This week, Hawaii’s largest, fast-growing, and now controversial vacation rental management company, Vacasa, laid off 17% of its 7,600 U.S. employees in, among other things, a sign of weakness for the Hawaii vacation rental sector. It isn’t clear whether that will be enough to fix the company’s profound problems. Not only that, but the industry has been struck with waning demand and downward price pressure after rates rose too high, too fast, following Covid.
CEO Rob Greyber said: Vacasa has more work to do. We need to reduce our costs and continue to focus on becoming a profitable company.
Vacasa was not long ago the darling of the vacation rental sector. It seemed that nothing could stop them until very recently. Sales growth as recently at the end of 2021 was a staggering 81% year over year.
1,172 Hawaii vacation rentals at Vacasa – for now.
Vacasa is unique in its full-service approach. It manages, maintains, and markets 1,172 Hawaii vacation rentals plus others across the U.S. The company went public in 2021, after which it disappointed investors with missed financial targets and increasing issues with its operations.
Last fall, they started layoffs and warned of weakening sales and unexpectedly high costs. The CEO, Rob Greyber, also warned that many other problems would take time to get in check.
As a result of this and vacation industry-wide pressure, among other things, Vacasa’s stock had taken a beating, down 82% compared to when it went public. The company has also lost most of its value, from $4B to $760M.
Greyber said “I am optimistic about Vacasa’s potential.” BOH: We hear the words but no longer hear the music.
BOH’s take on Vacasa Hawaii vacation rentals.
Even before this, there was significant dissatisfaction, especially among homeowners, and controversy about how Vacasa managed its affairs. It’s noteworthy that on Yelp reviews, Vacasa has a rating of 2.5/5. Their reviews tend to swing either very positively or very negatively.
The situation at Vacasa now may result in an opportunity for local and smaller vacation rental managers, who were under fierce pressure from Vacasa’s size, superior technology, and financial dominance before this.
When we last wrote about Vacasa, some of the comments included:
“We rented a Vacasa property… and it was in bad condition when we arrived. We didn’t stay in the house, and they have not returned us a reasonable refund. Not sure we will ever use them again.”
“Not surprising that Vacasa stock plummeted. I have used them 2x’s. Needless to say, I was very disappointed when they changed weekly rentals to daily rental rates that were almost twice the amount than before. So I basically paid the same amount for 4 days that I used to pay for 7. Especially since I found numerous cleaning flaws. Kitchen stove vent/fan caked with bugs/grease that could fall into your pot while cooking. Just 1 example. I clean for a living, so am very detail oriented on specific things that really matter. I actually got a cleaning refund a year ago because of “terrible cleaning” by their team.”
It’s worth noting that there is a Vacasa Fraud victims page on Facebook for those interested. The most recent comment on that page from two days ago reads, “Vacasa is looking to sell and was already rejected by at least one company, an international vacation rental company.”
Vacasa is similar, yet different, from Airbnb.
Airbnb remains the standard in Hawaii vacation rentals. Most vacation rental managers, plus individual owners, list their units there. It is the go-to place where visitors shop for Hawaii vacation rentals. Vacasa, on the other hand, is a management company, unlike Airbnb. With Airbnb rentals, those functions, including customer service, cleaning, and repairs, are left to others.
Vacasa charges up to 35% of the total cost of a rental for its combined listing and management work. The concept has worked well, at least in theory, since it allows remotely based owners to have a hands-free vacation rental operation while they may be thousands of miles away.
What isn’t necessarily apparent to those renting is that many of Airbnb’s Hawaii vacation rentals are actually managed by Vacasa. It may be the largest property manager of Airbnb rentals.
Vacasa spends heavily on advertising and technology to ensure they get eyeballs on their rentals. To accomplish that, they offer their rentals on up to 100 different booking websites, including Airbnb, in addition to their own.
Things went wrong.
It was reported late last summer that Vacasa’s attempt to use Salesforce CRM to help manage their business “was a nightmare, leading to myriad sales inefficiencies. Vacasa hasn’t excelled in the mission-critical area of retention and satisfaction of its current properties and homeowners.