Sometimes you can’t catch a break, which seems to be true at long-troubled Hawaii vacation rental giant Vacasa. Following news recently that Vacasa abruptly laid off 17% of their workforce, they’ve just encountered terrible headwinds, including shrinking revenue, mounting losses, loss of key people, shares down 88%, and more.
The greater vacation rental industry remains under pressure, having grown too fast and often without sound business practices. This darling of the stock market has gone from its recent high of nearly $10 a share to a low of $1.13 today in after-hours trading, in a precipitous drop of 88%. It seems like they announced 81% sales growth only yesterday before today’s reality became clear.
Vacasa grew quickly to be Hawaii’s largest vacation rental company.
Vacasa’s website says it still manages, maintains, and markets 1,164 Hawaii vacation rentals. But that doesn’t describe the problems you’ve reported in comments and are being widely publicized. Troubles became obvious late in 2022, as the company warned about too high costs, waning sales, and management trouble. Last month Vasasa’s newly appointed Chief Commercial Officer departed suddenly, just four months after taking the position.
BOH’s current take on Vacasa Hawaii vacation rentals.
There are obvious concerns for homeowners and those renting vacation rentals at Vacasa. The company’s future seems uncertain, even by its own carefully crafted words.
Before today’s earnings report, dissatisfaction existed among homeowners and renters as the controversy surrounding Vacasa management grew. On Yelp reviews, Vacasa now has a rating of just 2.5/5, with the reviews swinging wildly between positive and negative. Google reviews on Vacasa Hawaii came in at 2.1.
Vacasa’s situation presents an opportunity for other vacation rental management companies to improve their own waning inventory. Previously these same people had seen extraordinary challenges due to Vacasa’s money, influence, and technology.
One person recently commented on BOH: “We rented a Vacasa property… and it was in bad condition when we arrived. We didn’t stay in the house, and they have not returned us a reasonable refund. Not sure we will ever use them again.”
Another said, “Not surprising that Vacasa stock plummeted. I have used them 2x’s. Needless to say, I was very disappointed when they changed weekly rentals to daily rental rates that were almost twice the amount than before. So I basically paid the same amount for 4 days that I used to pay for 7. Especially since I found numerous cleaning flaws. Kitchen stove vent/fan caked with bugs/grease that could fall into your pot while cooking. Just 1 example. I clean for a living, so am very detail oriented on specific things that really matter. I actually got a cleaning refund a year ago because of “terrible cleaning” by their team.”
Airbnb is the gold standard for renting Hawaii vacation rentals.
Most vacation rental managers and individual property owners list their units on Airbnb, including Vacasa. It is the go-to destination for shopping Hawaii vacation rentals. Airbnb, unlike Vacasa, Airbnb is not a management company, so things such as customer service, cleaning, and repairs, are performed by others.
Vacasa has been charging up to 35% of its services’ total vacation rental cost. The concept worked well because it gave remote property owners a means to have a hands-free operation, even if it was expensive.
Things went wrong at Vacasa.
In today’s latest company report, Vacasa said revenue would contract this year. This comes during a cooling trend for Hawaii vacation rentals and the fact that Vacasa couldn’t keep up with the growth the company previously experienced. Then just two months ago, the company slashed 1.3k jobs or 17% of its workforce.
Vacasa also said, “We face challenges which are fixable, but not yet fixed,” without offering more details. The company added it doesn’t yet know how the “reduction in the size of our sales force and adjustments to the sales strategy will affect our home growth.”
Vacasa confirmed that they are not adding as many new properties as before and that current homeowners are departing for greener pastures. “We began to see “An increase in the number of homes leaving our platform.”
The company reported a one-third billion dollar loss today, which was fully double its prior year’s loss. They also believe that sales will decline by perhaps 10% this year. But simultaneously, they cautioned investors further about “significant uncertainty” in their business and the industry.