First, if you don’t know the name Vacasa in terms of Hawaii vacation rentals, you should. They are one of the single largest managers/purveyors of Hawaii vacation rentals, with an inventory of nearly 1,200 Hawaii homes and condos.
This week, shares in the recent vacation rental darling of the stock market plummeted by 48% “on weak sales and cost overruns.” In total, it’s down more than 80% in the past year. What does that mean for the Hawaii vacation rental sector, Vacasa, and, more importantly, for you? Let’s talk about Vacasa, then circle back to the larger implications.
How Vacasa is different than Airbnb and Vrbo.
While Airbnb is the household name in Hawaii vacation rentals, Vacasa has staked its claim here on a slightly different premise. Unlike Vrbo or Airbnb, Vacasa is a full-service property management company that also lists its inventory for rent. Those other companies (Vrbo and Airbnb) do not provide management, leaving that to private or professional managers. Vacasa, on the other hand, sets up local teams responsible for a myriad of elements, including check-in/check-out, cleaning, customer service and repairs.
Vacasa charges about 30% for its combined listing and property management services. The concept has worked, or they wouldn’t have amassed such a large number of Hawaii rentals in their pool in just the past few years.
Vacasa went public last year with the potential for exponential growth.
Many of the Hawaii vacation rentals on Airbnb and other websites are managed by Vacasa. It offers up to 100 booking sites on which the properties it manages can be found.
Vacasa’s stock dropped first in the stock market decline, then again on its own merits this week.
And now, there appears to be significant doubt about whether Vacasa can achieve its desired goals. That is based on lower-than-expected earnings, and more significantly, the guidance it offered that the momentum may be fading as the company failed in its third-quarter earnings. So in spite of selling more rental nights and with higher rates, they ran into much higher than expected costs that resulted in adjusted earnings far below what they had expected ($46M vs. $55-$60M).
What does this mean for Hawaii visitors who prefer vacation rentals?
1. Expect greater availability from now on for Hawaii vacation rentals.
2. Price increases are likely to stop, and costs for vacation rentals should moderate going forward.
3. Promotional periods should reappear for the off-peak seasons of winter, spring, and fall.
What’s next in the Hawaii vacation rental sector?
Vacasa also said that gross booking per rental could decline due to a weaker-than-expected economic environment. That is based on consumers traveling and/or spending less on future (Hawaii) vacations. And therein is the big news in terms of Hawaii vacation rentals. As it goes for Vacasa, it will likely go for the Hawaii vacation rental industry.
Read Hawaii Vacation Rentals No Longer The “Cheap” Alternative.
What does the state’s report on September vacation rentals indicate?
Interestingly, the number of Hawaii vacation rentals in the marketplace has declined considerably since 2019, on average 27%. The state’s report for September already showed lower occupancy rates even with fewer available units available. But at the same time, most notably, considerable increases in rates remained (at least for now).
There was a statewide average occupancy rate of just 59%, down more than 9% compared with pre-Covid. The average daily rate was $283, which is +46% compared with 2019.
With the enormous increases in rates and an upcoming reduction in demand, visitors are likely to see better times ahead for vacation rentals.
Maui vacation rentals.
Maui, which has the most vacation rentals, had an average rate of $333, +46% compared with 2019, and 64% occupancy, -8% compared with 2019.
Honolulu vacation rentals.
Honolulu vacation rentals had an average rate of $214, +34% compared with 2019, and 61% occupancy, -12% compared with 2019.
Big Island vacation rentals.
Big Island vacation rentals had an average rate of $225, +54% compared with 2019, and 50% occupancy, -8% compared with 2019.
Kauai vacation rentals.
Kauai vacation rentals had an average rate of $377, +56% compared with 2019, and 59% occupancy, -7% compared with 2019.
hawaii-vacation-rental-performance-2022-09
Get Breaking Hawaii Travel News
I hope they all fail. Vacasa is so greedy, charging $200 for a cleaning fee in top of other fees. These vacation rentals no longer offer a cheaper alternative to hotels. Most times they’re even more expensive than hotels. Maui rentals are like $300 per night or Waikiki at $250 per night and they’re not even in nice condos. Very mediocre accomodations but very expensive indeed. I hope they all fail because of their greed.
Is it possible that we are seeing a possible public response to the Rising Prices in Hawaii? Compared with Resorts and Hotels the Short Term Rental Market is a breath of fresh air. With prices per night averaging less than 20% compared to the alternative it’s easy to see why the STR’S must be eliminated. Even with less rentals available due to whatever circumstances the market isn’t booking that well, could it be reflective of Council’s regulations and the public unsure of if they can book? It seems that it is Industry Wide, is it possible that everyone has Overpriced Themselves and now must sit back waiting for a sign of what to do? With the Entire Resort, Hotel and STR Industry in Hawaii suffering a Loss of Tourists bookings, reexamine!
Good information.
Beware….we rented a Vacasa property in Oregon recently and it was in bad condition when we arrived. We didn’t stay in the house and they have not return us a reasonable refund. Not sure we will ever use them again.
Lol I work at Vacasa and they may be a lot of things but unprofitable is not one of them. Our 3rd quarter results just posted and we succeeded projections, again.
Our 2nd quarter revenue was $310 million, a 31% year-over-year increase. As I said there’s plenty of issues but our ability to make money isn’t one of them.
The WA/OR coast, where I’m located, is up 550% this year. 🤑😑
Despite the 2nd quarter results that showed Exactly what the consensus was at the time of a Very Strong Rental Season in which basically Every Company And Service of this type did well, weeping over 3rd and then 4th quarter softened market bookings began already! The probability of a “Soft Market” in 2023 is predicted. Vacasa missed their own income projections and expected it through at least 4Q2022. Sounds less “Rosey” then what you’ve indicated as a Whole, good company though. Still a Buy/Hold.
In the current environment of state government a d locals hoping for a decrease in visitor numbers, this will be viewed as a good thing by some. It may even go on to get some rental property owners to sell off and that could lead to a downturn in prices for housing. All to be viewed as good news for locals.
Skip this sounds good to “certain investors” because of the potential for good returns on undervalued housing which will continue to be outside of the price range for the average Hawaiian home seekers. Definitely against your thinking the housing market will take a bit of a drop with the glut of former STR Properties. Once the prices are low enough the feeding Frenzy will begin and drive the housing market to the Expensive Side putting the properties even Further Away from the average Hawaiians Budget and Price Point. It’s Past Time for the State to Build “Affordable Housing” for Hawaiians in sufficient numbers.
What a Debacle for the Big Ticket Resorts and Hotels, Expansions and New Constructions planned to add rooms in a slightly depressed market. 🙁 With a Court Date scheduled for February hopefully the Justice System will rule in favor of the STR Market and Add Fuel to the Fire 🔥 sending a Shockwave at the Council and Hoteliers that will sting their Hands and keep them up at night. Keeping My Prayers going for this Righting of Wrongs.
Aloha Rob+Jeff. Interesting article and not surprising that Vacasa stock plummeted. I have used them 2x’s since they took over Pacific Kauai Real Estate office in Kapaa. 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. Really overpriced for sure. 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 detailed oriented on specific things that really matter. I actually got a cleaning refund a year ago because of “terrible cleaning” by their team.
Seeee we jacked up our prices, everywhere not just in Hawaii and we were still booked solid every weekend all summer, how does that scream floundering profits, Debram obviously still stayed with us and so did everyone else. Not saying it’s worth it nor that I agree with the price hike, just disagree with anyone trying to say we didn’t make a pile of money this year.
Your Employer has made quite a lot of money, anyone doubting the results through the end of 2Q2022 just needs to learn how to read. Great for the Company. Projections to the end of 4Q2022 are Not Enthusiastic and Analysts expect the downturn to last possibly into 2Q2023 at least. Profitability to take Hits but still be there. The company is in a good position to whether a short-term market like what is predicted with less overall profits.