Vacasa just raised a whopping $319 million in new funding as the Portland, Ore.-based company aims to extend its reach in the vacation rental industry and fuel growth of a new real estate offering.
Global tech investor Silver Lake, which counts Dell, Alibaba, and Tesla among its portfolio companies, led the Series C round. It’s one of the first Pacific Northwest investments for Silicon Valley-based Silver Lake. Existing investors Riverwood Capital, Level Equity, and NewSpring also participated.
The round is the largest for a Pacific Northwest company in the past 13 years, according to PitchBook.
Founded in 2009, Vacasa — ranked No. 2 on the GeekWire 200 — bootstrapped for six years but has raised more than $500 million since 2016. It manages more than 23,000 vacation homes in 31 U.S. states and 17 countries, and bills itself as “North America’s largest vacation rental management platform.”
“Our goal has always been to be everywhere our guests want to travel, and there are still gaps to fill both in the U.S. and internationally,” Vacasa CEO Eric Breon told GeekWire. “This new financing will help propel Vacasa into our next stage of growth, and allow us to deepen our investment in technology.”
Vacasa is using tech to disrupt the hospitality industry, similar to companies such as Airbnb, which is expected to go public next year, and HomeAway, which was acquired by Expedia for $3.9 billion in 2015.
But it’s not just a marketplace — it is a “full-service property management company,” helping homeowners manage the entire booking process from start-to-finish. Vacasa employs thousands of people across its markets for on-the-ground “field-based roles” — housekeepers, reservations agents, local managers, etc.
“Unlike Vrbo, Airbnb, and others, our field staff fully manage every home on our site,” Breon said. “This is a massive difference for both owners and guests. Owners can rent their homes without worrying about the day-to-day complexity of short term rentals, and guests have the assurance that we’re there to help should the need arise.”
Vacasa actually counts Airbnb and HomeAway as partners, providing inventory for their marketplaces.
The short-term rental market has been growing steadily over the past three years and particularly for destination markets, according to the AirDNA Index that uses Airbnb and Vrbo property data.
Vacasa cited a recent study by RBC Capital Markets showing that nearly half of travelers have stayed at a “vacation rental” in the past year.
Vacasa’s platform uses proprietary yield management software that updates price rates daily based on hundreds of variables like weather, events, competitor pricing and occupancy, regional demand trends, season demand curves, and more. The idea is to maximize revenue for property owners that list homes on Vacasa.
Vacasa’s revenue has grown nearly 7X in the past four years and will nearly double again in 2020. Gross bookings are expected to top $1 billion over the next year. Breon said “our existing operations are profitable and will remain so.”
Last week Vacasa finalized its $162 million acquisition of Wyndham Vacation Rentals that increased its portfolio of homes by 9,000.
This past September, Vacasa inked a deal with Google to have its properties show up in Google search results.
“Vacasa has spent the past decade bringing innovation to the $100 billion global vacation rental industry,” Joerg Adams, managing director at Silver Lake, said in a statement. “We believe Vacasa, with its differentiated technology platform that’s already the market leader in North America, has the potential to become a global brand that stands for superior financial returns for homeowners and exceptional experiences for guests.”
Vacasa will use the cash infusion to speed up expansion into new markets and continue to build an all-encompassing platform for vacation rentals.
In 2018, Vacasa expanded beyond its bread and butter service of vacation rental management to offer a new network called Vacasa Real Estate to help people through the process of buying and selling second homes. Vacasa will continue to invest in that service, which has evolved from an agent network to a bigger network with brokerage offices in key vacation rental markets across the U.S.
Breon said the company is seeing an increase in buyers looking to purchase vacation homes as an investment, with an intent to rent out the property.
“With our data and expertise, we can help people find the perfect home — be it a pure investment, or a blend of personal use and profit,” Breon said. “And with our local teams, we can make the process of buying, furnishing, and renting a home incredibly simple.”
In a way, the real estate offering is like a Zillow for vacation rentals. Breon noted an “income calculator” as a differentiator, similar to how Zillow stands out with its “Zestimate” tool.
“Creating visibility as to the rental income potential is essential in helping people make informed purchase decisions. Our income calculator provides this information, and our real estate team helps them through the process,” Breon said. “Our primary focus is on helping individuals buy the perfect second home, either through a Vacasa agent, or one of our partner agents.”
An IPO is still on the table for Vacasa. The company hired Lisa Jurinka as chief legal officer last year and brought on former Chewy CFO Jim Grube as CFO in July. “Part of his focus is on ensuring that Vacasa is public ready,” Breon said. “As we first raised external capital less than four years ago, we have flexibility as to the timing.”
Vacasa employs 379 people at its Portland HQ and 145 at a Boise office, with the remaining workforce in the field. It expects to add roughly 2,000 employees in the coming year.
The Series C round is the largest in the Seattle region since 2006, when Bellevue, Wash. telecommunications company Clearwire raised a $900 million round led by Intel Capital that altered plans for an eventual IPO.
It’s been a year of huge deals for Pacific Northwest startups in 2019. In addition to Vacasa, international remittance company Remitly, contract management startup Icertis, sales automation firm Outreach and identification management company Auth0 all landed nine-figure funding rounds this year.
Portland has not seen a huge tech giant emerge over the past few decades such as Microsoft, Amazon, and others in the Seattle region — but some believe Vacasa could change that.
Tuesday’s funding makes Vacasa the state’s best chance to develop a new, homegrown company to help anchor Oregon’s economy and to nurture a new generation of employees and executives to lead future businesses.https://t.co/4KZTkXg0kD
— Silicon Forest blog (@siliconforest) October 29, 2019