With all the time and hard work you’ve put into building your vacation rental business, it’s natural that you’d want to make the best sale possible.
At Vacasa, we’ve worked with hundreds of vacation rental business owners as they navigate this important transition. And from all their stories, we’ve learned some core truths about the unique process of selling a vacation rental business.
Here’s our step-by-step guide to help you navigate the sales process for your vacation rental business.
“What’s the best approach to selling my property management company?”
When you start thinking of selling your business, you’ll encounter some tough questions. And so the first step of the process is to think about what you’d like the outcomes of the sale to be.
Examine how you want the buyer to create value for you, your staff, your homeowners, and your community. When you have your sights on the end of the road, finding the right fit, negotiating the sale, and reasoning with skeptics becomes much less of a burden.
Typical vacation rental industry buyers can be anyone from your long-time assistant to a well-known international company. And each potential buyer comes with its perks—and its drawbacks.
Is payout your only concern? Look to cash-flow buyers, like private equity companies. Cash-flow buyers can afford to pay a premium for your business, making this the most profitable option. But selling to a cash-flow buyer likely also spells a rough transition for your team and clients.
Tip: Make sure there’s a solid management plan in place for running day-to-day operations if you sell to a cash-flow buyer.
Connected buyers, like a family member or someone already on your team, may not have the capital of a private equity firm, but they certainly have the connection to you and the business you’ve built. Consider whether the buyer can keep up with industry changes, maintain the level of service your guests expect, and provide competitive returns for homeowners.
Tip: Remember that you are passing on everything associated with your company—the good, the bad, and the ugly—to someone you know. Transparency is key when mixing business with your private life.
Keeping things local could earn you goodwill within your community, but it can also turn out poorly for your team and homeowners. Having the budget to purchase your company doesn’t equate to having the skills to operate it. When it comes to cash, this type of buyer often can’t match the payouts you’d see from a cash-flow or industry buyer.
Tip: Ask yourself why your homeowners chose you over the local competition. Think about the possible short- and long-term effects of selling to a local competitor in your area.
Vacation rental industry buyers (like Vacasa) are well-established, typically larger-scale organizations seeking to expand their inventory in a new market. A good industry buyer will help your team and your homeowners grow from the solid foundation you’ve laid. Industry buyers respect your local expertise—in fact, some of Vacasa’s best talent has come from acquisitions.
Tip: When talking to an industry buyer, ask about their goals in your area. Consider how your ambitions match or diverge with theirs.
Whatever buyer type you go with, advocate for close partnership throughout the process. You’ll feel better about the deal if it creates positive outcomes for everyone involved.
Just as nightly rates change over the course of a year, so too does the price of your vacation rental business. Expect to command the highest premium if you sell prior to peak season and the lowest premium if you sell after. But that doesn’t mean selling during peak season is the right move for you. Here’s what you should consider when deciding when to sell.
Peak season brings higher profits, higher staffing levels, and fewer homeowners seeking an alternative property manager. On the other hand, this busy period can make it more difficult to access each property for onboarding, and to find time to train your staff on new systems. And it all has to be done while your team handles their highest volume of reservations (which will need to be transferred or prorated, to boot).
In the shoulder season, you’ll have fewer reservations to transfer, plenty of time to transition employees, and an opportunity to optimize bookings. But it’s also a time period when owners with fewer reservations may be looking to sell or change property managers.
In the off-season, it’s easy to complete training—you’ll have more access to homes and employees have more free days. But it’s also the time of year when much-needed vacation home maintenance takes place. Also, with fewer reservations on the books, it may be more difficult to encourage homeowners to see the transition through.
Though your vacation rental business’s valuation is the most challenging part of the acquisition process, it can also be the most impactful on your profits. The information you provide to the potential buyer forms the basis for your sale price, deal structure, and timing. Missing or inaccurate data creates a sense of risk—and may result in a less enticing offer for you.
As you prepare for your valuation, we recommend breaking the work into four weekly pieces.
Start with the easy stuff. Document your organizational chart, and then compile a list of tangible and intangible assets used to run your vacation rental business. Wrap up the week by doing a full systems audit, creating a spreadsheet that lists each tool you use for business, as well as any passwords.
Examples of tangible assets for vacation rental businesses
Examples of intangible assets for vacation rental businesses
Compile reservation data for the past two years, documenting rental charges, fees, and commission structures for each property. The majority of potential business partners will want this report in spreadsheet format so it’s easy to transfer. Your reservation data should include property IDs as listed on your website or in your books. Then, create a report of the booking data for each home, including owner holds, guest booking dates, and the first and last nights of each stay.
Kick off week three by generating a report that shows your 12-month base rental income, including booking fees, taxes, and cleaning fees. Once that’s done, compile and review all your contracts, specifying any that are wrapping up in the next three months. Then, make a list of your marketing channels and document any special service deals you’ve made and are obliged to continue with homeowners.
Create two sample profit and loss (P&L) statements with one broken down to the individual home level. The P&L should include all of your company’s costs, including licenses, HOA fees, and office supplies. Finally, calculate your earnings before interest, taxes, depreciation, and amortization (EBITDA) and account for any extraordinary expenses. Keep everything clean and organized in spreadsheets—and don’t forget to back up your work.
You’ve found a great buyer at the right time and made the sale. And although the ink’s now dry, it’s important for you to remain available during the transition.
The 30-day period after the sale will be full of questions from employees and homeowners. Homeowners will want to know if contracts and local teams will stay the same. Employees will want to know how this change impacts their lives. And, if you’ve built a large or long-running organization with deep ties to the local community, the community will want to know what this transition means to the area.
Not all vacation rental business buyers will provide the same level of support during the transition period. At Vacasa, we take a hands-on approach to acquisitions. Our team helps sellers create a plan to ensure a strong future for your vacation rental business, has HR reps available to your staff, and works hard to create a bond of trust with your homeowners. We even reach out to local newspapers on your behalf to deliver the message about why you chose to partner with Vacasa, and to explain the benefits to the community.
It can be difficult to separate yourself from homeowner relationships you’ve maintained for so long. In an acquisition partnership, you’ll have time to answer important questions, leaving your relationships on solid ground. But it’s also crucial to redirect inquiries to the new management team—it establishes a strong rapport with the buyer and lets you take steps toward your next chapter.
Once the deal is done, congratulate yourself. While Vacasa’s transition teams eventually leave, the support and resources don't. We respect what you built and the people who helped you build it—so you can enter into new opportunities with confidence.