Major consolidation is underway in the vacation rental management sector with Vacasa announcing plans to acquire TurnKey Vacation Rentals.
Terms of the agreement have not been disclosed, but the deal - a combination of equity and cash - is expected to close in a month.
The acquisition comes as demand for vacation rentals has accelerated due to the COVID-19 pandemic. Airbnb – which, despite the odds, listed on the public markets last year – has said the crisis has shown that the home-share model is “inherently adaptable.”
For professionally managed vacation rentals, the pandemic has presented a unique opportunity to attract homeowners and travelers looking for a higher-touch service.
For Vacasa and TurnKey – which share similar portfolios and a focus on technology to simplify the homeowner and guest experience – the two full-service management companies will have the opportunity to deliver higher levels of customer service and value as the travel industry prepares for a COVID rebound.
Portland, Oregon-based Vacasa manages around 24,000 vacation homes and averages two million guests per year. TurnKey, based in Austin, Texas, manages vacation rentals for premium homes in more than 80 destinations across the U.S.
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The TurnKey acquisition will add more than 6,000 vacation rentals to Vacasa’s existing portfolio, including homes in premier markets such as Los Angeles and Napa in California; Asheville and Black Mountain in North Carolina; and Santa Fe, New Mexico.
“This is an incredibly exciting day as we plan to welcome TurnKey employees, homeowners and guests into the Vacasa family upon closing of the transaction. Our companies have a similar focus on delivering exceptional service to our homeowners and guests, and we are excited to do that together at a key juncture for the highly competitive vacation rental industry,” says Vacasa CEO Matt Roberts, the former CEO of OpenTable who replaced Eric Breon in February 2020.
"The vacation rental sector continues to see significant gains in market share for accommodations and, with our expert teams and innovative technology, we’ll have the opportunity to lead the industry forward.”
Adds TurnKey CEO John Banczak: “Innovation has been at the core of our business from the start. Our goal is to make vacation rental homeownership more efficient and more profitable for owners through the use of technology.
“Moving forward together, we expect to deliver on our shared vision of developing innovative solutions to meet the evolving needs of our homeowners, and offer a consistent, reliable hospitality experience to our guests.”
Pandemic performance
In June, Vacasa raised a $108 million financing round led by Silver Lake, a previous investor in Vacasa’s $319 million Series C round in October 2019, which at the time valued the company at more than $1 billion.
Of the financing, Roberts said Vacasa decided to raise additional funding due to the “significant impact” COVID-19 had on the business.
“Since this was an inside round with existing investors who are familiar with Vacasa, the process was very smooth,” he told PhocusWire.
With travelers eager to get back on the road in safe and socially distant ways, short-term rental providers need to address the question of supply as demand heightens.
Roberts has said that he believes travelers will gravitate toward professionally managed vacation rentals as privacy and cleanliness become top priorities. And with TurnKey, Vacasa is growing its supply to a total of 30,000 rentals.
“As a full-service property management company, we provide an added level of control that the home will be expertly clean and safe for our guests - that’s different from what booking sites can provide.”
As sales of vacation homes boom - according to a November report from the National Association of Realtors, vacation homes sales in the United States rose to 109,100 in the period from July to September, a 44% gain over the same period in 2019 and up from about 60,000 sales in the period April to June - Vacasa vice president of sales and marketing Shaun Greer has said that challenges mount for management companies and listing platforms that need to determine if new owners intend to occupy the property full time or list it for rent, either self- or professionally managed.
To grow its inventory, Vacasa has also used content marketing, creating multiple reports each year with data on market performance and occupancy trends, which Greer told PhocusWire partly accounts for a boost in organic leads this year.
In the first 11 months of both 2019 and 2020, Vacasa says it took in about 4,000 inquiries, but this year those coming in organically went from 1,168 in 2019 to 1,998 in 2020 – an increase of more than 71%, with the biggest jump coming between June and September. Vacasa also partners with real estate agents to introduce the Vacasa brand from day one.
Both Vacasa and TurnKey offer full-service vacation rental management to homeowners through local teams that care for guests in-home during stays, as well as property cleaning and maintenance. Vacasa’s more than 4,000 local team members are backed by central support offices in Portland and Boise, Idaho.
Following the acquisition, Vacasa expects to maintain TurnKey’s headquarters in Texas.
TurnKey is Vacasa’s 160th acquisition since its founding in 2009: In December 2019, Vacasa acquired Colorado-based Resort Lodging Company for an undisclosed sum, and earlier that year, it bought the remainder of Wyndham Destinations’ Vacation Rentals unit for $162 million.
In 2018, Vacasa acquired Oasis Collections, a home-share company with investment backing by Hyatt Hotels.