After acquiring yet another UK holiday firm in Forest Holidays, Sykes Cottages has positioned itself well to capitalise on the booming staycation market in the UK.
The acquisition, completed in April 2021, expands Sykes Cottages’ property portfolio to approximately 21,500. Furthermore, the move adds even more diversity to its overall product offering, which will undoubtedly serve a broad range of UK tourists in the summer of 2022.
A timely move by the UK holiday cottage rental company
Domestic tourism in the UK in 2022 is expected to exceed pre-pandemic levels of 2019, with many tourists still wary of international travel and squeezed budgets. The success of staycations over the past 12 months has provided a much-needed confidence boost for the UK tourism industry. Sykes Cottages has taken advantage of this trend by investing heavily in M&A activity to boost its product portfolio and attract a wider range of travellers. Since the onset of the pandemic, Sykes Cottages has acquired four other holiday brands including Forest Holidays, LHH Scotland, Lyme Bay, and Best of Suffolk, according to GlobalData’s M&A Database.
The latest move is a timely one from one of the fastest-growing travel companies in the UK. GlobalData’s Tourism Demands and Flows Database projections show that domestic overnight trips in Britain will increase to approximately 123 million this year. This statistic is a 23% year-on-year (YoY) increase on 2021 levels, and a slight increase on 2019 figures, which eclipsed 122.9 million. As such, the timing of Sykes Cottages’ expansion could not be better.
More M&A activity likely
With many other accommodation rental firms still feeling the financial pinch of the pandemic, many short-term lettings agencies could well be a target for a potential merger or acquisition. In times of economic hardship, M&A activity usually increases as businesses look to increase revenue, streamline operations, increase purchasing power, and cut costs. With Sykes Cottages receiving strong support from private equity firm Vitruvian (its owner), we will likely see more acquisitions in the near future as it looks to expand its operations. Furthermore, as confidence in international travel returns, the company could potentially look to develop its operations in other countries.
Sykes Cottages is competing on an even footing with sharing economy companies
The growing property range within Sykes Cottages allows it to compete more effectively with sharing economy companies such as Vrbo and Airbnb, which have gained considerable popularity in the UK in recent years. Like the aforementioned companies, Sykes Cottages offers a range of accommodation types for different traveller needs. Furthermore, its reputation for service continues to grow. In 2020, it won the British Travel Awards category for ‘Best UK Holiday Cottage/Self Catering Booking Company’ for the eighth year in a row, according to its website.
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Given the current economic climate, critics may deem its rapid expansion strategy risky, but its strategic focus on the staycation market couldn’t come at a better time. As such, it is an exciting phase for Sykes Holiday Cottages as we move into a pivotal summer for the travel industry.