Recent trends in Travel M&A and implications for the future
September 04, 2018
As the summer holiday period comes to an end, we’ve been reflecting on the high level of transactions in the travel sector, and considering the drivers behind this trend and how it will continue. There has been a lot of deals activity in the travel space recently, with 49 deals announced and completed in Europe this year to date as reported by Mergermarket.
Deals have been particularly prevalent in certain segments of the travel market: experiential travel, domestic tourism and tech-enabled businesses.
Despite the diversity of offerings between them, these three segments have attracted interest, from both trade and private equity purchasers, as they have two things in common – namely they are growing segments with resilient and defensible business models.
A number of companies are now focussed on differentiated offerings which attract customers looking for better products, which are tailored to their needs and readily accessible – be it tailored/ premium (e.g. Travel Counsellors, Audley), escorted (e.g. Riviera Travel and Great Rail Journeys) or activity based (e.g. Neilson).
As well as the growth inherent in addressing this consumer demand, the control of the product or knowledge also provides resilience against disintermediation and price comparison.
With ongoing success, the inherent advantages of scale in terms of route to market or access to product will likely lead this to continue to be an attractive area for deal activity.
The continuing rise and resilience of the staycation market are well trailed. Increasing professionalism and more developed consumer offerings by holiday park operators (e.g. Forest Holidays and Park Holidays), and customer understanding and platform scale by agents (e.g. Travel Chapter, Sykes, Wyndham) in an evolving market has led to the growth and success of these, and investor interest in them, with no signs of abating.
Whilst all of the companies mentioned above have invested heavily in technology throughout their businesses, be it route to market, customer offering or back office, we need to consider those for whom the technology is at the heart of their business. Specifically the travel ecosystem, which links suppliers with customers, is complex and changing. There has been disruption throughout the market, including new agent models (e.g. loveholidays, Sykes, Travel Chapter), B2B intermediaries / connectors (e.g. Atcore, Tour Partner Group, Hotelbeds) and metasearch (e.g. Skyscanner), which we expect to continue to evolve.
What does this mean for future activity?
There is continuing momentum in the travel deals space and we expect to see further activity in the coming year. It is an attractive segment, with scale and market growth supported by the consumer trend towards spending on experiences rather than things. Ongoing industry evolution also gives the opportunity for entrepreneurial management teams to disrupt service to market vs. incumbent models, which will therefore continue to attract private equity investors.
Finally, there are a number of well-capitalised trade players looking to increase their customer base, offer a greater selection of products, and scale their businesses internationally. This will lead them to consider acquisitions and consolidation – domestically and internationally, whether outbound or inbound (notably in the light of weaker Sterling).
An interesting period ahead and we look forward to discussing with you…..
Our recent deals experience:
PwC Corporate Finance has been at the forefront of the recent deal activity, advising loveholidays, Click Travel, Riviera Travel, Hotelbeds, Forest Holidays and Park Holidays, while our Strategy& Deals team has also advised Great Rail Journeys, Atcore, Travelopia, Tour Partner Group, Arosa,Leisure Pass and Smart Destinations.