Skift Take

Vacasa's market cap comeuppance in its first day of trading doesn't have huge significance. Are many private valuations inflated these days? For sure. But Vacasa's debut in a SPAC deal is a milestone for a bevy of startups seeking similar paths.

Property manager Vacasa saw its market cap trimmed more than 10 percent on its first day of trading on Nasdaq, but one of its top executives took in in stride, telling Skift it all marked the next phase of the company’s odyssey.

Vacasa’s stock opened at $10.99 per share on December 7, and by the closing bell its stock price had fallen 10.4 percent to to $9.84 per share. The broader market all finished in the green, with the Nasdaq closing up 3 percent.

A dozen years after its founding, Vacasa entered its historic day with more than $340 million in gross proceeds from its merger During an interview with Skift on Tuesday, chief financial officer Jamie Cohen said the company has around $100 million baked into its forecast for portfolio acquisitions.

It carried out 22 of these acquisitions of vacation rental management companies of varying sizes for $117.9 million in the first nine months of 2021. That’s an average of some $5.3 million per deal.

Speaking late morning Eastern time, Cohen termed Tuesday a “really exciting day for Vacasa,” and the “next step” in the company’s journey.

Vacasa’s stock opened on Nasdaq under the symbol VCSA at $10.99 per share, and was trading roughly nine percent lower than that during the interview.

Cohen said not a lot of shares were being traded — only 10-12 percent were part of the float — and added there is a lot of volatility in the broader markets as well. Cohen said Vacasa’s long-term value will ultimately be reflected in the markets.

One executive, who declined to be identified, at a much larger rival, said “property management is still hand to hand combat, feet on the street, cleaning and a fixing-things business so I suppose it’s a credit to them to get a tech multiple for that kind of business. I suppose it shows the maturity of the home rental and management space but since the space if predominantly unmanaged, I’m not really sure that building a brand inside it is powerful.”

None of Vacasa’s large existing investors sold their shares, Cohen said. After the business combination and under a no-redemption scenario, the largest beneficial owners of Vacasa were Silver Lake (25.2 percent), founder Eric Breon (14.9 percent), Riverwood (12.6 percent), and Level Equity (8.6 percent), according to a November financial filing.

In addition to portfolio acquisitions, Vacasa intends to lean into product and technology development, and growing its sales force and staffing at the property level, Cohen said. Vacasa currently has a workforce of around 8,000 people, including seasonal employees.

The company has been testing a branding campaign in local markets on linear TV, streaming video, and audio that’s been live for five or six weeks, she said. It isn’t running nationally in the U.S.

Cohen said Vacasa currently manages less than 1 percent of U.S. vacation homes, and obviously less than that of the approximately 20 million worldwide. The company therefore has substantial opportunities although it takes a “measured and deliberate” approach, she said.

Asked how the Delta and Omicron variants figured into the timing of Vacasa’s trading start, Cohen said the company had “an incredible summer” when the Delta variant was at its seeming peak, and wasn’t seeing an Omicron impact.

Vacasa sold more than 1.8 million room nights in the third quarter, a 63 percent jump from the same period a year earlier. It recently upped its revenue guidance for full-year 2021 16 percent to $872 to $877 million.

The company is making investments in marketing and staff, and expects its full-year 2021 adjusted earnings to come in at negative $40 million to negative $45 million so Vacasa is choosing growth over profitability.

Carl Shepherd, former board member of TurnKey, which Vacasa acquired earlier this year, believes Vacasa’s SPAC, or special purpose acquisition company, merger and public debut could represent a proverbial doubled-edged sword: It could mean further professionalization in the vacation rental industry but also the demise of family run businesses.

“What does it mean to have a huge, well-funded competitor in a local market?” Shepherd asked. “That will unfold in front of us, changing the industry significantly, and hopefully for the better. Change is constant, but it is far more likely we see increased consolidation in (property) management than continued tracking along a path where families had great small businesses that were integral to their communities, and where decisions were made locally.  For good or ill, the days of the mega manager are here, full stop.” 

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Tags: alternative accommodations, marketing, property managers, spacs, tpg, vacasa, vacation rentals, valuations

Photo credit: Vacasa Chief Financial Officer Jamie Cohen said the company's long-term value will ultimately be reflected in the markets.

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