Machine Learning in the Vacation Rental Industry
When Vacasa entered the short-term rental space in 2009, the vast majority of the industry was operating without the use of technology. Made up of thousands of small, local operators who booked guests by phone and took reservations on paper, Vacasa sought to bring emerging technology to the vacation rental industry. Ten years later and now North America’s largest vacation rental company, Vacasa cares for more than 23,000 vacation homes around the world through its use of strong local teams and a proprietary technology platform developed in-house and hosted on AWS. Vacasa relies heavily on automation to scale the business, which includes the use of machine learning to drive rates and pricing algorithms.
When founder Eric Breon started Vacasa, his primary objective was simple: maximize revenue for vacation rental homeowners through the use of technology. To facilitate this in a way that would be scalable as the company continued to grow, he needed to build an algorithm that would emulate what hotels and airlines were using to adjust pricing throughout the day in order to generate more income.
Tapping into the historical data behind each clean allows for accuracy, and also for the scheduler to reward housekeepers who earn a high clean score and efficient clean time
Vacasa built its first Yield Management tool and the company began marketing itself as a tech-enabled vacation rental company. By promising dynamic pricing and increased revenues for homeowners, the company signed hundreds of homeowners in its first year.
As the company continued to scale, it placed a high priority on technology and product development to support its rapid growth. In 2017, Vacasa released a vastly improved tool, Yield Management 2.0 (code named Alan after scientist Alan Turing), which included algorithms that ran in real-time, analyzing market rates, location, and a variety of other factors. The news permeated across the vacation rental industry and Vacasa saw a spike in new homes added to its inventory. With new homes to manage and new geography to cover, the company would need to invest further in operational technology.
Local teams using tech.
One of Vacasa’s other main differentiators is that it employs local teams in each of the markets it serves. Teams of local operations managers, housekeepers and maintenance staff are on the ground and ready to assist with both preparing the homes for guests, as well as responding to any emergency or last-minute needs a guest may have. To improve call answer rates and ultimately guest satisfaction, Vacasa invested in a new contact center solution, 8x8, in 2018.
When it came to managing Vacasa’s local teams, the question became, how do we manage our hourly staff and provide them with the highest level of both predictability and flexibility for their schedule? Vacation rentals are seasonal and popular times can create chaos throughout the summer or winter months and on holidays, but quickly taper off in the shoulder season.
Vacasa first considered an off-the-shelf solution, but ultimately came back to the fact that we could build something better, more suited to their needs and unlike anything else in the industry. The result is Vacasa’s housekeeping scheduler, which auto-assigns housekeepers to cleans through machine learning, but also allows for a human element by allowing local operations to make adjustments as needed. Our algorithm will find the most efficient housekeeper, but also employ data science to predict how long the clean will take as every unit that we manage is different. Tapping into the historical data behind each clean allows for accuracy, and also for the scheduler to reward housekeepers who earn a high clean score and efficient clean time. In addition, Vacasa rolled out a new ticketing system that uses intelligent ticket routing so that maintenance requests can be handled efficiently as tickets are routed directly to the person responsible and helps reduce the workload on the local manager.
Continuing to scale.
In order to become North America’s largest vacation rental company, you have to develop ways to continuously bring on new inventory. These days, prospective customers are looking for ways to self-serve before interacting with an actual human to determine if that solution is a fit. To solve for this, Vacasa created an online tool for those interested in property management services to be able to see how much revenue they stand to earn if they were to use their second home as a short-term rental. To build this tool in a way that would actually add value to potential customers, we had to take into account not just the value of the home and its location, but also the value of the market based on the features that make it valuable. Neighborhoods can vary greatly by just one block, so we built a model to account for granular elements that would ultimately impact revenue. We continue to iterate on the Vestimator to support our other business units, including Vacasa Real Estate where we’ll merge the Vestimator algorithm, MLS and other market level data to assess which homes on the market are the best to convert to short-term rentals.
Serving our customers.
Transparency is key to maintaining a positive relationship with our homeowners. When they hand us the keys to their vacation rental, they are putting the utmost trust that we’re taking proper care of their home and the guests who visit it. We built and designed our Owner Portal so owner’s can assess unit performance, have real-time visibility of Vacasa’s care of their home and place holds for personal use. This important piece of our infrastructure strengthens our relationships with homeowners by providing them with the information they need to know about their home. For guests, we’ve invested heavily in a mobile application that makes accessing their vacation rental - from driving directions to keyless entry to Wifi - simple and straightforward.
As Vacasa forges new ground in the vacation rental industry, it will continue to rely increasingly on technology to build more automation and leverage economies of scale. This will enable our field managers and office staff to focus on high-value activities that benefit guests and homeowners, rather than repetitive administrative tasks that take up time and reduce productivity. Our team of product managers will continue to work closely with the business to envisage what the next level of Vacasa looks like, and we’re working hard to prioritize that work, so the vision becomes tomorrow’s reality.