As part of its growth strategy, which includes dedicating more than $250 million to acquire vacation rental management companies, Vtrips has appointed two new executive hires: CFO Paul Smith-Marquez and chief growth officer Sandra Brahn.
With a deep understanding of the vacation rental business, Brahn spent almost six years at Vacasa, where, as senior director of corporate development, she led the team to close more than 150 portfolio acquisitions and partnerships.
Below, Brahn explains to PhocusWire how her experience in building departments, identifying and delivering profitable growth opportunities and closing complex deals will help lead Florida-based Vtrips through its next growth phase. This interview has been lightly edited for clarity.
What led you to Vtrips after time at Vacasa?
I was at Vacasa for almost six years, and then, with COVID, it was the perfect storm of unfortunate events happening around that time. [Vacasa founder and CEO ]Eric Breon was stepping aside, and Matt Roberts was coming in. Then COVID hits – it all happened. Bam. The department I had built up for six years was demolished overnight, unfortunately. Then bits and pieces were capped, mostly for the integrations, because it was during the whole Wyndham integration time.
I stayed on for a little while and then it was just a different company, different path and COVID – not knowing what was going to happen.
So that was that. But I love the industry, I really do. I can’t say I’m more passionate about any industry. I consulted for [Vtrips founder and CEO Steve Milo] a little bit and got to know him and got to know Vtrips and see what the opportunities are. We talked a lot, and getting Hudson Hill, the investors, involved showed: OK, there’s real growth for this company ahead in the market. There’s certainly tremendous opportunities still in the market.
To come in and to be able to build a team and build a process and really go after this opportunity that’s ahead of us – that’s exciting to me.
It’s been a profitable company for years, and that’s pretty interesting and different, but it’s still sort of at – not in its infancy, but there’s still so much that needs to be developed and built as we grow and scale, and that’s exciting to me. … There’s a real inflection point with the company. We’re doing all this with a certain amount of processes and people but it’s very limited relative to where we need to get to.
It's an interesting time too because of how the pandemic put the spotlight on rentals in a way we haven’t seen before.
Absolutely. It’s people that have never rented vacation rentals before, we have a whole new audience now. And others who have become more dedicated to vacation rentals as opposed to hotels. That’s exciting. I think it’s a much better model than hotels for a myriad of reasons.
The sharing economy is a cool thing, and that’s an area I want to see grow across the board. It’s a shame for a house to sit there unused while its owners come a couple times a year.
Coming into Vtrips, what has been something about working with the company that’s surprised you, and what has been one of the biggest challenges?
Those are probably one and the same, but there is so much to do. The challenge is really figuring out what are our priorities and what can we get done this year? You can’t hire overnight, and you can’t train people overnight.
At the end of the day you’re really buying a relationship with the homeowner.
Sandra Brahn
I think the surprise is the people who have been doing so much for at least for the last two years. They’ve been carrying a lot on their shoulders, and I’m so impressed by the people, they’re amazing.
We have all these people wearing multiple hats, so trying to shift the organization in such a way that we can really define roles and define responsibilities – it’s not going to be perfect the first go, but it’s getting a little more definition around it and getting people to not have to wear five different hats, because that’s not scalable, right?
So like I said, that inflection point, that’s sort of the interesting thing, and the challenge is how to move through that. I think this year will be the biggest of that shift that will take place. It will be across the year, but we’ll be having to move into more defined roles and those scalable processes and scalable positions.
Can you speak to additional priorities for Vtrips in 2022?
We’re growing our EBITDA and unit base – it’s how do we grow profitably, being smart about that growth and also being smart back to the resources, being smart about growing at a pace that is manageable but still have immense growth.
The other focus is going to be on organic and building a good, strong muscle to grow organically. Because the strategy is let’s go and do kind of a hub and spoke – start off with our mostly drive-to markets … and building a real foundation in one market or market area with a good operational base. And from there start to expand and strategically look at how we grow. Where are the population centers? Where are people driving from? Where are there not so many challenges in terms of employees, because you have to be able to get a lot of house cleaners and inspectors and all of those things. There are real employee challenges across every industry right now.
Making sure we’re growing in the right places where we can staff and support the growth will be mostly this year and then expanding to limited new markets. Looking in the years beyond, how do we branch into new markets? Are we doing that from a local nexus that we grow out from, or do we plant a new flag in a new market somewhere through a portfolio acquisition and then build on the space?
In August it was announced that Vtrips would invest more than $250 million in acquisitions. Can you speak to your acquisition strategy? What are you looking for?
Some new markets, but mostly those tangential markets, moving further from an existing market. I can’t say [we won’t ever move into new markets], but this year we’re not going to go to Colorado. That’s a different part of the country, it’s a winter market, it’s significantly different.
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So not sure we’re going to expand like that. But we would expand to markets surrounding our Florida markets. They may be considered new in that we don’t have units there … that’s an easy expansion and that will mostly be through acquisitions.
That said, we’re not going to go and get one or two unit in a market that’s more than an hour away because that’s a strain on the existing operations. We would have to get a mass of enough units to say we can have an office there and a home base there.
Are there any upcoming deals you can point to? There was a string of acquisitions in July.
We do have some upcoming deals. We are primarily focused on larger deals at the moment, and that’s largely because of resources again. It is a lot of resources that need to go into a larger acquisition, but it’s not linear in terms of the resources between small and large. It’s better for us to get a more well-run company. … We’re very conscious about the brand and the local team and, where possible, even the owners [or drivers] of the company, keeping them. … We want to keep as much continuity for homeowners as possible.
All of those things speak to brand. We do keep the local brands mostly in any larger acquisition we do. We have all these sub-brands, and that’s new for me personally. It was not that way at all at Vacasa.
Do you think we’ll see continued consolidation in the rentals sector?
I do. I think there will be a few more players consolidating. We’re already seeing some of these, like AvantStay coming up and starting to do acquisitions. Then there are some private equity firms that get involved. There are going to be a handful of larger players, Vtrips being one and Vacasa being the other.
I think there’s been a strain. There have been really good results for companies, but the smaller mom-and-pop shops had such a strain during COVID initially that I think they’re probably exhausted by now. Also because there really is a lot of activity in the market at the moment and companies are saying, “Hmm.. maybe it is a good time to sell because for the larger ones revenues are really up.”
What role does technology play when you’re considering an acquisition?
One of the key items we look at is what is the technology integration going to be. If they’re on the same PMS as we are, that makes it a lot easier. Again, it’s back to what resources do we have to do that transition because while we do keep the brand, we want to put them on our PMS and get all of our accounting and financial models and structures aligned. So the sooner we can do that, the sooner we can also realize synergies with that.
It’s not a defining characteristic, but it is an important one more right now for timing I would say. I’ve got my integration team that I’m building up and as we get more resources and understanding of how to do conversions from different systems and do them a little more fluidly … but there’s always going to be a crunch.
Right now we’re definitely focused on where we are going to have the fasted energy from a technology perspective, so the preference is for ones that are on our PMS, but that’s not exclusively so.
What learnings did you take from Vacasa into this new role?
We learned at Vacasa too that keeping the local staff is really important, as is understanding the effect on the homeowner in the transition. So figuring out a way to minimize the amount of change they have to go through or pacing that change. That’s super important because at the end of the day you’re really buying a relationship with the homeowner. It’s a tangible asset. In most cases we’re not doing stock purchases, we’re not buying the company per se; we’re buying these assets, and the fundamental asset is a relationship, which is a very different kind of acquisition than most companies do.
That understanding of how to assess the strength of that relationship is very important, and understanding the effects of change on that relationship and therefore minimizing those effects.