Vacation Rental Startups Gear Up for IPOs
Three vacation rental management companies Vacasa, Sonder, and Inspirato are gearing up to go public via SPAC deals, testing investors’ appetite for alternatives to traditional hotels. With more Americans working remotely, the vacation property management startups have benefited from demand for vacation homes and apartment rentals.
But that’s not to say they don’t face challenges. The companies are facing increasing competition. They are also up against a shortage of properties to use for expansion. Nonetheless, Vacasa plans to go public by the end of this year with a valuation of around $4.5 billion, while Sonder is aiming to be valued at more than $1.9 billion in its public debut this year. Inspirato is targeting a $1.1 billion valuation.
More Market Share Coming
There is an opportunity for the professional management companies to grow in the current market. As it stands, the short-term rental market is dominated by individuals who post their homes and apartments on websites like Airbnb (ABNB). Professional managers like Vacasa and Sonder only represent 16% of the US short-term rental market, but that is up from 13% compared to before the pandemic.
The industry is expected to grow its market share even more because properties that are branded and managed tend to get higher rates than those listed by individual homeowners. Vacasa and Sonder think that managing a number of short-term rentals at one time is more efficient and that travelers like to know that the same basic standards will be met no matter where they travel.
Challenges Abound, But Demand Persists
The short-term rental market has grown about 30% since the pandemic began, but the startups are having difficulty finding new properties to rent out with real estate demand growing in vacation hotspots. The companies are not only at the mercy of what’s happening in the hospitality industry, but also the residential real estate market, competing with long-term renters and home buyers when they seek to add new listings to their portfolios.
Despite challenges, the short-term rental market is booming, which is why startups in the industry are commanding multibillion-dollar valuations. Vacasa, Sonder, and Inspirato are trying to capitalize on this trend as they prepare to go public.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21111002
The post Vacasa, Sonder, and Inspirato Test Investors’ Appetite for Short-Term Rentals appeared first on SoFi.
from SoFi Blog – SoFi https://ift.tt/3kr0wae
via IFTTT
0 Comments