How Did All Those Travel SPACs End Up Doing? Where Travel SPACs Sit Today

25.08.2023 - 14:26 / skift.com / Sherry Sun / Today

The investor mania for special purpose acquisition companies, or SPACs, in the past two years cooled mighty quick, with most travel companies going public through this process plummeting in value since their stock market debuts.

In fact, some of the major travel SPACs have lost on average more than 65 percent of their value from market debut.

A quick recap on the concept: These faddish investment vehicles offer an alternative fundraising method for companies seeking capital. A shell company with no operations is formed with a pool of money from investors. The goal is to identify an acquisition target, often a private company, and take it public quickly.

The appeal of the process is often to bypass the regulatory scrutiny and lengthy process behind a traditional initial public offering, or IPO. SPACs have been on the playing field long before gaining popularity during the pandemic.

A combination of eager startups seeking funding and abundant investors sitting on dry powder saw a storm of blank-check companies enter the stock exchanges in 2020 and 2021.

The Wall Street SPAC frenzy waned in 2022.  One culprit was increased regulatory scrutiny from U.S. regulators. Another was general market underperformance in response to rising interest rates. 

Here are the specific outcomes of some travel SPACs swept up in the frenzy and made it to the market:

Vacasa, the Oregon-based startup offering a full-service vacation rental property management platform, was one of the first SPACs in the travel industry to hit the market. The company announced in July 2021 its plans to become publicly listed by combining with the TPG-backed blank-check company. 

At the time of the announcement, Vacasa projected a 31 percent multi-year revenue growth rate, and the transaction implied a pro forma equity value of approximately $4.5 billion for the SPAC.

The company debuted on the Nasdaq exchange in December 2021, with its Class A common stock opening at around $11 per share. Today, the stock sits at around $1.45 per share.

In the past year, the company reorganized its sales department in July 2022 and announced layoffs in corporate divisions that impacted 3 percent of its employee base in October 2022. 

Vacasa reported experiencing softness and variability in guest bookings in their third quarter 2022 results, and expected the trend to continue into the fourth quarter with uncertain extent and duration.

San Francisco-based Sonder was another short-term rental startup that hopped on the SPAC bandwagon. The company originally announced its merger with Gores Metropoulos II at a $2.2 billion valuation in April 2021, before lowering its valuation to $1.9 billion in October 2021 following a reported $54.6 million loss on an adjusted