UK: Devon-based holiday letting agency Travel Chapter has signalled its intention to file for an initial public offering [IPO] on AIM, a market operated by the London Stock Exchange.
It comes two months after the company, the third largest holiday rental agency in the UK by size of property portfolio, was first revealed to be exploring the possibility of going public.
Owning a network of regional and lifestyle brands such as holiday cottages.co.uk, Stay In and Cottages & Castles, Travel Chapter has grown its portfolio significantly in recent years, both through organic growth and a number of selective bolt-on acquisitions. It offers its customers access to a domestic portfolio of over 8,000 properties on behalf of approximately 6,200 property owners.
Citing the “substantial” headroom for further organic growth as a reason for wanting to go public, Travel Chapter intends to leverage its quality-led proposition, scalable platform, market position and increasing brand awareness to capitalise on the structural long-term growth opportunities in the post-Covid-19 UK holiday rental market and grow its market share.
Despite operating in a fragmented sector populated by a range of local and regionalised agencies, the company believes it is differentiating itself with a quality focused proposition and strong growth track record, having acquired and integrated 25 agencies since 2016, as well as receiving investment from two mid-market private equity firms [ECI Partners and Phoenix Equity Partners].
The move to file for an IPO has been prompted by the news that the UK self-catering holiday market is expected to rebound in 2021 with a 54 per cent increase in market value, following a 45 per cent decline in value during the height of the Covid-19 pandemic with the introduction of travel restrictions. PwC estimates that the market value will grow at an average of six to seven per cent p.a. to 2025, supported by favourable customer trends and growth in supply.
The UK self-catering holiday market has already provided its resilience to economic shocks by recording long-term growth in the midst of the global financial crisis, with a CAGR of 4.1 per cent between 2006 and 2019.
In addition, Travel Chapter’s customer database has increased from approximately 735,000 in May 2019 to 1.1 million in August 2021, something which the Group attributes to the new demographic of of customer entering the UK holiday rental market, particularly younger and more affluent travellers.
As such, Travel Chapter says its is “well positioned” to continue to benefit from the strong underlying growth drivers in its markets to scale its business model, such as its technology, data and additional, specialised owner and customer services. This includes assigning a PAM to each property in its portfolio, thus ensuring that it provides a more personalised service.
In order to achieve further organic and acquisitive growth, Travel Chapter has developed an ‘M&A blueprint’ that will target and integrate additional opportunities to acquire smaller regional agencies, and has invested in its in-house New Business team to sign up properties organically and scale significantly.
Travel Chapter CEO Jayne McClure said: “We are delighted to announce our intention to IPO on AIM. This marks the exciting next stage of the Travel Chapter journey as a leading online platform for UK holiday rentals. We have witnessed long-term and robust structural tailwinds in domestic tourism in the UK and believe that these are set to continue.
“Our sector-leading booking platform, owner relationships, customer service and quality-focused property portfolio means we are well placed to continue to grow market share in a fragmented market, both organically and through selective acquisitions,” she added.
Looking ahead, Travel Chapter is exploring opportunities to expand into related areas of the domestic holidays market that complement the Group’s operations and could help to broaden its offering and appeal. These include camping, glamping and alternative accommodation types, such as treehouses or yurts, as well as experiences and new partnerships.
The Group will also continue to focus on quality, develop its marketing strategy to raise repeat booking levels, and maintain the investment in its technology, including improvements to its e-commerce platform and apps, with a view to enhancing the owner and customer experience moving forward.
The IPO is expected to take place by mid-November of this year.
