A spate of private equity and venture capital deals in the UK travel sector are forecast in the next two to three years with at least one of the M&A targets, Loveholidays, seeking a £1 billion valuation.
That is according to Rick Jones, corporate finance partner and UK hospitality, sport and leisure leader at consultancy PwC, who told Abta’s Travel Convention in Greece: “Loveholidays is very publicly coming to market looking for £1 billion.”
He added: “That would be phenomenal.”
Loveholidays chief executive Donat Retif denied knowing whether private equity owner Livingbridge was planning a sale when he spoke at the Travel Weekly Future of Travel Conference last month
But the rapidly growing company, now the UK’s third-largest Atol holder, has been widely reported as up for sale for the past 12 months or so. Livingbridge paid £180 million for a majority stake in Loveholidays in 2018.
Jones highlighted the company after noting “travel was very attractive” to investors and M&A deals in the sector “buoyant” in the period before the pandemic shut down international travel.
But he told the Convention: “We’ve started to see green shoots of investment over the last 12-18 months.”
He forecast a fresh investment cycle over the next two to three years, suggesting: “Watch this space.”
Jones argued: “Investors want exposure to consumers, and they see growth in travel today and potential for growth in the future.”
Fellow PwC Strategy& partner Eleanor Scott reported a survey of PE investors with interest in travel found significant interest in ‘experiential’ holidays, companies targeting older travellers, luxury holidays, sustainable travel and technology-led companies.
She forecast “a lot of activity” by investors in these areas.
Scott noted a separate survey, of UK consumers, suggested about 40% of those planning a holiday this year were planning some kind of experience-based holiday, “about the same proportion as planning beach holidays”.
She said the market attracts investors “because it’s fast growing, is high growth with a high level of repeat business and hard for customers to replicate themselves, plus there is potential to expand product sectors and geography.”
Scott noted luxury travel is similarly fast growing, while holidays targeting older “more financially secure” travellers are growing “ahead of the overall market”, as is sustainable travel demand.
She also highlighted the attraction to investors of digital intermediaries in the sector, noting: “Investors like companies that are asset light.”