Vacasa Could Get Boost From Home Sales Softness

Talk about a good side of things: the slowing pace of US home sales and rising mortgage interest rates could prove positive for the property management company Vacasa.

It was one of six takeaways from Vacasa’s first-quarter earnings announcement.

Slower home sales mean less supply attrition

Vacasa plans to grow its roster of managed properties by 30% to around 48,000 in 2022. One factor — in addition to seller hiring and portfolio acquisitions — is the recent sluggishness in the U.S. real estate market.

This is because when the housing market is hot, owners sell their homes and new owners cannot turn them into vacation rentals or register with Vacasa.

“Interestingly, the number one cause of any type of attrition for us is selling or selling homes,” Vacasa CEO Matt Roberts told financial analysts on Wednesday. “So to the extent that it actually slows down that gameplay pacing on that, it’s actually more of a neat feature than a bug for us.”

Seven acquisitions at $2.7 million each

Vacasa has completed more than 200 acquisitions of relatively small property managers since 2014, and it completed seven in the first quarter of 2022 for $18.9 million. These relatively small acquisitions, averaging $2.7 million each, aren’t the primary way Vacasa adds property. The main way it incorporates properties is through direct sales by its sellers.

Vacasa is hiring salespeople, but not as many as in 2021

Vacasa hired 200 sellers in 2021 and is actively hiring new ones in 2022, but the company expects there will be less than 200. This is how Vacasa gets the majority of its new properties.

With these new sellers hired since the start of 2021 doing their job, Vacasa reported that its first-quarter property additions were 2.5 times the pace compared to the first quarter of 2021.

Unused $15 million in future credits bolstered first quarter revenue

Vacasa’s first-quarter revenue was inflated by $15 million previously issued but unused future vacation credits that it said would expire or not be allocated to vacation. An additional $10.6 million, much of it stemming from Covid-related cancellations, was indeed refunded during the quarter.

Vacasa issued an additional $5 million in future resort credits during the first quarter.

Turnkey figures help drive Vacasa’s growth

Vacasa acquired rival property manager TurnKey in April 2021, so TurnKey’s financial statements were not included in Vacasa’s first quarter 2021 financial results.

However, Vacasa reported Thursday in a financial deposit that its nights sold jumped 64% in the first quarter of 2022, largely due to its purchase of TurnKey.

Vacasa’s gross booking value increased 23% in the quarter due to higher rates and resort fees.

Vacasa losses will continue

You can expect Vacasa’s red ink to continue – at least until the end of 2022.

Vacasa’s expects its adjusted 2022 year before interest, taxes, depreciation and amortization to be between minus $21 million and minus $14 million.