Investors continue to see “huge opportunities” in the UK travel industry as it continues to hold its own despite wider economic and political concerns caused by Brexit, a leading financial advisor claims.

The projection is based on a large number of deals seen in 2018, continuing a steady flow of transactions witnessed over the last few years.

Many players in the travel industry have attracted the interest of private equity (PE) investors looking for strong growth opportunities.

“We are likely to see further secondary buy-outs, which were a particular characteristic of the market in 2018, as businesses grow and existing PE investors look at their exit options,” corporate finance advisor Clearwater International said.

“Trade acquirers will also continue to improve their growth rates through M&A (mergers and acquisitions).”

The projection comes against a backdrop ofgrowth of the UK travel market in recent years showing little sign of slowing.

The market was worth around €54 billion in 2017, while last year more than 47 million overseas trips – and 61 million domestic trips – were taken.

“Much of this growth continues to be driven by changing consumer behaviour as holidaymakers shun the traditional two-week beach break in favour of more flexible, exotic and experiential holidays,” a report by Clearwater said.

“At the same time social media is playing an increasing role in holiday choices, with an estimated 61% of millennials influenced to travel to a destination by its potential for Instagram-friendly snaps.

“As such, we continue to see significant growth in areas such as premium, online, escorted and niche specialist travel. These segments have also seen notable M&A activity in recent months, with private equity investors particularly active.”

The firm cited Nielson Holidays, a business that has capitalised on the increasing demand for activity and wellness holidays at the premium end, being bought by LDC.

Other PE deals have seen:

• Tour operator On The Go Tours acquired by Alcuin
• Escorted rail holidays provider Great Rail Journeys bought by Duke Street
Livingbridge acquire online travel agency loveholidays
Silverfleet buy Riviera Travel, an operator of escorted tours for the over-55s.
• In a trade deal, Classic Collection Holidays, which sells luxury beach holidays through branch-based travel agents, was acquired by listed travel business On the Beach

Clearwater identified ‘skip-gen’ travel as emerging as the latest trend, where grandparents take their grandchildren on holiday, leaving the parents behind.

The rise is attributed to the baby boomer generation who, in the midst of retirement age, are prioritising travel and family and are looking for ways to combine the two. Such trips are typically planned around certain milestones in a grandchild’s life.

Increasingly tour providers are targeting this growing travel group, which requires activities with cross-generational appeal.

Cruising appeals to ‘skip-gen’ as it caters to a variety of ages, offering diverse itineraries and on board activities that are tailored to the guests.

“Therefore, multigenerational cruising is likely to see an increase in popularity,” Clearwater predicted.

The growing and wealthy over-50s demographic also represents an “exciting opportunity” for the travel sector as it is expected to represent 40% of the UK population by 2033.

“This older demographic is also becoming much more active, carefree and adventurous, increasingly looking for alternative ways of enjoying life and is becoming more inclined to travel,” according to the study.

“Companies have responded by making holidays friendlier to this generation by offering more managed, packaged, and escorted/guided holidays which provide high quality experiences.

“As such, travel operators in this space are attracting significant attention from investors.”

Leading operators are waking up to the growing spending power of Muslim travellers have, driven particularly by millennials.

“In the travel space we are seeing more Muslim-friendly platforms springing up,” Clearwater said. “For example, Halalbooking.com, a travel search and booking website, has rapidly increased its accommodation portfolio with the aim of listing 10,000 properties. The London-based company is expecting to achieve revenue of at least $40 million in 2019 with a target valuation of $1 billion in 2022.

“Compared to the already well established online travel agent market, halal tourism e-commerce is still in its infancy. However it is a market that will grow quickly, and so it wouldn’t be surprising to see some M&A activity in the space,” the reported added.

Other trends identified include a rapid growth in sustainable travel and shorter-duration holidays, meaning more business for local economies, especially when more people opt for staycations.

“Staycations are still an extremely important market in the UK. For example in 2017 alone, 56% of all adults stay-cationed and 74% were planning to do so in 2018.

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