Why Airbnb Wants Vacasa to Succeed

Despite fees, good property managers eliminate the hassle of owning an investment property. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on March 23, Motley Fool contributors Matt Frankel and Jon Quast discuss the complementary relationship between Airbnb (ABNB 2.77%) and Vacasa (VCSA 9.35%) and explain the value each company offers real estate investors.

Matt Frankel: Vacasa is a full-service property management company. Airbnb is a booking platform. Vacasa is a full-service vacation rental manager. If you list a property on Airbnb, you're going to have to not only determine what your cleaning fee is, you're going to have to coordinate cleanings. You're going to have to communicate with your guests, handle complaints, handle questions, things like that. Being an Airbnb property owner is a job. It is a job. Companies like Vacasa charge a much higher percentage. As you mentioned, Airbnb's take rate was about 3%. The typical vacation rental property manager charges 30% to 40% of the rent, but they do everything. They coordinate cleanings, they make sure there are plenty of towels and cups and glasses and all this other stuff that the Airbnb host would have to do. They make it not a job. My vacation rentals are professionally managed and my only interaction with my property manager is that I get a check once a month. I don't have any interaction with my tenants. I'm sure there are good and bad ones. I've dealt with bad tenants in long-term rentals. I have no desire to do that on a frequent basis in vacation rentals. I had one steal my lamp the other week and my property manager totally dealt with it. That's what Vacasa does. Vacasa is not a competitor to Airbnb. This is a very important point. Vacasa just went public, by the way, VCSA. They're the No. 1 active property manager for vacation rentals. They have about 3,500 vacation homes, which is about a 1% market share. Very fragmented industry. It's just a really interesting business because you know what Vacasa's No. 1 source of bookings is? Airbnb. No. 2 is Vrbo. [Expedia (EXPE 2.61%)] So they are not competitors. Airbnb wants platforms like Vacasa to succeed because one, that's 35,000 listings on its platform from one customer. They want these big property managers to succeed. Vacasa is more than willing to give up 3% in order to get 30% to 40% of rent in order to list on Airbnb. It's a nice relationship they have. It's not necessarily a competition thing. Hopefully, that helped a little bit.

Jon Quast: Just to add onto what you're saying, Matt, the reason that Airbnb would be so excited for a company like Vacasa to succeed is because they need more hosts on their platform. They are limited in terms of supply. There's a lot of demand and not always enough supply to meet it. When you have successful property managers, it really opens up the possibilities. Many people, where they're located, perhaps it doesn't make sense to own a property that you're using as a short-term rental, as a vacation rental. For me, for example, where I live, it's ideal about 30 minutes away from me to own a vacation rental, but I'm not sure if I want to make that 30-minute commute daily to manage the property on my own. A property manager really makes sense and it opens up, if I have a property manager, I can have a property anywhere that it makes sense. This really opens up the possibilities wide open for potential hosts, people who want to use their cash to invest in a property like this, and that increases the supply for a company like Airbnb and it helps them meet demand. This is why they are complementary.

Frankel: Yeah. If it weren't for vacation rental managers, I wouldn't have mine in Orlando, which is a six-hour drive from my house. It wouldn't be practical. It's a great relationship between the two.