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.
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