Skift Take

If they can't sell their homes, vacation rental owners tend to stay with their property managers. Making the proverbial lemonade out of lemons.

Talk about a silver lining: The slower pace of U.S. home sales and rising mortgage interest rates may turn out to be a positive for property management company Vacasa.

That was one of six takeaways from Vacasa’s first quarter earnings announcement.

Slowing Home Sales Means Less Supply Attrition

Vacasa expects to increase its roster of managed properties 30 percent to around 48,000 in 2022. One factor — in addition to the hiring of salespeople and portfolio acquisitions — is the recent sluggishness of the U.S. housing market.

That’s because when the housing market is hot, homeowners sell their homes, and the new owners may not turn them into vacation rentals or sign up with Vacasa.

“Interesting that the number one cause of any kind of attrition for us is homes sold or selling,” Vacasa CEO Matt Roberts told financial analysts Wednesday. “So to the extent that, that actually slows down, that pace of play on that, that’s actually more of a net feature than a bug for us.”

Seven Acquisitions at $2.7 Million Each

Vacasa has made more than 200 acquisitions of relatively small property managers since 2014, and it made seven of these in the first quarter of 2022 for $18.9 million. These relatively smallish acquisitions, averaging $2.7 million each, are not the primary way Vacasa adds property. The main way it onboards properties is direct sales by its salespeople.

Vacasa Is Hiring Salespeople But Not as Many as in 2021

Vacasa hired 200 salespeople in 2021, and is actively hiring new ones in 2022, but the company expects it will be fewer than 200. This is how Vacasa gets the majority of its new properties.

With those newish salespeople hired since the beginning of 2021 doing their thing, Vacasa reported that its property additions in the first quarter amounted to 2.5 times the pace compared to the first quarter of 2021.

Unused $15 Million in Future Credits Bolstered First Quarter Revenue

Vacasa’s first quarter revenue got pumped up by $15 million via previously issued but unused future stay credits that it figured would either expire or otherwise not get put toward a vacation. An additional $10.6 million, much of it arising out of Covid-related cancellations, was indeed redeemed during the quarter.

Vacasa issued another $5 million in future stay credits during the first quarter.

TurnKey Numbers Help Spur Vacasa’s Growth

Vacasa acquired rival property manager TurnKey in April 2021 so TurnKey’s financials were not included in Vacasa’s first quarter of 2021 financial results.

However, Vacasa reported Thursday in a financial filing that its nights sold jumped 64 percent in the first quarter of 2022 primarily because of its purchase of TurnKey.

Vacasa’s gross booking value climbed 23 percent in the quarter because of higher stay rates and fees.

Vacasa’s Losses Will Continue

You can expect Vacasa’s red ink to continue — at least through the end of 2022.

Vacasa’s expects its full-year 2022 adjusted earnings before interest, taxes, depreciation and amortization to be between negative $21 million and negative $14 million.

Tags: breakage, earnings, future of lodging, homes, mergers and acquisitions, online travel newsletter, property managers, real estate, salesforce, turnkey, vacasa, vouchers

Photo credit: A Vacasa property in Venture, California. The company believes a soft home sales market can help it retain homeowner customers.