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The travel sector continues a resilient course through 2025, with strong fundamentals creating a healthy appetite for M&A in the sector. But while demand remains robust, dealmakers are contending with some turbulence: unpredictable booking patterns, geopolitical headwinds, and a market that’s still finding its post-COVID rhythm.
Announced M&A activity in travel and accomodation quarterly (UK targets or aquirors)
Sources: Mergermarket, BvD Zephyr and GT sources
The desire to travel is undiminished. d During a recent ABTOT M&A panel we hosted, the market dynamics are good everything you’d want to see is in place - but that doesn’t mean deals are easy. Booking patterns, once a predictable barometer of performance, have remained variable . It’s this unpredictability which is making buyers cautious, and slowing down deal completions.
If bookings are strong, uncertainty is removed from a deal process, but if they’re soft, even temporarily, it creates nervousness. Buyers hesitate, advisors pause, and timelines stretch. This year, later-than-usual bookings, driven by everything from weather to economic sentiment, have made that uncertainty more pronounced.
Geopolitical tensions are also shaping travel flows. e.g. US outbound travel, especially among business travellers, has been impacted by economic volatility. The result compounds unpredictability in booking patterns.
Private equity is showing strong interest in niche travel and tour operator segments. The recent Vitruvian investment in Great Rail Journeys is a standout example. With a track record of backing travel businesses, Vitruvian’s move signals confidence in the sector’s long-term growth.
Other niche players are also attracting attention. Accessibility-focused operators like Limitless Travel and over-50s specialists are seen as high-potential targets, offering differentiated propositions.
Announced PE activity in travel and accommodation quarterly
Sources: Mergermarket, BvD Zephyr and GT sources
A leading escorted tour provider of worldwide rail holidays, Great Rail Journeys, headquartered in York, has entered a new chapter with its acquisition by Vitruvian Partners. Previously backed by mid-market private equity firm Duke Street, the company is now well-positioned to accelerate its growth with Vitruvian’s support.
Lovat Parks, a B Corp-certified holiday park operator with sites in popular UK holiday regions such as Cornwall, Norfolk and the New Forrest, has been acquired by Terra Firma and TPG Angelo Gordon. The founder has retained a minority share and will continue to lead the business operations.
Real estate investment firm Tristan Capital Partners completed the acquisition of 100% of the share capital of the budget hotel brand easyHotel. The deal includes 48 hotels across 11 countries and an asset base of over €400 million and is set to drive the brand’s continued expansion across key markets in Europe.
The Travel Chapter has strengthened its presence in the Lake District with the acquisition of Lakeland Retreats, a holiday lettings agency known for its luxury offerings. The deal will add to Travel Chapter’s portfolio with 220 properties in popular holiday destinations including Windermere, Ambleside, and Keswick.
Announced M&A activity in Travel quarterly (UK targets or acquirors)
Sources: Mergermarket, BvD Zephyr and GT sources
After a subdued Q1, deal volumes rebounded in Q2—up 45% overall, and 67% for travel-only deals. But we shouldn’t read too much into quarter-by-quarter swings. If we normalise Q4, Q1 and Q2, the market looks stable. Q4 was distorted by capital gains tax changes, and Q1 was quieter as a result. What we’re seeing now is a return to a more consistent pattern.
That consistency is reflected in the data: since Q4 2022, deal activity has shown a steady upward trend, with only minor fluctuations. The market, it seems, is finding its level.
Private equity deal volume rose 29% in Q2, with a shift toward larger, more strategic investments. Minority stakes were rare this quarter, suggesting a preference for control and long-term growth plays. The focus remains on specialist operators - luxury, experiential, or demographically targeted - rather than broad-based holiday providers.
Q2 has been relatively quiet for the travel sector. Broader capital markets have been subdued, particularly in the UK, reflecting the underwhelming performance of the US markets following their “liberation day” period. Overall, market sentiment has been subdued.
Debt markets have shown a marked improvement compared to the previous quarter. There is strong appetite for lending provided the business fundamentals are sound. However, debt availability is closely aligned with private equity sentiment: where PE interest is lacking, debt financing is also likely to be constrained.
That said, businesses with a clear niche, loyal customer base, and resilient demand, such as those in the travel sector, continue to attract interest. Lenders are demonstrating creativity and a willingness to deploy capital, especially where there is a compelling story.
While the consumer sector remains more challenging than others, there are still viable funding routes. If a deal is commercially sound, the debt markets are generally finding ways to support it.
With most 2025 bookings already made, the focus is shifting to FY2026. September’s ATOL licence renewals and forward booking data will offer early clues about next year’s performance.For those in the market, results in Q3 will shape their valuations and may provide fertile ground for dealmaking.
For the hotel sector, the second half of the year is expected to be more challenging. Rising labour costs driven by increases in National Insurance and the National Minimum Wage as well as the rollback of business rates relief in April 2025, are putting pressure on margins. Additionally, speculation around potential tax increases in the Autumn Budget may be dampening consumer confidence.
On a more positive note, M&A activity remains steady, with limited signs of formal distress (e.g., insolvencies). Furthermore, the outlook for interest rates remains favourable, with anticipated reductions over the next 24 months likely to support increased investment activity.
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Announced travel and hotel deals quarterly
Sources: Mergermarket, BvD Zephyr and GT sources
Announced M&A activity in Hotels quarterly (UK targets or acquirors)
Sources: Mergermarket, BvD Zephyr and GT sources
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