In 2008, Airbnb disrupted the vacation rental market with a then-new system of “peer to peer” home-sharing arrangements. But since then, a number of competitors have popped up, including Vacasa, which just secured $103 million in venture funding. In the face of rising competition, is Airbnb still viable for the long term?
As the Magic 8-ball says, “Signs point to yes.”
Over the years, Airbnb has received many votes of confidence from private equity and venture investors. In 2015, General Atlantic CEO Bill E. Ford told the Silicon Valley Business Journal that Airbnb benefits from low capital intensity, global operations, and high barriers to entry from competitors.
But is Airbnb even a direct competitor to Vacasa? Its CEO and co-founder, Eric Breon, says it isn’t.
If Airbnb is more akin to peer-to-peer marketplaces like eBay, Breon said in an interview with GeekWire, Vacasa wants to be like the Amazon of the vacation rental industry.
“People aren’t inherently looking for peer-to-peer,” Breon said. “People are just looking for that accommodation that isn’t available through traditional channels. Yet at the same time, they very much want the professionalism that comes with the hospitality industry. They want it to be perfectly clean; they want to know that when they pick up the phone, somebody will answer. That’s how we see the similarity.”
Vacasa views itself as more of a global property management firm. Unlike Airbnb, it provides comprehensive property management services. It assists homeowners in managing the entire booking process from start to finish and has more than 1,000 employees on the ground for what it calls “field-based roles” including housekeepers, reservation agents, and local managers.
Vacasa even partners with Airbnb, HomeAway, Booking.com, and others by listing its properties on their sites in order to maximize bookings.
Vacasa currently manages 6,000 luxury vacation homes in 17 U.S. states, as well as Europe, South and Central America, and South Africa. They plan to use their funding to expand their listing in new destinations, as well as hire more than 100 full-time employees.
“Within a year, we’ll be in the Hamptons, the Jersey Shore, and the Adirondacks,” Breon told the New York Post. “We are looking to make an impact on the East Coast.”
Airbnb is expanding into the luxury market, too. It bought Montreal-based Luxury Retreats, which manages about 4,000 properties, in early 2017. Luxury Retreats bills itself as a full-service villa rental company, offering “24/7 personal concierge service to assist with details big and small.”
While Vacasa isn’t disclosing its valuation after the capital injection, Airbnb is now worth an estimated $31 billion—only $7 billion less than Marriott International, the world’s largest hotel company.
By targeting more professionally-managed vacation rental listings, Airbnb may actually be getting ready for an IPO. But it still needs to deal with regulatory issues in a number of cities across the U.S. and around the world.
Will Vacasa have an IPO any time soon? There’s no indication either way. The real question may be, is Airbnb, with its name recognition, going to eclipse Vacasa in the luxury rental property management market? That remains to be seen.
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