Vacation rental company Vacasa saw a record quarter in Q3 2021, according to earnings results the company released on Monday.
The company’s gross booking value surged 97 percent year over year to $776 million. In response, revenue also hit a record high of $330 million, up 77 percent year over year and exceeding the company’s targeted revenue of $258 million by 28 percent.
“We generated record results in the third quarter, driven by a combination of consumers’ continued desire to travel, the ongoing preference shift towards vacation rentals, and strong execution across our entire organization,” Matt Roberts, Vacasa CEO, said in a statement. “While guest demand is the leading driver of our outperformance, we’ve had solid supply additions through both our individual and portfolio approaches in 2021. We now have more than 35,000 homes on our platform, in-line with the expectations we outlined when we announced our transaction with TPGS, and are the largest vacation rental management platform in North America.”
At the end of July 2021, Vacasa announced its intention to go public via a merger with blank check company TPG Pace Solutions.
The news of Vacasa’s all-time high earnings comes on the heels of another giant in the industry, Airbnb, also releasing record third-quarter results earlier in November, marking new high point for the short-term rental industry as travel makes a comeback and travelers preference short-term rentals over hotel stays.
The company saw over 1.8 million nights sold during the quarter, up from 1.1 million the year before. As demand for short-term rentals soared, the company was able to drive Gross Booking Value per night sold to a record of $422, up 19 percent from the year before.
Meanwhile, the quarter’s net income jumped to $33 million, up from $9 million the previous year.
Adjusted EBITDA was $57 million, up from $25 million the year before, which exceeded the company’s target of $26 million. Vacasa noted in its shareholder letter that this significant outperformance “demonstrates the underlying earnings and margin power of our business.”
As a result of its positive third-quarter earnings, the company was able to raise its full-year 2021 revenue and adjusted EBITDA. Full-year revenue is now expected to hit $872 million to $877 million (up from a previous target of $757 million), and the full-year adjusted EBITDA target has been shifted to a range of negative $45 million to negative $40 million (about 10-20 percent better than a previous target of negative $49 million).
“A strong consumer demand environment allowed us to achieve high occupancy and record levels of Gross Booking Value per Night Sold, up 19 percent year over year, leading to third quarter Revenue and Adjusted EBITDA coming in well ahead of our targets,” Jamie Cohen, CFO of Vacasa, said in a statement.
“As we indicated in September, we are investing the outperformance from the second and third quarters back into the business during the fourth quarter through a brand advertising campaign and a pull forward of hiring to drive growth as we enter 2022. Even with the investments in the fourth quarter, we are still expecting to deliver full-year 2021 Adjusted EBITDA about 10 percent to 20 percent better than our target.”
The company’s earnings report also noted that it anticipates continued consumers preferences towards short-term rentals over other vacation stay options to be long-lasting, which will help drive the company’s Gross Booking Value per night sold. In addition, flexible work trends will also help stimulate the industry, which the company said “gives us the confidence to accelerate investments.”
“Nearly 20 percent of guests stayed in a vacation rental for the first time between March 2020 and March 2021 according to a Skift Study and recent industry reports suggest trial could be even higher,” a letter to shareholders states. “Additionally, guests are having an outstanding experience with short-term rentals; 86 percent of guests plan to continue booking vacation rentals post-pandemic according to VRM Intel and 52 percent of guests would prefer to stay in a vacation rental over a hotel post-pandemic according to a Skift Study.”
The company also highlighted a few product updates in its earnings report, noting its recently launched AI-driven Itinerary Based Pricing algorithm update, which helps homeowners maximize their income on bookings, as well as its Probability of Booking feature, which helps homeowners understand how likely a potential guest is to book and projected income from their stay.
Vacasa also plans to roll out soon Vacasa Smart Home technology across its portfolio more widely to improve guest experiences and increase operational efficiency.
Vacasa and TPGS anticipate finalizing their business combination during the fourth quarter, pending shareholder approval.