Merchant Innovation

Vacation Rental Home Startup Vacasa Isn’t Just An Airbnb Knockoff

At first glance, the business model behind Vacasa, the vacation rental home startup, sounds very similar to the one behind Airbnb.

But Cofounder and CEO Eric Breon says that the two online rental startups are actually vastly different from one another.

First, according to Breon, Vacasa tends to operate in smaller towns and more affluent communities, where people have vacation or second homes, as opposed to larger cities and urban centers, where Airbnb typically dominates the market.

And Vacasa is serving a vastly different clientele than the one Airbnb caters to.

“They’re the eBay of our industry, and we’re the Amazon,” Breon said of the differences between Airbnb and his company. “A lot of the properties we manage are owned by people who are very busy and very successful. The owners of a $2 million oceanfront vacation home may not want to be taking text messages during dinner about whether people can throw a wedding there next month or responding to a problem like the guest not being able to get into the house.”

Rather than just a vacation home rental online marketplace, Breon bills Vacasa as a soup-to-nuts, full-service property management company that handles everything for the home owner, from renting the property and screening the prospective renters to maintenance and house cleaning services to securing whatever local permits might be necessary for home improvements or to operate the property as a rental home.

“One difference between us and Airbnb is we actually follow local zoning laws,” Breon said.

Founded in 2009 when Breon and his wife became responsible for a cabin on the Washington coast built in 1898 that belonged to his wife’s family, Breon said, at first, they poured about $4,000 in maintenance and annual repairs into the property before realizing they were never using it.

So, they decided to rent the place out as a vacation home, but Breon soon realized that his options for local property managers in the area were pretty slim and the only one he could find wanted to charge him a 50 percent commission on an estimated annual rental income of $3,200. Breon decided to rent it on his own and wound up making $24,000 for the entire year, keeping all the profits for himself.

And that’s how the idea for Vacasa was born.

“That made me realize how unprofessional this industry was. The majority of them [property managers] have gotten into it by accident, and as a result, they’re not very focused on it,” Breon said. “They’re pretty limited in what they can do for their home owners just on their industry.”

Since its founding, Vacasa has grown from a two-person company to employ more than 1,300 people at offices in Portland, Oregon, and Boise, Idaho, as well as numerous field personnel in the 14 U.S. states and four foreign countries where Vacasa manages about 4,000 vacation properties.

“We’ve taken what’s historically been a very local business and made it into a national business with the use of technology,” Breon told Forbes in an interview back in April after it was announced that Vacasa had secured $35 million in Series A financing from the New York City-based firm Level Equity.

Having as many employees as Vacasa does is rare for a startup, but Breon says the sense of ownership that employees take in the properties they manage is paramount to the company’s business model (especially when, on average, a boiler blows at one of the properties Vacasa is responsible for at a rate of about once every hour now, Breon says).

“It’s an important part of our model. We think it’s very important that they’re a part of our team,” Breon said. “It’s not a problem that can be solved through contractor dynamics. We need to get every single home cleaned, so we need those people to be part of our team and really help out.”

And in order for members of the Vacasa team to take a sense of “ownership” in the properties they are responsible for, Breon says the company pays a starting wage of $15 to all its housekeepers.

Vacasa takes about a 35 percent commission on the rental homes it manages, but Breon says the company’s technology and data-driven approach to the vacation home rental market allows homeowners to squeeze the most profit possible from their properties, which, in turn, helps cover the costs of Vacasa’s commission.

“We’re very effective at setting the right price at every property every night,” Breon said. “We’re about really getting top dollar for homeowners in peak season, but also opening up affordability in the off season has been very helpful to our homeowners. Trying to figure out what’s the right price on every home on a manual basis for the 4,000 properties under our care would really be impossible.”

Vacasa began an expansion into Italy, Spain, Belize and Chile about a year ago and is slowly expanding into the lucrative East Coast vacation home market. It is also exploring more international expansion options, but Breon says the company’s goal is to reach global expansion and to become a ubiquitous term when it comes to the property management business.

“Wherever anybody has a home, we’ll be there,” Breon said.

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