A look at the Vacasa & Turnkey deal

After an extended courtship, the two largest vacation rental PMs – Vacasa and Turnkey – tied the knot this week when Vacasa acquired its smaller rival Turnkey. Vacasa has been an acquisition machine, gobbling up 159 PMs over time, but Turnkey represents the largest pure play PM it has acquired to date.

Vacasa’s acquisition of Turnkey presents an apt moment to investigate the strengths of its model and reflect on its implications for the direction of the PM industry. With 26,000 listings, Vacasa managed 4.5X more homes than the next largest full service property manager (Turnkey). The company is in a league of its own. A comparison of Vacasa and Turnkey at the point of this acquisition highlights the impact of scale on a full service PM.

TurnkeyVacasaTotal
  Employees (linkedin)4161,9002,316
 Properties as of February 20216,00025,00031,000
  Ratio Properties per employee14.413.213.4
Supply growth last 3 years150%268%237%
Fundraised to date ($ Millions)120635755
Fundraised to date by property ratio ($)20,00025,38024,339
Number of cities4731,2201,382
Top 10 cities1. Park City
2. South Padre Island
3. Hilton Head Island
4. Gulf Shores
5. Corpus Christi
6. Nashville
7. South Lake Tahoe
8. Myrtle Beach
9. Truckee
10. Palm Springs
1.Panama City Beach
2. Destin
3. Myrtle Beach
4. Davenport
5. Hilton Head Island
6. Miramar Beach
7. Fort Walton Beach
8. Gulf Shores
9. Breckenridge
10. Steamboat Springs
1. Panama City Beach
2. Myrtle Beach
3. Destin
4. Hilton Head Island
5. Davenport
6. Gulf Shores
7. Miramar Beach
8. Fort Walton Beach
9. Steamboat Springs
10. Breckenridge
Top 10 cities as % total supply27%25%n.a
Site visits February 2021 (similarweb)303,0002,200,0002,503,000
Page views February 2021 (similarweb)4.54.44.4
Direct traffic February 2021 (similarweb)42%38%38%
Monthly page views per property ratio226387356
Source:  * Transparent Estimates

Growth begets growth

Vacasa has built a machine geared for growth, and they have delivered. Despite a substantially larger base, Vacasa has outpaced Turnkey over the past 3 years; their listings under management increased 268% vs. 150% for Turnkey. 

Part of this difference is a result of different strategies. Vacasa has been an aggressive acquiror, unlike Turnkey. They have acquired 159 companies, including the very large acquisition of Wyndham. The Transparent data does not allow us to separate organic and inorganic growth, so we cannot compare organic growth alone.

But one fact is inescapable: Vacasa has been adding supply far faster than its competitors.

People-based Activities Still Take People

Operational functions – labor-intensive tasks such as cleaning, maintenance, and guest support – see no benefit from scale.  In fact, one might ask whether these tasks face diseconomies of scale, where a more expansive footprint leads to greater complexity and less efficiency.  At least when comparing Turnkey and Vacasa, this seems to be the case. Based on their Linkedin employee count, Turnkey manages 14.4 homes per employee, whereas Vacasa manages 13.2 homes per employee, which translates into 10% more labor per home.  

Perhaps this efficiency gap is a testament to Turnkey’s technology investment; technology has been a point of emphasis for Turnkey. Likewise, we don’t know the mix of contractors and employees at the two companies, which could also sway this analysis. That said, we see no evidence that vacation rental PMs find operational efficiencies as they scale. If anything, evidence supports the opposite conclusion.

This is roughly in line with data from our 2019 US North American Vacation Rental Survey:

Source: https://seetransparent.com/blog/2019/10/07/report-north-american-vacation-rental-survey-2019/

Bigger Scale; Better Marketing & Distribution

On the opposite side of on the ground operations, intuitively, scale should allow for outperformance in revenue functions like marketing and distribution, and Vacasa outperforms on these dimensions. 

Scale allows for greater marketing investment, as breadth of selection on the Vacasa website should translate into higher conversion rates and a stronger ROI. Site traffic and consumer branding benefit from Vacasa’s scale. The Vacasa website generated 2.2M visits in Feb 2021 as compared to 303K for Turkey. Vacasa generated 71% more unique visitors per property than Turnkey.

Distribution is another area where Vacasa is able to leverage its scale. While both companies use all major distribution channels, Vacasa captures more share (as illustrated by the average consumer reviews per listing in each platform). On HomeAway, Vacasa generates 27% more reviews per listing. And Vacasa has found a way to capture substantial Booking demand, whereas Turnkey has not. 

With scale also comes brand recognition as shown by the fact that Vacasa attracts 836,000 direct monthly visits (as of February 2021), 7 times more than Turnkey – data extracted from Similarweb. This strong brand muscle translates into a capacity to drive direct reservations: Vacasa currently drives 387 page visits per property in average in February 2021, vs. 226 for Turnkey. If we assumed both companies have similar conversion rates, that could potentially mean that Vacasa generates 70% more direct reservations than Turnkey on a property level. This could bring some significant synergies and increase revenue per property on Turnkey’s inventory.

If like Vacasa and Turnkey you want to be competitive in the short term rental industry, book a demo with us here.

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