So, how did Vacasa, the online vacation rental home startup, go from managing one beachside cabin on the Washington coast that belonged to the family of one of the founder’s wife to a multimillion-dollar company with more than 1,400 employees that manages over 4,000 properties in the U.S. and four foreign countries that is threatening to disrupt the vacation and rental homes industry?
Well, according to Cofounder and CEO Eric Breon, scaling was a matter of necessity when Vacasa first started out because rental homes were illegal in the company’s home turf of Portland, Oregon, in all but commercial areas (which greatly limited the company’s initial reach).
“From day one, we were always managing homes in other areas, so it forced us to develop ways of doing business effectively with that distributed model,” according to Breon. “Whereas, if they were legal in Portland, we might have just ended up building Portland’s best vacation home business, and it would have been really difficult to figure out how do we scale that to an area that’s not right by our central office.”
Vacasa is a full-service property management company that handles everything for the homeowner, from renting the property and screening the prospective renters to maintenance and house cleaning services — they will even secure whatever local permits might be necessary for home improvements or to operate the property as a rental home.
The Portland-based company currently employees about 1,400 people with headquarters in Oregon and another office in Boise, Idaho, but the majority of the company’s employees work in the field at the more than 4,000 properties Vacasa manages in the U.S., Italy, Spain, Belize and Chile.
Vacasa’s staff are all W2 employees, and the company pays them at least $15 an hour, because Breon believes it’s important that employees be committed to and invested in the properties under their care.
“It’s a different model than most,” according to Breon.
In order to reach the level of saturation in the quick time that it has — the company was founded in 2009 — scaling the Vacasa model in the areas where there were desirable vacation and second homes to rent was of critical importance.
“In any given local market, we’ll have a local operations managers,” said Breon. “They’ll oversee about 30, 35 homes, they’ll manage the local housekeeping team, they’ll be the primary contact for those homeowners. They’re the ones taking care of those homes, taking care of those guests, taking care of those owners and taking care of those employees.”
When Vacasa identifies a potentially desirable market — as the company is doing now in its East Coast expansion, starting with properties on the Maine coast, Cape Cod, Martha’s Vineyard and Nantucket — it focuses on securing an acquisition to give it a foothold in that market and help it hire out the staff needed to maintain and manage the properties that might fall under its care in the area, according to Cofounder and CDO Cliff Johnson.
“Typically, we’ll identify a key market in the region, launch that market and then grow organically from there,” Johnson said.
Or, as Breon likes to say, Vacasa establishes “beachheads” in vacation communities where it thinks the market might be profitable and builds out from there.
“Currently, our strategy is largely focused on finding an acquisition opportunity to launch a new market, because that lets us skip the inefficient period early on of ‘Hey, we have two employees and one property.’ That does not look great on our financials,” according to Breon. “So, we can go in, we can buy a company that already has 30 properties or has 60 properties. We have a foothold, and then, we can build upon it.”
Oftentimes, when Vacasa acquires a small property management company in a new region, many of the employees or contractors of the company, and sometimes even its former owner, will end up working for Vacasa to help it secure contacts and staff in the area.
“The owners of those companies actually make great employees for us,” Breon said. “A lot of the time they’re very interested in one aspect of it, like maybe they were a real estate broker that got into real estate. They love bringing on new properties, but they have no interest in managing the day-to-day of the housekeeping.”
Vacasa is currently trying to build out its East Coast operations, but the company hopes to have scaled the Vacasa model nationwide by the end of 2017 and will then turn its sights on building out an even larger international presence in the vacation rental home market.
“This time next year, we’d like to be in all major markets on the East Coast,” according to Breon. “Beachheads in any places where we’re not currently over the next year.”