Sykes Holiday Cottages remains on the look out for further acquisitions as it targets further growth in the holiday rental sector.
Graham Donoghue, chief executive, told the Short Stay Show in London last week that it’s aim is to grow from around 23,000 properties to 35,000.
He said the ambitious firm is a “very good acquirer” but that it looks for businesses it can add value to by integrating them on its technology platform.
Most growth will come in the UK, but last year Sykes invested in New Zealand firm Bachcare, which Donoghue said it will use as a “beachhead” for a move into Australia.
Last October, private equity investor Vitruvian Partners took a majority stake in the businesses giving former owner Livingbridge an exit.
“We have a pretty large piggy bank, which means we look for businesses to acquire that we can add value to,” said Donoghue.
Speaking in a session on Investment and Money on the short term rental sector, OYO Homes director of operating partner group Angus Taylor said it was also looking to acquire.
“OYO saw a market with a strong adjacency to the hotels business where we can bring capabilities to a market that’s growing fairly rapidly.”
OYO, the fast-growing a Indian hotel brand on which there is intense scrutiny of its model, sees the move to short term rentals as a springboard to launch business in the US, added Taylor.
“We are always looking for opportunities to invest in very small property management companies, or companies that are much larger.
“Beyond that, we are just looking to grow the business organically with home owners. There are different segments of home owners that wants different sets of services.
“You have to cater for all of these. We are looking to scale our business to bring operational capabilities, but also distribution channels.”
Donoghue said Sykes looks for firms with strong management that can offer return on investment and said “we have to be very disciplined about EBITDA control”.
He said acquiring businesses need to look after the staff of the firms they buy and Sykes retains local offices while integrating technology behind the scenes.
The brand has grown its portfolio by around 30% in the last 18 months having done around 18 deals.
Taylor said having “people on the ground” and relationships is key in the sector. “We have business development and account managers to service the need of people in the local community.”
Donoghue said how firms service clients is critical. “We are a technology enabler service-led business. Technology enables us to offer the service,” he said.
“This makes it easier for employees to do their business, but it’s the technology layer that wraps around it so we can have people where there are issues and a 24/7 contact centre caring about the service proposition and measuring.
“That’s the difference from just being a tech platform. That’s what our investors value, the combination of both.”
Taylor said OYO also sees itself as a technology enabler but said there are limits. “For us it’s important to try not to do everything from a tech perspective.
“Many companies try to do lots of different things, but fail at lots of things. For example we want to make the best pricing decisions for our customers to maximise revenue.
“From a safety perspective have smart locks to make life easier for our home owners and integrating with the widest range of OTAs in a seamless way to allow them to rank highly to get bookings.”