Skift Take

Does Vacasa’s technology and scale really give it a defensible position in North America? Moats are so overrated.

For Vacasa CEO Matt Roberts, who had the same title at OpenTable when he sold it to Booking Holdings eight years ago, focusing on adding homes and building income for owners will work as a hedge against Google and other competitors just as adding restaurants, he argued, worked at the dining reservations platform.

Running property management platform Vacasa, which went public in December, amounts to a sort of ground hog day all over again for Roberts. He took the top spot two years ago at Vacasa, replacing founder Eric Breon, who remains a board member.

Roberts told Skift a day after Vacasa reported its first financials last week as a public company — it lost $154 million in 2021 — that the property manager is focusing on building a supply-centric business with the infrastructure to accelerate returns. 

If a property manager is increasing its supply — and Vacasa counts 37,000 in its portfolio — and has exclusive rights to control their calendars, then it is less beholden to the demand side of the business, and the need to look to Google for customer acquisition, he said.

When he joined OpenTable as its chief financial officer in 2005, obtaining the “next million diners” was a milestone Roberts said. “When I left that was a bad Wednesday,” he said. “But the growth was enabled completely by a supply focus by building out the infrastructure that solved a real problem.”

By the time Roberts relinquished the CEO post in 2015, OpenTable had a wide lead in the dining reservations market in North America.

Today, Vacasa, which withdrew from much of Europe and South America to focus on North America after Roberts came aboard in 2020, is the only really nationwide player in the U.S. after it grew by acquiring Wyndham’s vacation rental business in North America, as well as buying Turnkey, and a bevy of smaller property managers in the past few years.

Roberts said Vacasa’s tech and value proposition is creating new supply, adding that 20 percent of sales came from owners who had never rented out their properties before.

Roberts knows that competitors will be gunning for Vacasa, but he argued that Vacasa has a “defensible position” because of its supply, and ability to solve hard problems at scale. Execution is not cheap, he added.

“Everybody underestimates how hard everybody’s business is to do,” Roberts said, arguing that Vacasa built its own, comprehensive and integrated tech plaform, and that others use solutions that target specific pain points, but don’t combine the same levels of data and are piecemeal.

One vacation rental product expert scoffed at the alleged superiority of Vacasa’s tech, and added that “any professional manager has fully integrated systems these days.”

Another property manager CEO similarly disparaged Vacasa’s alleged competitive edge. “Vacasa’s current position within the hospitality industry is as defensible as a wall of snow in the hot sun light,” said Steve Milo, founder and CEO of Vacasa competitor Vtrips in Ponte Vedra Beach, Florida.

Milo argued that Vacasa has a poor reputation among some owners because of its lack of execution, which will deter its rollup and acquisition strategy. Vacasa, as does hospitality platform Sonder, gets its share of negative guest reviews, too.

Milo’s Vtrips is privately held, but Milo claimed it’s on pace to achieve pro form earnings before interest, taxes, depreciation and amortization of $50 million in 2022.

“It is possible to be highly profitable in this industry if you focus on employees, owner relations, operations and costs instead of maximizing revenue and organic new units at all cost,” Milo said.

Vacasa, which has seen its stock price tumble about 9 percent since its stock market debut in December but has a $3.9 billion market cap, has other detractors. 

Hospitality consultant Max Starkov said on LinkedIn that Wall Street will sour on Vacasa once the market begins measuring Vacasa against hotel management companies.

“Wall Street enthusiasm about Vacasa will evaporate once analysts realize that the company should be analyzed in the same manner as hotel management companies,” Starkov wrote. “Vacasa is suffering from exactly the same labor shortages, and from the same unattainable labor, utility, technology, marketing and distribution costs as any hotel company.”

On the other hand, Vacasa added 200 salespeople in 2021, although a portion joined the payroll through acquisitions.

Vacasa’s “direct” traffic to Vacasa.com grew to 30 percent in 2021, up from 18 percent in 2018, Robert said, although some of those site visitors weren’t purely direct because they came through paid marketing via Google.

Roberts said it is important to build direct traffic from guests as a means of enticing more properties to sign up because owners want to know that a property manager can attract customers in this way, has effective distribution capabilities, and can offer high-quality yield management.

The Vacasa CEO said Europe is likely Vacasa’s biggest opportunity, although he conceded those markets are very different from North America. 

Our playbook, Roberts said, will be to follow our travelers, and Vacasa will likely increase its penetration in Mexico in 2022.

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Tags: future of lodging, google, hotels, online travel, online travel newsletter, opentable, property managers, restaurants, short-term rentals, vacasa, vacation rentals

Photo credit: A Vacasa property in Trinidad, California. Vacasa is focused on adding supply.