Comment: M&A trends to look out for in 2025

In the first part of this article on travel M&A activity, I reviewed a bumper year for the sector in 2025. Here, I take a look at the factors to look out for during 2025

 

Niche is nice

Throughout 2024, PE gravitated towards niche travel companies, specialising in passenger type (groups, students, mature travellers, etc) or purpose (sports events, history, gap years, etc). PE and lenders are attracted to these assets for their typically higher margins, and the trend shows no sign of slowing in 2025.
Leading the trend – going for goals

 

More: Comment: Travel M&A continued to flourish in 2024

In October 2024, Compass Group’s sports hospitality firm, Keith Prowse, acquired Gullivers Sports Travel to expand its stadia tour and events business. Gullivers partners include the Welsh Ruby Union, Royal Ascot and England’s international cricket tours.

Tailor-made luxury

Luxury travellers are significantly more likely to book holidays through specialist operators compared to non-luxury travellers (51% vs 34%), according to Mintel. Meanwhile, research from Vamoos shows that 85% of luxury travellers say that working with travel experts is the only way to have a true luxury travel experience. We expect investors to continue to chase luxury agencies in 2025 for these reasons.

AI’s silent influence

Research from Abta shows that consumers aren’t rushing to AI bots to book their breaks, with 27% of people (including younger generations) still leafing through holiday brochures for inspiration.

However, investors will be seeking companies that are making clever use of customer-facing and behind-the-scenes technology such as predictive analytics to optimise pricing strategies, forecast demand and improve route planning.

Return of mainstream private equity houses

Since the beginning of 2023 when the industry was still reeling from the pandemic, deals have been dominated by smaller private equity houses investing in minority stakes.

However, throughout 2024, we’ve seen more mainstream PE-players return to the table using bolt-on deals to build existing platforms. They’ll be further encouraged by a slowly improving UK economy, which means debt is becoming cheaper and covenants and conditions are improving.

Continued demand for experience-led travel

Booking.com identified ’noctourism’ as a trend for 2025. The portmanteau of ’nocturnal + tourism’ refers to booking night-time experiences, such as the northern lights or cooler climates. This is just one example of the broader trend for experience-led holidays that drove M&A in 2024, and we expect it to continue in 2025.

InsideJapan, for example, offers trips that "get beneath the surface" of destinations by offering a menu of hands-on local experiences under categories like anime, food and drink, philosophy and sport.

Raring to grow

Last year’s deal data shows a sector that has bounced back stronger from pandemic upheaval and is raring to grow. We expect this momentum to continue in 2025.