The travel industry benefitted from post-lockdown bounce back, creating a spike in catch-up deals. However, many investors wanted to wait for ‘normal’ trading to return. Geopolitical tensions and UK economic turmoil extended the hiatus.

Now the economy is improving, transactions that were paused (or never got off the ground) are finally coming to market. Our analysis of Mergermarket data for the first quarter of 2024 shows that buyers and sellers are as keen to do deals as consumers are to get on a plane.

Q1 2024 deal volumes

Announced M&A activity in travel and accomodation quarterly (UK targets or acquirers)

Graph depicting the announced M&A activity in travel and accomodation quarterly

Source: Mergermarket

There were 16 travel deals in the first three months of 2024, a 60% increase on the previous quarter.  

As I explained in our Winter Review, travel companies now have a year’s worth of trading figures that aren’t distorted by COVID-19 bounce back. Access to a set of clear trading data is helping to drive new transactions.  

Private equity interest in travel soared in Q1 

Announced PE activity in travel and accommodation - quarterly

Graph depicting the announced PE activity in travel and accommodation - quarterly

Private equity (PE) involvement shot up by 250% compared to the previous quarter and a similar amount compared to Q1 2023. Activity was spurred by consumer confidence, the reopening of debt markets and a high volume of assets for sale.

Consumer confidence

Travel has always been attractive to PE, and with research showing that consumers prioritise holidays above other household expenses and no longer see holidays as discretionary spend, appetite has come back strongly. With inflation at its lowest since September 2021 and travel bookings up, the outlook is even brighter. 

Access to debt

Interest rates began increasing in January 2022 and have remained at 5.25% since August 2023. As inflation drops—albeit more slowly than expected—financial markets predict a rate cut in November.  
This means two things for debt providers. They can offer cheaper debt and falling inflation means companies are in a better financial position to service loans.  

A backlog of sales 

During the pandemic, the usual reasons for exiting a business remained: ageing owners, PE cycles, management buyouts. These created a bank of pent-up deals that are now coming to market.   

How we helped 

We provided vendor due diligence for Simpson Travel’s March 2024 sale to Risk Capital Partners. Simpson Travel offers boutique hotels and villas in Europe. Risk Capital Partners’ previous travel investments include Neilson Active Holidays and  

Ed Pyke, Managing Director at Simpson Travel said: 

"We are grateful for the support and assistance of Hemal, Amit and the team at Grant Thornton on the financial due diligence for our transaction. Due to already possessing extensive travel industry experience, the Grant Thornton team picked up the business very quickly and produced excellent analysis and reporting for both vendors and potential bidders which no doubt assisted with securing a positive outcome in our process".

Cross-border activity

Almost half (seven) of Q1 2024 deals were cross-border. Incoming investment from the USA, Spain, and Switzerland respectively accounted for three deals, while UK companies acquired four foreign entities (Romania, USA, Netherlands, and Ireland).  

Travel trade trends

Investors target hyper-specialisms  

A deal with altitude 

In January 2024, Foresight invested £1.3 million in Caerphilly-based hard adventure business EverTrek (Bucket List Adventure Travel Ltd).

Grant Thornton Corporate Finance Partner Jamie Roberts said, “This represents another exciting development for the dynamic global adventure travel business in its eighth year of trading and is the first investment from the newly-minted Investment Fund for Wales.

“The business presents a niche, differentiated offering and has significant potential to scale at pace following the equity investment and the introduction of Chair Gordon Mathie to support founder Andy Moore and team.”

Evertrek’s destinations include Everest Base Camp and Kilimanjaro. The Investment Fund for Wales launched in November 2023 to boost the supply of early-stage finance to small and medium-sized businesses across Wales. 

And action! 

Travel and event management company Appointment Group (TAG) scooped up two agencies in Q1. In February, it acquired Atlantis Travel of London, which specialises in travel for entertainment production. In March, it bought TravelStars, which handles touring travel for country music artists and luxury travel for high-net-worth individuals. Both deals were backed by Apiary Capital, which subsequently exited TAG in April for a 4x return on investment after selling its stake to ECI Partners. 

Hotels remain the most active sub-sector

Deal activity by sector

Deal activity by sector

Hotels was the most active sub-sector in the first quarter of 2024 as institutional investors put money to work, reflecting the perception that hospitality may be better able to manage cost-base fluctuations than other sectors.

The spread of deals shows that investors expect growth in both luxury experience-led and obligatory value-led travel, such as work trips.   

However, the hotel sector isn't without challenges. An influx of new rooms is driving competition, which means owners must invest in existing offerings while (in some cases) having to refinance debt at higher rates.

This need for CapEx, combined with potential increases in funding costs, means hoteliers must be innovative while optimising funding structures. This may mean selling assets or attracting new investors.

It will be interesting to see how prices and deal volumes evolve as inflation and the associated movements in interest rates impact pricing expectations, especially for opportunistic buyers looking for bargains.

Bolt-on bookings  

In Q1, large bookings/holiday rental companies bolstered their inventories with the addition of smaller brands. In January 2024, Kuoni-parent Der Touristik UK acquired UK Solmar Villas Ltd. In the same month, The Travel Chapter, a lettings company backed by Intermediate Capital Group, added two travel firms to its portfolio. It acquired self-catering rental booking firm Imagine Ireland, which will operate under Travel Chapter’s Shamrock Cottages brand. In a separate deal, it bought local holiday lettings agency Coquet Cottages from the founding family.  

Airlines report strong tailwinds 

A more favourable economy is driving travel sector confidence, as shown in airline trading updates.

In February 2024, British Airways (BA) owner IAG said demand for leisure travel remained robust, with the group 92% booked for Q1 and nearly two-thirds booked for the first half of the year. In April 2024, easyJet boosted travel stocks after revealing strong Easter trading and high demand for summer flights.

As travel M&A goes from strength to strength, our team is busier than ever and we expect this to continue throughout the year.


For more insight and guidance, get in touch with Nicola Sartori.

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