Vacasa reported its third-quarter 2023 earnings, with a focus on technology-driven efficiency and homeowner relationships, despite a year-over-year decline in revenue. The vacation rental company facilitated over half a million reservations during peak season, generating income for homeowners. Despite the industry trend of declining revenues, Vacasa increased its adjusted EBITDA and raised its full-year 2023 outlook.
Key takeaways from the call include:
- Vacasa's Q3 revenue was $379 million, down 8% YoY, reflecting industry trends.
- Despite the revenue decline, the company managed to increase its adjusted EBITDA to $74 million, up from $46 million in the same period last year.
- The company has made significant progress in improving its execution, individual sales approach, and technology products.
- Vacasa's investment in differentiated technology, such as automated scheduling and photo inspection tools, has improved efficiency and enhanced the experience for homeowners and guests.
- The company is managing operating expenses and carefully assessing the quality fit and mix of its inventory.
- Vacasa expects the normalization of traveler demand and potential challenges in revenue and homeowner retention to continue into 2024.
In the face of declining revenues, Vacasa has remained focused on improving efficiency and execution throughout the business. The company's investment in technology, including automated scheduling and photo inspection tools, has resulted in a better experience for homeowners and guests, and increased operating efficiencies.
Vacasa reported a decline in revenue of nearly $35 million, but the company's focus on optimizing contribution margins in every market and its investments in technology products and processes have led to positive results. The company is also focusing on revenue management strategies, homeowner relationships, and homeowner retention.
Looking ahead to 2024, Vacasa expects continued trends of declining traveler demand and homeowner retention. However, the company has not provided specific guidance on pricing or revenue trends. The company plans to continue investing in technology to improve operations, monitor evolving booking patterns, and evaluate pricing and occupancy trade-offs.
Vacasa's CEO Rob Greyber expressed gratitude to homeowners and employees during the call and highlighted the company's progress in improving financial performance and reducing costs while maintaining guest satisfaction. The company believes that further efficiency improvements are possible through technology and process optimization.
InvestingPro Insights
InvestingPro provides real-time data and tips that further illuminate the financial situation of Vacasa.
InvestingPro Data shows that Vacasa has a market capitalization of 242.47M USD. Despite a decline in revenue, the company has seen a significant return over the last week, with a 1 Week Price Total Return of 26.72%. However, the 6 Month Price Total Return is at -43.55%, indicating a significant decrease in price over that period. The company's revenue for the last twelve months as of Q2 2023 was 1191.78M USD, with a growth of 10.39%.
InvestingPro Tips reveal that Vacasa holds more cash than debt on its balance sheet, which could be a positive sign for investors. However, the company is quickly burning through cash and has a declining trend in earnings per share. Analysts do not anticipate the company will be profitable this year, which aligns with the company's own expectation of continued challenges in revenue.
These insights are only a fraction of the wealth of information available on InvestingPro. For a more comprehensive analysis of Vacasa's financial health and future prospects, consider exploring InvestingPro's additional tips and data.
Full transcript - VCSA Q3 2023:
Operator: Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vacasa Third Quarter 2023 Earnings Conference Call. All lines have been placed to prevent any background noise. [Operator Instructions] Thank you so much. I would like to now turn the call over to Jay Gincco [ph], Vice President, Investor Relations. And with that, Jay, you have the floor.
Unidentified Company Representative: Good afternoon, everyone, and thank you for joining us today for Vacasa's third quarter 2023 earnings call. I'm pleased to be joined today by CEO, Rob Greyber; and CFO, Bruce Schuman. Before we begin, let me cover a few administrative details. This call contains information that speaks only as of today's date. We have posted a shareholder letter on the Investor Relations section of our website at investors.vacasa.com that will be referenced by our speakers. Comments made during this conference call and in our shareholder letter contain forward-looking statements. Such statements include those about future expectations, beliefs, plans, projections, strategies, targets, estimates, objectives, events, conditions and financial performance, including guidance for future period results, which are based on what the company believes is reliable as of today's date. We caution you that various factors could cause actual results to differ materially from those anticipated. For additional information concerning these risks and uncertainties, please read the forward-looking statements section in the shareholder letter we issued earlier today and the forward-looking Statements and Risk Factors section in our filings with the Securities and Exchange Commission. During this call, we will focus primarily on various non-GAAP financial measures. Information regarding our non-GAAP financial results including a reconciliation of non-GAAP results to the most directly comparable GAAP financial measures may be found in our shareholder letter. These non-GAAP measures should be considered in addition to our GAAP results and are not intended to be a substitute for our GAAP results. And now I would like to hand the call over to Rob Greyber. Rob?
Rob Greyber: Good afternoon, everyone, and thank you for joining us. I'm pleased to be with you all today to share the progress the business has made during the third quarter and to review our financials and outlook. We wrapped up the third quarter, Vacasa's seasonally strongest, facilitating over 500,000 reservations with the majority of those taking place in July and August, the second two months of our three-month peak season. That's over 0.5 million family trips, weekend getaways, overdue breaks and highly anticipated summer vacations. For our team, for our industry, bringing vacations home means creating moments for family and friends, moments that happen at kitchen counters or around coffee tables and over board games, and in that way, moments that are unique to the vacation rentals category and so important to our homeowners and guests. We are still navigating a dynamic macroeconomic and industry environment. Demand for our category in leisure markets looks different today than during the highs of 2021 and 2022. And while reservation volume remains robust, many homeowners across the industry are now making less from their homes than in those prior years. While these dynamics have challenged our business in recent periods, notably in revenue and homeowner retention, we remain highly focused on delivering for our homeowners and guests. And once again, we generated millions in income for our homeowners during the third quarter. I remain extremely optimistic about Vacasa's potential and continue to believe we are, by far, the best option for homeowners who want to participate in the vacation rental industry. Our scale also uniquely positions Vacasa to develop technology-driven products that result in a truly differentiated experience for our homeowners and our guests. We are working better and more efficiently in all our functions, and you can see that in our results. We believe in the vast majority of our markets based on our data, Vacasa listings are generating more revenue than the industry. Last November, when I spoke with you all for the first time, I outlined 4 critical priorities I wanted to tackle during my first year at Vacasa. These were: improving execution in local markets and customer support functions, unlocking the potential of the individual sales approach, developing the right technology products and service offerings and ruthlessly prioritizing our business needs to drive profitable execution. Let me be clear, there is more to do and will get done. But as we look back over the past 12 months, we have made significant progress against each priority. I'm proud of how our local teams performed across our markets during our third and busiest quarter. They delivered outstanding hospitality experiences to our guests, while also leveraging some of our latest technology tools to increase efficiency. For example, earlier this year, we told you about new capabilities in the automated scheduling systems used by our field operations teams. These capabilities help our team or manage daily tasks, including ensuring homes are in top condition ready to welcome guests. These features are particularly helpful during peak season when home utilization is high, and there may only be a small window between guest stays and it's imperative that we have a well-planned schedule for our local teams. These systems help our local teams get to our homes at the right time with the right work planned, ready to be completed on time, and it's working. During the third quarter, we achieved a higher property condition score every single week compared to last year based on guest feedback while operating in a more efficient manner. In the spring, we also refined a number of internal processes around housekeeping, including sharing post clean photos from our clean inspection tool with owners. This had two important benefits. First, our clean scores from guests have been higher year-over-year in the third quarter. Second, homeowner see real-time images of their home after every inspection that gives them the peace of mind that their home is being taken care of and we received positive homeowner feedback on this feature. It's just another touch point that keeps them connected to their home and allows them to see the work our field teams do. The positive results from our automated scheduling tool and enhanced inspection process are important proof points that our investment in differentiated technology is paying dividends. It's driving efficiency in our operations and more importantly, its resulting in a better experience for homeowners and guests. Over time, these products will only get better with 500,000 reservations, you have 500,000 new opportunities to identify areas of improvement. Our individual sales approach, the primary way in which we add homes to our platform, had another quarter of improving productivity year-over-year and another quarter of developing and building on the local market presence and expertise that attracts our prospective homeowners. We continue to refine the way we attract homeowners shifting more of our resources to local channels and initiatives. This supports our locally based sales and operating teams, allowing them to participate in community events, and lets us sponsor unique local activities. We had a blast at last annual Falmouth Road festival on the Massachusetts Coast and the Gulf Chan Festival in Panama City Beach, Florida. We're also giving potential homeowners more reasons to choose Vacasa over our local peers. For example, Vacasa was selected as a launch partner for the new offering from American Express (NYSE:AXP) Travel select homes and retreats, a channel that positions us to reach more premium travelers. Our scale and commitment to quality positions us to provide these types of opportunities for our homeowners to reach more travelers across an expanding channel mix. With all that said, the short-term rental industry continues to adjust to a dynamic macroeconomic environment and changing travel patterns, and we see the impacts of this in elevated levels of homeowner churn. Homeowners are responding to recent market conditions, evaluating if they should continue to rent out their home, and if so, on what terms. We remain keenly focused on continuing to proactively communicate with homeowners, optimizing the rental income and delivering exceptional hospitality to guests. Our product and technology teams continue to focus on building products that deliver a one-two punch, making Vacasa's operations more efficient and improving the experience for our homeowners and guests. We do this by feature enhancements to existing products as well as by focusing our efforts on larger scale products that have this double benefit. These include the improved photo inspection tool and automated scheduling tool I just mentioned, which would generate measurable cost efficiencies and positive owner feedback. We are also rigorously evaluating and taking steps to improve our internal technology infrastructure. Examples include adding additional filtering criteria to vacasa.com to help guests find the perfect home, making it easier for guests to provide feedback on their stay and in the field, simplifying the way they transact with owners and vendors. Finally, we continue to prioritize driving efficiency across our business. We are carefully managing our operating expenses with technology development, sales and marketing and general and administrative expenses down year-over-year. We are also being judicious about the homes we manage on our platform, seeking to ensure all homes are the right fit across a variety of criteria, including homeowner objectives, rental income potential, the location of homes within a market and revenue potential for Vacasa. We will continue to regularly assess the quality fit and mix of our inventory at homes. In closing, we remain focused on making improvements across our business, from the way we manage local operations to ruthlessly prioritizing our technology and product resources to the highest ROI. There is more to do. But I believe as you look back over the past 12 months, you'll see we have made substantial progress. I want to take a moment to thank all our Vacasa team members across the country across all functions, who are each playing an important role in continuing to improve our product offering and furthering our lead as the top vacation rental management platform in North America. Now I'll turn the call over to Bruce to discuss our third quarter results and provide an updated outlook. Bruce?
Bruce Schuman: Thanks, Rob. First, I'll review our third quarter financial results, then I'll provide an updated outlook. Unless noted otherwise, I will be comparing our third quarter results to the third quarter of 2022, and I'll be referencing the operating expense lines, excluding the impact of stock-based compensation, restructuring costs and business combination costs, which you can find outlined in our shareholder letter. For the third quarter, gross booking value, which is the combination of nights sold and gross booking value per night sold, was $830 million, down 14% year-over-year. Night sold were $2 million in the third quarter, down 1% year-over-year. And gross booking value per night sold was $406 in the third quarter, down 14% year-over-year. Night sold per home on our platform was roughly flat year-over-year. We've discussed the decline in average gross booking value per home year-over-year as the industry continues to come off of the record highs from the past few years, and we saw this trend continue in the third quarter. Remember also, there is a strong relationship between night sold and gross booking value per night sold, and it's difficult to look at either in isolation. Our revenue management algorithms and data team constantly evaluate the trade-off between price and occupancy and the mix of night sold and gross booking value per night sold with the goal of optimizing homeowner income. Revenue, which consists primarily of our commission on the rents we generate for homeowners, the fees we collect from guests and revenue from home care solutions provided directly to our homeowners was $379 million in the third quarter, down 8% year-over-year. Now turning to our expenses. Cost of revenue was 40% of revenue in the third quarter versus 42% of revenue in the same period last year. Operations and support expense was 17% of revenue in the third quarter versus 18% of revenue in the same period last year. These 2 expense lines primarily consist of our local market and customer support costs. Our third quarter results are the strongest example yet of the progress we are making in operating our local markets in a more efficient manner. We decreased cost of revenue by 13% year-over-year and operations and support expense by 15% year-over-year, while supporting roughly the same number of homes and nights sold and delivering better guest satisfaction results. We are also demonstrating operating discipline in our central operations where we achieved year-over-year leverage across our 3 other operating expense lines in the third quarter. Specifically, on a year-over-year basis, technology and development expense was down 11%, sales and marketing expense declined 23% and general and administrative expenses declined 33%. Adjusted EBITDA was $74 million for the third quarter compared to $46 million in the same period last year. Now turning to the outlook. With peak season now complete, we are raising our outlook for full year 2023. Based on current business trends and conditions, we now expect 2023 revenue to decline by 7% to 6% year-over-year. We also expect adjusted EBITDA of between $5 million and $15 million. At the midpoints of our guidance, this implies expected 2023 revenue about $75 million lower than last year, but adjusted EBITDA about $35 million higher compared to last year. While there is more to do, I believe our improved outlook for 2023 speaks to the progress the team is making in advancing our operating discipline against a dynamic industry backdrop. That said, while it's early, as we look ahead to 2024, we believe many of the trends we are seeing in the back half of this year, specifically the normalization of traveler demand for domestic nonurban vacation rentals from the highs of 2021 and 2022, which impacts our revenue and homeowner retention will likely continue. We remain focused on improving our execution and driving targeted initiatives to support further efficiency gains throughout our business, all while adapting to the changing environment. We will provide you with more color during our fourth quarter and full year 2023 financial results call. With that, Rob and I will take your questions. Operator, please open up the lines.
Operator: [Operator Instructions] And our first question today looks like it comes from the line of Jed Kelly with Oppenheimer. Jed, go ahead.
Jed Kelly: Great. Thanks for taking my question. Two, if I may. Once again, you're getting a lot of efficiencies on a lower revenue base. So can you just talk about where that's coming from? How sustainable that is heading into next year? And then following up on the commentary you just gave for '24, you said the trends are likely to continue. I think industry RevPAR is probably down around 13% this year. So do you think per unit RevPAR can start to grow in the back half? And then just on the churn comment, do you think you're losing homes to other property managers? Or is this more of a function of the homeowners doing it themselves? Thank you.
Bruce Schuman: Yes, Jed, this is Bruce. I think the first one, I'll touch on your -- kind of what's driving the EBITDA improvement, the efficiency improvements. Really, this is primarily as a function of our kind of the focus we've had on the local market operations efficiency year-over-year, kind of the central ops efficiencies we've driven year-over-year. We're just really laser-focused on those, and that's really what's driving kind of this year-over-year improvement in EBITDA. I think your question on '24, as we think about how that plays into next year. I think we're focused on -- it's early in the booking cycle, first of all, kind of bookings on the folks for '24. It's very early. But as you look ahead, while we're still in the early planning phase. As we think about some of the trend in the second half of '23, things like the declining homeowner income, some of the churn dynamics we've seen, we think those likely could continue. So we're focused on improving that as we -- we're also seeing some changing booking patterns like for Q4, except for length of stay is coming in a bit lower. So we're really keeping an eye on that and how that evolves. So it's pretty early to provide further color there. We're just focused on taking care of the needs of our owners and guests and really continuing to operate the business more efficiently and drive savings. And if you look at what we delivered in Q3, I think that's kind of the best results, example of what we can drive that in that area.
Jed Kelly: Thank you. And then just on a follow-up. You did mention some of your technology progress, I think, last week or a couple of weeks ago was the largest industry event. I mean, there was a pretty full vendor haul. So can you just talk about sort of where you're winning on the technology front versus, say, the smaller property manager that can take a third-party technology and sort of do distribution and do rate management as well? Thanks.
Rob Greyber: Yes. Jed, this is Rob. Good to talk with you. I think, first of all, I think there's a couple of different dimensions where we see advantage, and we continue to invest behind it. So first, when it comes to how we think about revenue management, there are a number of different tools out there. We look very closely how those different platforms are performing versus what we're able to drive in the market and for our owners. And we think that we're performing very favorably against those other platforms and how those teams are deploying them. And that should be intuitive, right? There are -- there's powerful technologies out there, but we have the biggest platform. We can see how dynamics evolve across the largest spectrum of markets. And we also have the ability to control that technology and to tune it over time. So we think that the market bears that out. Now we're obviously -- we want to do that for every owner in it -- for every home in every market, and we work to try to make that as true as possible. But I think when you zoom back, I think that the cost has executed well there, and we're going to continue to invest to keep that advantage over the long term. I think there's also a number of great technology platforms that are out there in the market. But again, it comes down to what type of integrated experience can those operators deliver if they're having to try to knit together these various scenes versus what we're able to drive and what we're starting to really drive to optimize now. The home visit optimization is one example of that. In a peak season, you don't just need to be able to get a booking and then to try to turn a clean that helps the maintenance during a very busy season. And being able to get the right teams with the right work scheduled and the right pieces in place to be able to take care of the home and then turn it quickly. Those are the things that a more integrated platform can provide. And those are some of the -- those are two examples of where I think that we have that advantage. So those are the areas where we're focused. We think you see the impact of them in the numbers that we deliver. All of that is against the tough industry backdrop. But we think that, that's going to be a source of advantage for us in the long term and in lots of different economic seasons.
Operator: And our next question comes from the line of Doug Anmuth with JPMorgan. Doug, go ahead.
Dae Lee: This is Dae for Doug. Thanks for taking the questions. So the first one on the homeowner churn. When I think last quarter, you guys had talked about it being elevated at stable. Just wondering given your comment this quarter, if there's some changes that you're seeing in the amount of churn? And then secondly, your comments about some of the current trends continuing to 2024. I guess as we look out, is this the case that normalization is still kind of happening and that you expect it to get a little bit worse before it improves? Or is this just more of -- things are stable now just to that the, I guess, lower base that you guys could grow off of? Do you want to get any clarification around that? Thank you.
Rob Greyber: Yes. Let me start, and then I'll hand it over to Bruce to sort of add some thoughts. So onshore, as we called out, we've begun to see some higher levels of churn as we move through the fourth quarter last year. I think that coincided with changes in the slowing of booking growth, some changes in the demand environment. And we began to see owners citing homeowner revenue as a reason for churn as they were frustrated by bookings coming off of the record high the industry had experienced in 2021, in 2022. So we've been continuing to kind of take the steps to set those expectations to listen to what they want to see play out in the marketplace and do our best to manifest that and make it happen against an industry backdrop that I think is continuing to translate into lower rental income in 2023. So we've been very responsive from a revenue management perspective, from a product perspective. We think that we're delivering above average performance on a per listing basis, but it continues to be against a tough backdrop. So we think this is a dynamic that others are dealing with. We think that -- there's not a lot of great data out there about that, but we're watching it very closely. And we think that this is something that the industry is going to wrestle with. And that's to be expected when you kind of come off some pretty high levels. As we look forward to next year, again, we haven't kind of set our plan or set guidance to that. We're going to be watching those trends. And continuing to be focused on delivering a business that is more nimble and able to execute well on the top line and the bottom line in any season that we see involved in the market.
Bruce Schuman: Yes. I think that's good, Rob. The only thing I would add, again, our focus on efficiency, you look at what we delivered in the third quarter. We grew EBITDA by nearly $30 million despite nearly $35 million decline in revenue. That focus on efficiency will continue into '24, even as some of these trends like you know to do continue to materialize, and we'll be watching that very carefully.
Dae Lee: Understood. Thank you.
Operator: And our next question comes from the line of Ben Miller with Goldman Sachs. Ben, go ahead.
Ben Miller: Thanks for taking my questions. I'm wondering if there's any color you can share on what profitability or margins look like in some of your more mature markets or markets where you think you're closer to optimizing the cost structure with some of the operational changes and recent product initiative rollouts. And then the second would just be, any thoughts on the Google (NASDAQ:GOOGL) Vacation Rentals, price comparison product and impact this might have on the industry? Thanks.
Rob Greyber: Bruce, do you want to take the first one? I'll take the second.
Bruce Schuman: Yes. The first, we haven't really indicated any per market profitability metrics in the past. We really look at every single market, trying to optimize our contribution margins. We've not really indicated upper market breakdown at this time.
Rob Greyber: Yes. And I think that we do see markets that are more mature and less mature. By and large, what we're doing is executing a set of product and business initiatives that have actually seen good results across all those markets. So we're pleased on that progress. We haven't provided that disclosure. Look, when it comes to the channel structure, I think there's been a lot of different types of investments and changes that have happened over the last decade when it comes to the maturing the vacation rental category. We've seen a lot of investment on the OTA side, a lot of investment on the metasearch side. A lot of investment, I think, as Jed called out earlier on platforms that have come into the markets to better manage across channels. Look, we evaluate those pretty critically when it comes to our channel participation. We believe that having a diverse channel mix is a great source of strength for us as a company. I'm not going to comment on any particular investments that the different players are making. Generally speaking, having good part of the agency side has been very helpful. Meta (NASDAQ:META) search has been more of a mixed bag as an industry, but we'll keep our eye on it and we'll be watching how it falls.
Operator: [Operator Instructions] And the next question comes from Nick Jones with JMP Securities. Nick, go ahead.
Unidentified Analyst: This is Luke on for Nick. Just taking a step back. So top line year-over-year declines accelerated in 3Q. So I guess on a more broader level, what do you think are the main 1 or 2 factors in focus when it comes to reaccelerating that top line heading into next year? Thanks.
Rob Greyber: Yes. Thanks, Luke, for the question. I really appreciate it. So look, when I first spoke with this group in November, I shared how excited I was about the cost of long-term potential about what I see as a terrific category in the market. Really one of the last categories in the travel industry to undergo the type of transformation and growth that I think has been demonstrated over the last several years, and I think it's still ahead of the industry, by and large. When I joined the Vacasa team, I've been seeking out and tried to be very forthright about acknowledging areas where I see opportunities for improvement. I think we're making the changes that we need to make as an organization. I'm not satisfied, our team isn't satisfied. We've demonstrated good progress on an absolute basis and also how we're able to execute in a challenging dynamic. So when I think about the long term, Luke, I think about really the opportunity to build a platform-based business that can on an iterative basis, build and continue to improve on superior debt experiences, superior owner experiences. And we've seen businesses like that transform so many other categories across travel and across the broader economy. And I think that there's that opportunity. I think it exists here and it's for the taking. I think when I think about the short term, there are really the two things that I'm focused on that have driven the results that you can see so far. First is around how we think about revenue management. And again, this is against the difficult market backdrop this year, but you can see the progress that we've made in our financial performance despite declines in revenue, we're seeing those investments on the revenue management side help navigate a difficult environment, we think better than others. And I think then the second piece of that is investing in technology products and business processes in the people to really deliver better experiences for guests and owners every single day. I've highlighted a few of those things on the technology side. When I think about our ability to optimize home visits to make sure that we can get the right people in the right place at the right time, to get the work done that's needed to take care of our owners' homes and to have our guests enjoy their time away and their holidays. We think that's absolutely critical. We're also doing a lot of work in other elements of our platform to improve the system how guests and owners interact with us, giving more owner visibility into the status of their homes, the progress that we're making on maintenance items and so forth. So on the process side, there's a lot of work that we've gotten done. On the technology side, there's a lot of work that we've gotten done. We've been very judicious, I think, in how we're allocating capital and making sure we're being efficient with our workforce and where we're investing. So I think all of those things, to me, say that we're going to be able to build the business for the long term. You can see the beginning of that impact flow into our business results. We're going to be looking for where we see that really getting traction and trying to allocate capital there more aggressively. So there's a lot more for us to do. We're pretty keenly focused on execution and efficiency. And we think that, that is also going to point us in the right in on better customer experiences for the long term.
Operator: And our next question comes from the line of Bernie McTernan with Needham & Company. Bernie, go ahead.
Unidentified Analyst: This is Stefanos Chris calling in for Bernie. Thanks for taking my questions. I'm just curious on the type of visibility you have at this point for the quarter, especially with last minute holiday trips being booked as what do you typically see in Q4?
Rob Greyber: Yes. So Q4, I mean, as we get into the quarter, it's still a little bit early. I think the only thing I would notice what I talked about earlier, there's just kind of some evolving booking patterns, specifically into the length of stay is coming down just slightly. So it's not a huge impact to revenue, but I think that does just talk to kind of the evolving booking patterns. So that's one of the things we're keeping a close eye on. No other specific guide to call out at this point.
Unidentified Analyst: Got it. Thank you
Operator: And our next question comes from the line of Lee Horowitz with Deutsche Bank. Lee, go ahead.
Unidentified Analyst: This is Jeff on for Lee. Thanks for taking the questions. So when you're thinking about supply growth, where do you think you can move the needle more? Is it more to efficient to go to market to drive new homeowners to the platform? Or is it spending time and investment dollars aimed at lowering increased churn that you've seen recently? And then you talked about the trade-off between pricing and occupancy. And given the declines in pricing that we've seen so far this year, would you expect the pricing declines to moderate into next year? Or would more continue at current levels?
Rob Greyber: Yes. Why don't I go ahead and start and then I'll ask Bruce to jump in as well? So I think when it comes to home growth, there are a couple of things. So I think, first, as we've shared before, we pulled back on the portfolio program. I think that there's a real value in having a robust organic growth motion of the business, that lets us build the relationship with the owner directly rather than through something that we inherit. And so we want to build that out, there's going to be opportunities for us to deploy capital through a portfolio approach in the future, but that's really been a focus. And again, as we've said, we've been pleased with the progress we've seen so far through the year. I think we were pleased with the progress we've seen in Q3, but we want to see that continue to bed in and become a very reliable, repeatable source of results for us as we move into 2024. Which brings me to the other leg when it comes to home growth, which is around retaining our homeowner relationships. We think that there's a backdrop of things that we can control. There's backgrounds that are happening in the market. And we're very focused on mobilizing and executing across the company on that basis. When it comes to how pricing is going to evolve in 2024. Again, we haven't made a lot of comments about 2024. We do see some trends continuing in terms of what's going to happen with consumer demand in our markets, the markets that we serve, which again are maybe not as broadly representative of some of the larger agency platforms that you see, which generally are in more urban markets versus ours and also in more international markets, ex U.S., ex Canada. So it's hard to kind of speak to how pricing will evolve. There's a lot that we're looking at. We're looking at the macro dynamics. We're looking at different alternatives in the travel categories. So I really don't know that there's a lot for us to say there yet. But -- the markets that we've seen have already seen some of the pricing declines that you've seen as a result of kind of changing consumer demand. And we're going to watch and see how those evolve as we head into next year.
Bruce Schuman: Yes. Well, I think you said that well. I mean, our revenue management team is really always looking at this carefully. They're analyzing kind of that trade-off between occupancy and price. And we've made a very kind of conscious decision to really drive the occupancy. And we -- I think our revenue management team has driven some really nice results for our homeowners, but we're going to be just carefully evaluating that as we head into '24. And Rob said it well, not a lot we can didn't guide on that yet.
Operator: [Operator Instructions] And our next question comes from Justin Patterson at KeyBanc.
Justin Patterson: Thank you very much. And good afternoon. I wanted to revisit Jed's question from earlier. You've done the hard part. You have to higher EBITDA year-over-year on a lower revenue base. As we think about just the business scaling up from here, how should we think about incremental margins versus what we used to look at this business in the past? Thank you.
Rob Greyber: Yes. Again, I'll start on this one, and I'll ask Bruce to make a comment as well. I appreciate the question, Justin. I think we don't think of ourselves as being done, but we are pleased with the progress we've seen the team make so far this year. There's a lot more for us to do. I think that we believe that there is an opportunity like we've seen play on so many other businesses and categories where you deliver better customer experiences by delivering more efficient experiences. And think about an Amazon (NASDAQ:AMZN) delivery experience. Think about the experiences that so many of these platforms can deliver as they integrate and then iterate and improve over time. We think that, that path to being more efficient paves the way along the way toward really differentiated customer experiences, and that's what we're building. How that translates into short-term and long-term financial results. Look, we're pleased with what we're seeing so far. But there is a lot more for us to do along those lines. We're not kind of yet may comment to what we see evolving and how that will balance out in 2024. But we think that, that same discipline on the financial side is actually what will translate into really differentiated prices for guests for our owners and the ability for us to continue to improve those things over time.
Bruce Schuman: Yes. I think a proof point I would highlight is in Q3, I mean, we drove a double-digit decline in our local market operations costs. We supported the same number of nights, the same number roughly at homes on our platform, and we didn't do that by sacrificing guest demand -- guest customer satisfaction scores. So that just kind of tells you what's possible when you really focus on this. We're going to continue to trend, we're going to continue injecting technology in our local market ops get better and better, and that's what we're going to be focused on for '24.
Operator: And with that, I will now turn the call back over to CEO, Rob Greyber, for closing remarks. Rob, the floor is yours.
Rob Greyber: Thanks very much. I want to say, again, thank you for everyone for joining for the questions today. I want to thank our homeowners for their partnership with Vacasa. And I want to thank everyone who works at Vacasa for working so hard every day to bring vacations home for homeowners and our guests. Thanks, everyone. I look forward to speaking with you and updating you on the full year and our outlook '24 in the coming months.
Operator: And ladies and gentlemen, that does conclude today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.
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