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This deal cements Vacasa status as the largest full-service property manager for whole-home vacation rentals in the U.S. That makes it a rare pure-play bet on alternative accommodations for its private equity backers, which have prompted Vacasa to consolidate more of the sector.

Vacasa, an online vacation rental company backed by private equity, has signed a deal to acquire smaller rival TurnKey Vacation Rentals, which professionally manages more than 6,000 properties in the U.S.

Vacasa, based in Portland, Oregon, didn’t disclose the terms of its deal to buy Austin-based TurnKey except to say that it’s a mix of equity and cash.

TurnKey had disclosed raising more than $120 million in venture capital funding from investors like Altos, Adams Street Partners, and Silverton Partners.

The pandemic temporarily hurt TurnKey, leading it to receive millions in small business aid from the U.S. government. Yet the brand roared back in the second half of 2020 thanks to a surge in vacation rental bookings. The sale to Vacasa thus appeared to be a soft landing for Vacasa’s investors.

“Together, we feel we can further elevate the service, experience, and hospitality that homeowners and guests have come to expect from our companies,” said T.J. Clark, co-founder and president of TurnKey.

Vacasa’s acquisition of a smaller rival lets it plug some gaps in its portfolio, especially with select markets such as Napa, California; Asheville, North Carolina; and Santa Fe, New Mexico. Vacasa has disclosed raising about $634 million in private equity funding to date.

“Acquisitions are a big part of our business plan because they help us enter new markets or in certain cases substantially increase the density of vacation rentals in a given market,” said CEO Matt Roberts in our January story that the company had resumed shopping for acquisitions.

Executives haven’t finalized plans. But the companies could complete the merger by year-end, and for the immediate future, the TurnKey brand will continue, a Vacasa spokesperson said.

TurnKey built some proprietary tech, such as smart locks for entry doors and noise-sensing tablets to detect unwanted parties. Executives are still evaluating which aspects of the two companies will be kept long-term, a Vacasa spokesperson said.

Investor Frenzy for the Rental Market

The acquisition comes against a backdrop of frenzied investment by private equity and capital firms in young companies that may surface as winners from the pandemic. This year, the investor funding level for startups is tracking at a pace of about 40 percent above the most recent investing peak in 2018, according to data tracker PitchBook. The vacation rental sector has drawn attention in light of the success of Airbnb’s initial public offering.

Vacasa has disclosed raising $626.5 million in private equity funding — more than any other startup of its category. Most recently, Vacasa received $108 million in investment last fall. Private equity firms Silver Lake, Riverwood Capital, and Level Equity took part.

Some investors have floated Vacasa’s potential to debut in the public markets.

Other investors have discussed Vacasa as being a potential acquisition target of online booking titan Airbnb in a future year. In 2017 Airbnb paid $224.1 million in cash and stock for Luxury Retreats, a property management company. Airbnb turned it into an offering branded as Airbnb Luxe and focused on rentals often costing thousands of dollars a night.

Yet, as Skift Research noted in a recent report on Airbnb and the rental market, one of Airbnb’s great challenges is how to scale its platform by adding and marketing “boring” or “generic” vacation rentals without “diluting its idiosyncratic brand positioning.”

Vacasa has doubled in size to 6,000 employees since early 2019, partly through dozens of acquisitions. But the company still has only a minority share of the fractured market of whole-home property management companies.

Adjacent to that sector is a slew of companies that offer a la carte services rather than a full-service package, such as Evolve, which has raised $128 million to date, including a previously undisclosed $25 million insider round last spring.

Evolve’s basic plan has cost 10 percent of rental income but doesn’t include housekeeping or maintenance. It focuses instead on marketing a property on major channels like Airbnb, Vrbo, and It shoots professional photos, creates listings, handles guest interactions, and offers rate-setting advice with analytics that claims to make up to 5 million pricing adjustments a night.

“Our direct site is an increasingly large focus point for us, and is actually our fastest growing source of bookings — within a context where everything is growing fast,” said Evolve CEO Brian Egan. “From this perspective I don’t think our approach to reaching/converting demand is any different than Vacasa or TurnKey — or for that matter, Marriott or Hilton. We all combine direct with distribution to drive occupancy and yield.”

Vacasa may want to vary its business models, such as by considering a subscription offering. Oasis, a property management service based in Miami, debuted a “passport” subscription service, is close to selling out its first 50 “introductory” memberships, said CEO Parker Stanberry.

International expansion is also a possibility for Vacasa. Its dependence on American demand will be fine this year while it digests a merger with TurnKey. Yet Vacasa might need more geographical variation in 2022 through European acquisitions, some experts suggested. In Europe, a broad array of tech-led, full-service vacation rental property managers have sprung up in the past few years.

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Tags: private equity, property management, property management companies, property managers, turnkey, vacasa, vacation rental tech, vacation rentals

Photo credit: The poolside view of a vacation rental property in La Quinta, California, near the Indio Hills that's professionally managed by TurnKey. Vacasa, an online vacation rental company backed by private equity, has acquired TurnKey Vacation Rentals, a manager for 6,000 properties. TurnKey

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