Keswick's celebrated Theatre by the Lake has made it on to a list of seven of the smallest yet staggeringly spectacular theatres in Britain.

And according to Hundredrooms, the Spanish holiday rental search engine, the location of the hugely-popular theatre cannot be matched by any other in the country.

Set on the shores of Derwentwater and a stone's throw from the western fells of the Lake District, the theatre, says Hundredrooms, offers an experience that you cannot miss out on.

Vibrant and unconventional, Theatre By The Lake, features alongside other successful theatres in Britain compiled by Hundredrooms to celebrate World Theatre Day on March 27.

Last year £1.5bn worth of theatre tickets were sold in the West End.

But theatres, like the one in Keswick, which opened in 1999, survive on little but the goodwill of volunteers and plenty of grease paint.

"For years now the cuts to culture budgets have led to the closure of many theatres, and this has particularly impacted children's theatre, where there are some struggling to stay afloat," said a spokeswoman for the rental company.

It is for this reason, they say, they have chosen to draw up a list of the smallest theatres in Britain to celebrate examples of success and determination despite the hard times.

"Theatre by the Lake offers a host of events from drama, music, dance and comedy. Their timetable is always jam-packed," said the spokeswoman. "The magic of theatre situated in one of the country's most remote locations has become a firm favourite with family audiences."

"We're delighted we've been recognised as being the most spectacularly situated theatre in the UK," said Conrad Lynch, artistic director and chief executive of Theatre by the Lake.

"Our location next to Derwentwater is undeniably a very very special one. We love that we are able to offer audiences quality culture – whether that be one of our in-house summer productions, a family show, or a gig – in this beautiful setting, and that audiences can attend a performance having spent the day walking the fells and enjoying the amazing scenery," he added.

The theatre also stages its own productions at Easter, a Summer Season of six plays and a Christmas show. It also hosts the Keswick Film Festival in February, the Words by the Water Literature Festival in March and the Keswick Jazz Festival in May.