Is Vacasa’s switch from pure M&A growth to direct homeowner acquisition succeeding?

Thibault Masson

vacasa stock

What made Vacasa’s stock jump up more than 30% in mid-August 2022? Last June, we reported how the stocks of Sonder, Airbnb, and Vacasa had been down up to -80% in the previous 6 months. Let’s look at the case of Vacasa to see what’s changed. Just like Airbnb, Vacasa has reported solid Q2 2022 earnings. The company is transitioning from a pure M&A play, acquiring more than 200 vacation rental management companies over the years, to a balanced model that also promotes direct contract sign-ups from individual homeowners. Not only is Vacasa painting a rosy picture on the demand and supply sides, but the company also believes that it can be profitable … next year. Vacasa says that it is “confident we can strike an appropriate balance between growth and profitability and continue to expect to reach Adjusted EBITDA profitability for the full year 2023.”

Vacasa, a rebounding stock

As soon as Vacasa announced its Q2 2022 earnings on August 10, it stock jumped up more than 30%.


vacasa stock rebound

Now, the overall Nasdaq was going up. Airbnb and Sonder also posted good numbers and rebounded. Yet, Vacasa’s rebound has been the most dramatic after its earnings were published. We’ll see below that the company is willing to distance itself from the likes of Sonder, whose stock remains much more depressed than that of Vacasa. 

Let’s have a look at their stocks over the last 9 months:

  • The NASDAQ composite index (in green) is down by -18%
  • Booking Holdings (in dark blue) is down by -9%, outperforming NASDAQ
  • Airbnb (in pink) is down -by 38%
  • Vacasa (in black) is down -by 43%
  • Sonder (in light blue) is down -by 74%

Thanks to its August rebound, the evolution of Vacasa’s stock is now closer to Airbnb’s than Sonder’s. 

vacasa vs airbnb vs sonder vs booking

Q2 financial was good. Vacasa posted a profit for Q2 2022, says on track for Adjusted EBITDA profitability for full year 2023.

Reminder: What are Vacasa’s revenues made of?

Vacasa’s model is that of a classic vacation rental management company. Its revenues consist primarily of commissions on the rents that the company generates for homeowners and the fees it collects from guests. These revenues were $310 million in the second quarter, up 31% compared with Q2 2021.

Just as with Airbnb, Vacasa benefited from continued strong demand for vacation rentals in Q2. The high revenues are a combination of a high occupancy rate and a high ADR (average daily rate). Q3 should be just as brilliant, while the impact of high inflation, recession uncertainties and traditional off-season trends may lower both occupancy and ADR in Q4.

Financially, Vacasa managed to deliver a net profit of $10 million, while Adjusted EBITDA was negative $2 million.

vacasa nights sold
vacasa bookings
vacasa profitability

Can Vacasa grow its supply organically, outside of acquiring existing vacation rental management companies?

Vacasa has been plagued with several doubts:

  • The company has never been profitable. Can it actually turn a profit? 
  • The company is present in 400 destinations. How can it coordinate these markets efficiently? Are there really economies of scale in a decidedly local industry? 
  • The company mainly grew from acquiring other property management companies, especially large ones such as Wyndham and Turnkey. Can it grow organically by directly signing up individual vacation rental homeowners?

Vacasa’s supply playbook

Let’s focus here on organic growth. Vacasa’s playbook is to become a dominant force in key vacation rental markets by acquiring a large share of supply. Then, the company can become a price maker able to influence locate rates and get a good return on demand-generation campaigns.

According to the slide below, Vacasa has two main paths to supply growth:

  • Individual, i.e. going after homeowners, which is “modeling as 3/4 of new supply“
  • Portfolio, i.e. acquiring local property managers, which is “modeling as 1/4 of new supply”.
vacasa individual vs portfolio

Vacasa has acquired more than 200 property management companies over its existence. Yet, going after homeowners in each and every market that the company wants to dominate can be tricky.

Fewer company acquisitions and more direct sign-ups of homeowners 

The company says that managed to wane itself off from a purely M&A approach:

“Our individual approach, which is a direct sales model where predominantly local sales representatives sign up individual homeowners, continues to account for the majority of our home additions.

“We made substantial progress on home additions during the second quarter and remain on track to increase our homes under management by about 30% during 2022.”

To do so, the company needs to:

  • use data to find leads (e.g. real estate transactions, vacation rental permits),
  • conduct targeted multi-channel campaigns (from Facebook ads to postcards mailed to vacation rental homeowners),
  • hire salespeople to close deals with these owners.

The company is also leveraging the sales forces of the vacation rental management it has acquired to sign up more local homeowners.

Going from acquiring property managers to adding individual vacation rentals means switching from an M&A approach to a marketing-and-sales-heavy strategy. Vacasa says that it has been building this muscle, which requires both manpower and a good CRM platform (Note that the company hinted that they’s have issues with their CRM tools in the first half of 2022). 

This is how Vacasa mentions these costs:

Sales and marketing expenses were up 58% year-over-year, with the increase due to our significantly larger sales force compared to a year ago and, in turn, greater homeowner-focused advertising spend to drive more leads for our larger sales force.

In its 2021 investor deck, Vacasa showed that a key success factor of this strategy is its LTV / CAC ratio, i.e. lifetime value (LTV) of the revenues generated by a signed property over the client acquisition cost (CAC) which is the cost to acquire and onboard a new property. 

In its initial deck, Vacasa showed that its LTV/CAC ratio was 4.3. During its Q2 2022 earnings call, the company said that its LTV/CAC ratio had been above its target range of 4x to 5x on a trailing 12-month basis, a positive outcome. Their CAC has remained stable, which combined with stronger lifetime value, led a higher ratio.

vacasa LTV CAC

Fewer moves on the M&A side

In the second quarter, Vacasa acquired the properties of 16 new vacation rental companies for a total value of $74 million. This is about $4,6 million per deal.

The company says that it will spend even less on new acquisitions in the second half of 2022. Its leaders want to show that the M&A play ultimately leads to more organic homeowner signups:

We deploy it in a disciplined fashion with our targets and valuation framework informed by our prior experience executing this playbook more than 200 times. The portfolio program is a very powerful strategy that allows us to enter new markets profitably and, importantly, unlock substantial opportunities for our individual approach.

How does Vacasa view the impact of a recession on its business model?

First, Vacasa wants to discuss itself from the Sonder business model (leases), as it sees it less recession-proof:
Our business model generates revenue by taking a commission on the rental income earned by our homeowners and collecting fees from guests. It doesn’t rely on leasing vacation homes. As opposed to other alternative accommodation business models, we do not rely on lease agreements to add vacation homes to our platform.

Second, the company went at length to convey that demand for vacation rentals was resilient (while ADR may not). With its wide coverage of destinations and property types in drive-to and fly-to destinations, the company believes that it can capture shifting demand patterns.

“If a consumer on the East Coast decides not to fly down to Florida for summer vacation, no problem. They can trade down to take a house that’s just a few hours away. Vacation homes, in general, are a lower-cost vacation option. So think about cooking in a vacation home rather than taking the family out to eat.”

Yet, the company remains cautious about Q4 and beyond:

Guest demand was strong throughout the quarter and, to date, the demand strength has continued into the third quarter, demonstrating that consumers are still prioritizing travel. While we haven’t seen signs of consumer weakness in our results or future bookings as of today, we are keenly aware of the changing macroeconomic environment and have spent time understanding how these changes could impact our business.

On the supply side, a recession can be the opportunity to acquire vacation rental companies at lower multiples. Also, a downturn may reduce churn in properties as homeowners may want to keep making money with the rentals and even add availability throughout the year to make up for income lost somewhere else.


Vacasa is sticking to its story of a company switching from a pure M&A play to getting at some point ⅔ of its new properties directly from homeowners. It is not quite there yet, even if the moderation in acquiring new companies is helping tilt the ratio in acquisition sources. The company is busy containing costs as it wants to start delivering on profitability. Yet, Q2 and Q3 may be historical revenue peaks for the industry. As ADR and occupancy may go down should a recession strike, it could be harder to turn a profit.

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