By Jill Menze | Article originally published on PhocusWire.com
Vacasa’s 160th acquisition is a big one – and one that has the vacation rental sector abuzz at what it means for the future of the industry.
Last week, Vacasa, one of the leading vacation rental management companies in North America, announced its acquisition of Austin, Texas-based property management company TurnKey Vacation Rentals.
Terms of the agreement were not disclosed, but the deal – a combination of equity and cash – is expected to close in a month and comes at a time when demand for vacation rentals has boomed amid the COVID-19 pandemic.
Among certain corners of the vacation rental industry, the deal was not surprising: Many believe that consolidation was bound to happen – and will continue – as competition increases and the pressure to scale intensifies as companies crawl back from the pandemic.
However, for an industry so fragmented, what will further consolidation mean for smaller players in the space?
And for Vacasa – under pressure to turn profitable – is acquiring TurnKey a move to better position the company for an eventual IPO?
Below, we hear from vacation rental experts on what the Vacasa/TurnKey deal will mean for the sector and the travel industry at large.
Steve Milo, founder and CEO, VTrips
“This proves again that capital is starting to move into what I would call the supply market. Previously to this, most of the capital was on the demand/OTA side, and we’re seeing more and more capital now being invested in the supply/property manager side. That’s really good news for the industry because there’s far more demand than supply right now.
“Regarding an IPO, I’m not sure that their accounting is in the shape to withstand an IPO any time soon – SPAC is more likely an outcome.
“Generally, we’re going to see an acceleration of consolidation: I think investors have figured out that the property manager space has exclusivity of the contracts, and that exclusivity is the [key] to profitability in the industry. I would anticipate a lot more capital coming into the property management space and rolling up what is still a hyper-fragmented market. For all the capital invested in Vacasa, they’re still only 5% of the North American market.
“I think a lot of property managers in the space are watching Vacasa to see if they can solve their operational issues. Vacasa has proven it can raise money, but the question is can it operate a business in an operational and profitable manner.”
