliable, curated rental experience — and an investment opportunity for its homeowners. “One of the big differences between us and say, Airbnb or HomeAway, is that we are a full-service company,” said Johnson. “We do the marketing, booking, housekeeping, maintenance, and we have an exclusive relationship with the homeowners.”

Vacasa provides its homeowners a respite from the 24/7 world of rental management.

“People often buy a house are excited about managing it on their own and making income. Then one or two years in it starts to dominate their lives and they wish they had their freedom back — and that’s where we come in,” said Johnson.

Local teams work to monitor and manage the rental properties between stays. They regularly update homeowners on the status of their property.

For guests, Vacasa offers rentals for a variety of budgets. “We have homes that range from $70 a night to $18,000 a night — and everything in between. Our sweet spot is that $70-to-$1,000-a-night range,” said Johnson.

The company’s pricing model is also adaptable to different markets and times of the year. “We’re offering affordable options for anyone to take a vacation if they have the ability to travel during off-peak periods or mid-week periods,” he added.

Vacasa started small — with just a single property.

“We started with one property that Eric [Vacasa’s other cofounder] and his wife owned on the Washington coast,” said Johnson. “The idea of Vacasa as a full-service vacation rental management company started with managing that one property. We got together November of 2009 and launched the site and effectively launched the company in March of 2010.”

In the seven years since it began, Vacasa has expanded to manage 4,200 homes in 15 U.S. states and six countries. It currently employs 1,400 people. “We typically get about 40 to 50 reservations per home per year,” said Johnson. “We can expect, based on our current number of homes, about 210,000 reservations with an average of six to eight guests per stay.”

This means a total of about 1.5 million annual guests if Vacasa were to stay the same size. But they’re growing fast — they say generally doubling year over year. This most recent funding round will be used to further their expansion.

“We’re launching Hawaii and Montana later this year. Those are two domestic markets that we’re excited about,” said Johnson. “We’ll be launching Uruguay shortly, as well as in the Dominican Republic. We’re also looking to Mexico and Canada as two targets for 2017.” Vacasa looks to expand its footprint in Europe and Latin America as well.

Johnson noted that a major challenge Vacasa faces when expanding is adapting to each new market while maintaining a consistent level of service across the board. “You can figure out one market, but then you enter a new market and the nuances are completely different,” he said.

He gave the example of Big Bear, Calif., which instituted a law requiring in-person check-ins for all rentals.

“We would typically operate a more self-service check-in for most of our markets,” he said. “But in that case, we have to adapt to the market and find a way that we can enhance that experience so that it works for the guests.”

Challenges increase as Vacasa expands internationally.

“In Italy, we manage old villas that are several hundred years old,” said Johnson. “They have giant keys and other very irregular processes for operating and maintaining them.”

Wherever it expands, Vacasa makes it their business to also do what they can to improve the local conditions.

“It’s very important for us to be part of the communities that we work within,” Johnson said. “We have a lot of programs that are geared toward supporting and promoting local businesses.”

He gave an example: “In Portland, we have a ‘home for the holidays’ campaign. We’re working with Central City Concern, a nonprofit that helps alleviate homelessness in the area.”