Deals update – what's happening in the leisure sector?
October 28, 2015
Following our update earlier this year, 2015 has continued to see an abundance of activity in the leisure sector. Completed deals we've worked on have spanned restaurants to gyms and holiday parks to online travel. Across all of these, consolidation has very much played a part, with a number of large scale mergers or buy and build strategies seeing more corporate activity, not least in the Gaming sector.
Restaurants remain a tasty area for investors with growing consumer confidence and the longer term trend toward eating out helping ensure it remains a sector where people like to indulge. We see an increasing trend toward fast casual and premiumisation, which we expect will give rise to a number of transactions going forward.
To help work off all our dining out, we've been active at the gym, helping on the sellside for both Virgin Active and LA Fitness. We expect to see more in this area, particularly with the low cost chains weighing up their options.
Travel and holiday businesses have also had a busy summer both at home and abroad, with corporate structuring and the success of niche and premium players likely to drive more activity.
Looking forward
Overall, the sector looks set to see continued M&A activity, but there are some headwinds affecting profit. Unsurprisingly, the implications of the national living wage is drawing a lot of attention, and whilst we've seen a number of announcements as to planned approaches, ultimately, the question on people’s lips is whether there is an offsetting benefit from increased consumer spending power, and how much can you recover through pricing. Along with this cost inflation, multi-site operators face ever stiffer competition for property (and not just in London) and finding good staff.
How do you see the rest of 2015 playing out? Share your thoughts below or schedule a meeting to discuss your situation in confidence.
