Overview

Vacasa is a leading vacation rental management platform in North America. The company operates a vertically integrated platform that handles all aspects of the vacation rental experience for homeowners, from listing creation and distribution to pricing, marketing, and property care. Vacasa earns revenue primarily through commissions and fees from homeowners and guests.

Recent Developments

In December 2024, Vacasa entered into an agreement to be acquired by Casago through a merger. If completed, Vacasa’s Class A common stock will be delisted from Nasdaq.

Vacasa also received several unsolicited acquisition proposals from Davidson Kempner in early 2025, which the company is currently evaluating. The proposals involve acquiring all outstanding Vacasa shares.

In August 2024, Vacasa’s subsidiary issued $30 million in convertible notes to Davidson Kempner. The notes can be converted into Vacasa Class A common stock and have various redemption features.

Guest Demand and Financial Performance

Vacasa experienced significant variability in guest booking patterns in 2024, resulting in fewer nights sold per home compared to 2023. This led to lower revenue and cash generation than expected. Vacasa’s fixed field costs did not decrease proportionately, negatively impacting profitability.

Vacasa’s revenue decreased 19% in 2024 to $910.5 million, primarily due to the 19% decline in nights sold. Cost of revenue, operations and support, and sales and marketing expenses all decreased, but not enough to offset the revenue decline.

Vacasa reported a net loss of $154.9 million in 2024, compared to a $528.2 million net loss in 2023. The company’s Adjusted EBITDA, a non-GAAP measure, was a loss of $0.7 million in 2024 compared to a gain of $23.5 million in 2023.

Workforce Reductions

In 2024, Vacasa implemented two restructuring plans that eliminated a total of 1,120 positions, or about 18% of the workforce. This was done to align the company’s cost structure with its strategic and operating priorities.

The restructuring resulted in $6.0 million in severance and employee benefits costs in 2024, as well as $1.9 million in severance costs and $1.4 million in professional service costs related to the 2024 Plan.

Seasonality

Vacasa’s business is seasonal, with the first and second quarters typically being the strongest for bookings and cash generation. The second and third quarters have higher revenue due to increased nights sold during the peak summer travel season.

Key Metrics

Vacasa tracks several key business metrics:

• Gross Booking Value (GBV): The total dollar value of bookings, including rent, fees, and taxes. GBV decreased 20% to $1.86 billion in 2024.

• Nights Sold: The total number of nights stayed by guests. Nights Sold decreased 19% to 5.08 million in 2024.

• GBV per Night Sold: The average dollar value per night stayed. GBV per Night Sold decreased 1% to $365 in 2024.

Liquidity and Capital Resources

As of December 31, 2024, Vacasa had $88.5 million in cash and cash equivalents. The company drew $81 million on its $105 million revolving credit facility in 2024 and issued $30 million in convertible notes to supplement its cash position.

Vacasa expects its existing sources of liquidity will be sufficient to fund operations for at least the next 12 months. However, the company may need to seek additional financing if guest demand and booking patterns continue to be weaker than historical levels.

The company’s future capital requirements will depend on factors like growth, homeowner and guest retention, booking patterns, and any potential acquisitions or investments.

Critical Accounting Estimates

Vacasa’s critical accounting estimates include:

1. Impairment of long-lived assets: The company recorded a $84 million impairment charge in 2024 related to its homeowner contracts asset, as the fair value was below the carrying amount.

2. Impairment of goodwill: Vacasa performed goodwill impairment tests in 2024 and did not record any impairment charges, as the fair value of the reporting unit exceeded its carrying amount.

3. Valuation of equity units: Prior to going public, Vacasa used various valuation methods to estimate the fair value of its equity units, considering factors like market comparables and the probability of liquidity events.

4. Convertible notes: Vacasa elected the fair value option to account for the $30 million in convertible notes issued in 2024, with changes in fair value recorded in earnings.

Analysis

Vacasa’s financial performance in 2024 was negatively impacted by weaker-than-expected guest demand and booking patterns, which led to a significant decline in revenue and profitability. The company’s fixed field costs did not decrease proportionately, further pressuring margins.

The workforce reductions undertaken in 2024 were a necessary step to align Vacasa’s cost structure with its current operating environment. However, the restructuring charges added to the company’s losses for the year.

Vacasa’s reliance on the seasonality of its business, with the second and third quarters typically being the strongest, makes it vulnerable to fluctuations in guest demand. The company will need to continue optimizing its pricing and utilization strategies to manage this seasonality.

The proposed acquisition by Casago and the unsolicited offers from Davidson Kempner introduce uncertainty around Vacasa’s future ownership and strategic direction. The convertible notes issued to Davidson Kempner also give the investor significant influence over the company.

Vacasa’s liquidity position appears manageable in the near term, but the company may need to seek additional financing if the current demand and booking trends persist. The company’s future capital requirements will depend on its ability to grow, retain homeowners and guests, and potentially pursue acquisitions or investments.

Overall, Vacasa faces significant challenges in the current operating environment, with weaker-than-expected guest demand and booking patterns negatively impacting its financial performance. The company’s efforts to restructure and optimize its cost structure are a necessary step, but the long-term outlook will depend on its ability to adapt to changing market conditions and potentially find a strategic partner or buyer.