In The Big Chair - Eric Breon of Vacasa

Eric Breon, CEO

As the largest vacation rental management company in the United States, Vacasa offers vacation rental management for more than 8,000 vacation homes in the US and Central and South America.

Coming to Vacasa with a background in venture capital and analytics, he has since raised an industry-leading $140 million in funding for the company since founding it.

What’s the biggest change you’ve seen in the vacation rental industry since Vacasa started in 2009?

The biggest change to the vacation rental industry, from my perspective, has been the shift to online booking. That’s something Vacasa has found extremely important since the start, and it’s great to see we’re finally getting there as an industry. It makes it that much more easy for people to book a stay, especially short-term, especially last-minute.

What accounts for the fragmentation within the market?

First, on the on OTA side – Airbnb and HomeAway and the like – there’s not much fragmentation left. Now, a majority of bookings already go through one of those relatively few channels.

In contrast, the place where we play is ridiculously fragmented. The reason for that is it’s a hard business to figure out how to scale across markets; it’s an inherently local business at its core.

If you look at people who started in one business and tried to expand – people that started in one market, then tried to expand to other markets - it generally goes poorly for them.

Their whole business is doing it in this one location around the office there and people there. When trying to expand, it doesn’t work out well for them.

There are very few people out there who have ever really figured out a model that works for multi-market vacation rental management. There’s really only two.

Can you elaborate on that?

If you look at which companies are growing across a variety of markets in the United States, it’s only Vacasa and TurnKey.

How have you managed to do what you’ve done?

When you look at the history of people trying to go multi-market, there are two different approaches that have been taken: There have been rollups like ResortQuest, and then there are people who built a strong location and they tried starting a second.

Both of those have pretty deep flaws. First, you look at the ResortQuest model, the idea that you could just buy these companies that were very independent and run differently, and generally their success was due to a strong founder and a strong management team, which often disappeared as part of the transaction. So just trying to roll up those disparate aspects wasn’t a strategy for success.

At the same time, trying to take a model that worked in one city and springing it up in the next city 30 miles down the road, again that hasn’t really worked out either for companies. It’s kind of when a restaurant opens a second location, it often fails just because it’s too distracting and they don’t truly have systems to make it replicable. They’re just trying to do what they were doing again.

When you look at the scale of property management firms, you see a lot of different levels where people cap out at. There’s the person that basically does it all, they cap out at 30 units. There’s the person who has one or two good full-time people to help them out, they cap out at around 60 units. Then there’s people who can really leverage a lot of help that are still talking to every single home owner, and those people cap out at around 200 units.

For home owners, what are the benefits of going with Vacasa?

Two things that we find that most home owners are looking at: One is how much money will I make, and two is who is taking care of my home and how good of a job will they do.

Yield management has been by far the most innovative tech development from our perspective.

Eric Breon - Vacasa

Share this quote

Everyone is on the spectrum between those two. Some people are very focused on who is taking care of my home, and they don’t care much about the income. Others are very focused on the income with less focus on caring for the home.

At Vacasa, our goal has been to provide the best possible answer to both those questions. We first succeeded on the how much will I earn front. We’ve been able to deliver outside financial results to our home owners since we started the company.

As we grew quickly, there were a few times where our customer service to our owners wasn’t as [good] as it could be. But now we’re there. Between our local team and technology that makes our lives easier, we are able to be our best in both how much money they can earn and how good of care we're taking of their home and of them as customers.

With regards to Airbnb, first I’d say people can participate on Airbnb through Vacasa. We do distribute our homes through Airbnb and HomeAway, so a few benefits of going through us – one, we’ll make them more money, and we’re going through a variety of different channels and we’re applying our yield management and our other technology around marketing to improve their total bookings.

But beyond that what really matters to owners is we’re really taking care of their home. It’s one thing if it’s an apartment down the street, but if you have a beach house two hours away or a plane flight away, you need someone local you can rely on. Being able to book their home for more and that local service they can trust, that’s what it’s all about.

What do you think of Booking.com’s recent push into the vacation rental market?

I don’t see it as a significant factor long term. It’s probably more relevant in urban markets where people are flexible in accommodations that they’re looking for – areas dominated by both condos and hotels – I could see them having significant impact there. It’s definitely stronger for European market than the domestic US market. They don’t have significant SEO for most destinations, nor will they be able to overcome HomeAway’s brand recognition in those resort markets.

I can see them continuing to shift the consumer that might already be on Booking. A family of four going to Orlando – that’s a place where I see Booking being significant. But someone actually booking a house on the California coast – I don’t see Booking ever playing a significant role there.

What tech innovations have been the most transformative to your business?

Yield management has been by far the most from our perspective. It’s helped us deliver outside returns for home owners while keeping a healthy slice for ourselves.

In general I think the industry can be a little too focused on technology. There’s so much technology out there. I recently stayed at the Park Hyatt in Moscow, and there’s so much technology in that hotel that they have to give you a tour of your room to make sure you know how to operate it, which made me think the ROI on this technology investment may not be all that they hoped for.

I think sometimes companies get a little too excited about technology.

Eric Breon - Vacasa

Share this quote

I think sometimes companies get a little too excited about technology. For us, tech is a key part of how we successfully manage 8,000 units. The logistics of that is not easy. Being able to automate the back office and making sure that everything that needs to happen happens – that’s not relevant to typical property managers only managing 30 homes. There, it’s about the relationships.

It’s kind of like a great restaurant. It’s not that it was super easy to book the reservation through their mobile app that made you really love that great meal. It’s that they greeted you with a smile and the food was good. It’s kind of same in our industry. Was customer service strong? Was the place clean and as promised? But that said, for achieving massive scale like we have and we intend to, tech to make that all happen is essential.

Looking at travel as a whole, what has been the most important tech innovation?

The rise of Uber has been the biggest change there. I travel frequently, and how much easier it makes international travel … you don’t speak the language, you don’t know where you’re going, but you can just press a button, and a car takes you where you’re going.

It’s had a huge impact, and then when you combine that with impact on the rental car industry and the impact on the kind of hotels people pick –I think there’s going to be a lot of trickle down just from that shift of people less likely to get a car on vacation now.

How are you seeing smart-home tech changing or transforming parts of your business?

From our perspective, we hold technology to a pretty simple bar of does it actually make the consumer experience simpler and does it make it better. A lot of tech out there fails that bar - it doesn’t actually make my stay easier to have a light switch that doesn’t look like a light switch.

There are few key pieces of technology we’re implementing like digital door locks, a key security feature. There’ a lot of benefits to that. There are energy efficient benefits to thermostats too … so there are a few pieces like that which I think are very key, but outside of that I think there’s more hype than there is value.

Can you talk a little about dynamic pricing and the benefits of having a dynamic pricing system?

When we started in this industry, the price variance was a joke in many locations. I remember it being pretty common on the Oregon coast one of the markets we started, a summer rate was $265 a night and the winter rate was $235 a night. Just totally suboptimal, not any thought into it.

From there you started to see a little more sophistication. But when you look out there now at yield management offerings, they’re generally about copying what other people are doing, and that makes no sense because there aren’t very many people out there that are very good at yield management.

Saying, “Hey this is what other people that have a three bed, two bath homes in ‘insert city name’ are doing,” doesn’t tell you nearly the whole story. Our technology is not about copying the market but knowing where the market is and leading the market.

Where do you see Vacasa five or 10 years from now?

Continuing to do what we’re doing. The core of our philosophy is to fill in the map. There’s a lot of markets where Vacasa is not yet available. We think it’s essential to both our brand value and our enterprise value to fill in those markets.

I think the next five or 10 years are going to be about the maturation of what’s out there today. I could be totally wrong about that but that’s how I see it.

What’s your proudest professional achievement?

Continued business success of Vacasa. The team we’ve built and how we’ve succeeded over the years far exceeds anything I’d ever imagined or hoped for.

What excites you and keeps you awake at night about your company?

The scale of the opportunities ahead of us is just so incredible. We’ve barley scratched the surface. I often tell people that Vacasa is a mediocre company. but were still doing it so much better than anyone has ever done it before. There’s so much opportunity across all aspects of our business. To get that much more dialed in and do that much of a better job for our owners and our guests – that’s really exciting.

What gaps would you admit to having in your overall knowledge of the industry?

My knowledge is still very US-centric. I don’t have a deep understanding of the European or other international markets, so that’s something I’ll be looking to learn more about over the coming years.