Vacasa’s Reliance on Booking Sites

Skift Analysis: Vacasa‘s debut into the public market in December 2021 had a significant impact on the short-term rental industry. Being one of the largest branded property managers in the U.S., Vacasa plays a crucial role in various aspects of the short-term rental sector and serves as an important indicator for the industry’s overall performance.

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But, its stock market performance has been highly disappointing with a staggering decline of 94%. This can be attributed to the company’s losses of $17 million in the past year and a projected slowdown in revenue growth. Given these circumstances, it is difficult to place blame solely on the broader market conditions.

Its sales and marketing strategy — at an average cost of 19% of revenue — is a critical piece of its business since it is so closely tied into the company’s distribution strategy. As Vacasa strives for profitability, is the company’s branded direct-to-consumer strategy paying off? 

Vacasa has established itself as a prominent brand within the industry. But Skift Research has found that the company continues to rely heavily on third-party booking platforms such as Airbnb for the majority of its sales. Undoubtedly, Vacasa’s management aspires to transition into a primarily first-party business model, aiming to secure the associated margin advantages. But how they will do it is the question. 

Vacasa is a Leader in Brand Building But Relies Too Much on Booking Sites – Skift Research

In Case You Missed It

The Plano city council has once again delayed the voting on a proposed short-term rental registration ordinance. This ordinance would mandate that owners of short-term rental properties in Plano register their properties with the city by September 1st and comply with inspection requirements. Failure to do so would result in a $500 fine. The voting will now take place on August 14th.

Expedia’s Vacation Rental Search in Its AI Assistant Isn’t a Priority, writes Skift executive editor Dennis Schaal.

Expedia execs would readily admit that its ChatGPT-based virtual assistant is a tad clunky when looking to find and book vacation rentals (and hotels, as well.) In fact, as the company tests what’s useful for travelers using the feature, it isn’t prioritizing vacation rental search.

In Expedia’s iOS app, you can select Explore trip ideas with ChatGPT, press the microphone option to speak or type a question, such as “What are some vacation rental options in Chicago for mid-July for four people.”

The chatbot responds with four options such as a “Cozy 2BR Apartment in Lincoln Park, Chicago” or Spacious 1BR Condo in River North Chicago.” There’s also verbiage about the amenities, and the locations. 

There are no other actionable choices other than to ask another question. I then asked about the rate for the cozy one-bedroom apartment and got a response that the virtual assistant has no real-time pricing, but the user could check the Expedia app or website for availability information.

When you exit the chatbot, a message says, “take the next step and plan your trip,” by “saving your chat.”

This is where things got funky.

I saved the chat, and that takes you to the Trips section of the Expedia app. But then couldn’t find any reference to the Chicago vacation rental choices that the virtual assistant previously sourced. Instead, under the heading “A Mid-July Vacation in Chicago,” there were options to invite people to the trip, and to start searching  for vacations to Paris and Orlando — not Chicago — based on previous questions I’d asked the chatbot. 

I asked the chatbot the same question again about vacation rental options in Chicago in mid-July for four people, saved the chat, and in the app’s Trips section under A Mid-July Trip to Chicago the only options the app provided were for Chicago hotels such as The Langham Chicago and The Peninsula Chicago.

So it provided hotels, but no vacation rental choices. In fact, Expedia is testing the best use cases for people using the AI chatbot and for now it is not saving vacation rental results to the Trips section. That could change in the future as Expedia prioritizes what to include and what to leave out.

These are early days for Expedia’s generative AI-based chatbot, and one from rival Booking.com in its app debuts in beta for its Genius travel rewards members in the U.S. on Wednesday. 

They get better eventually.

Around the World

Australian short-term rental operator Alloggio would be acquired by Next Capital, a mid-market private equity firm at a downgraded valuation of AU$48.2 million [US$32.7 million] after reducing the offer price by 20 percent. 

In April, we reported that the company will be taken private and if approved by a shareholder vote in July, the deal will be worth around AU $60 million ($40 million).

The New South Wales-based company went public in 2021 and raised AU$16.5 million ($11 million) with a market cap of $33.1 million — this was significantly below initial banker expectations of a $20 million raise and a market cap of $45 million. Alloggio went public to both expand its property management and mid-market hotel divisions and acquire property management rights across Australia.

Chart of the Day

Depending on the data you trust, occupancy of short-term rentals is both up and down. 

And they’re both true — it’s a matter of when (season) and where (region).  Unsurprisingly, key markets do better than others.

One short-term rental mid-year outlook released earlier this month predicted declining occupancy for 2023, but said that the rate of decline will be narrowed to 3 percent compared to 2022, which had a steeper fall (5.3 percent) from 2021.  The falling occupancies are due to higher mortgage rates affecting supply amid ongoing demand strength. This is according to AirDNA’s analysis.

This is in line with what Beyond Pricing found — U.S. occupancy for July pacing about 5 percent down year-on-year — from 37 percent in 2022 to 32 percent in 2023. And according to data released by Transparent/OTA Insight yesterday, in the first quarter of this year short-term rentals saw occupancy levels 12 percent higher than 2020. And looking ahead, occupancy levels in key markets are up 31 percent until the end of summer. 

Elsewhere on Skift

Selina, a hotel and experiences brand focused on youth travelers, said on Tuesday it had cut a deal for a strategic investment of up to $50 million led by Global University Systems (GUS), which runs for-profit universities.

On Tuesday, the company revealed it had suffered a net loss of $30.3 million on revenue of $54 million in the first quarter. It had $23 million in cash as of March 31. Selina said that it planned to cut about 350 full-time employees by October. It has closed five properties that contributed to 41% of its unit-level operating losses last year.

The extra capital from Global University Systems starts with $10 million right away. That will help the balance sheet of Selina — a growth startup that has struggled to become profitable after going public last October.

Hotel Brand Selina Gets Investment as It Still Struggles With Losses

Skift Short-Term Rental Reporter Srividya Kalyanaraman writes the Skift Short-Term Rental Report. Send news tips to [email protected].