Accountancy firm Grant Thornton expects increasing numbers of mergers and acquisitions in the UK travel market over the rest of 2023 as the post-pandemic recovery continues.
In a report called ‘Travel sector M&A takes off in Q1 2023’, its experts said: “2023 started with robust M&A for accommodation and showed the green shoots for deal activity in travel.
“We anticipate increasing activity as the year progresses, and recently announced deals, such as Hyatt Hotel’s Corporation’s intention to acquire luxury hotel platform Mr & Mrs Smith, show strong investor appetite for UK businesses.”
It noted “continued positive signs from the sector” such as Emirates’ record profits and sales for its 2022-2023 financial year, and British Airways’ owner IAG reporting that its group airlines were close to pre-pandemic levels during the first three months of the year.
Meanwhile, 78% of travel managers anticipate more business travel in 2023 compared with 2022, according to the Global Business Travel Association.
“The airline figures suggest consumers are determined to keep travelling despite pressure on household spending,” said the report.
“Indeed, data from our Cut Back Economy report shows that squeezed British consumers would rather cut back on other areas above travel.
“In terms of M&A, our conversations with the industry reflect this optimism. For example, holiday firms are telling us bookings are up, and business owners are preparing to sell now the post-pandemic travel outlook is clearer.”
It said the was a “healthy level” of UK deal activity within the UK travel sector in Q1 2023, amounting to 10 deals.
Total deal value – including only those deals where this information was publicly shared –stood at £273 million.
Examples included Travel Counsellors’ acquisition of homeworking agency Holidaysplease in March, and the acquisition by Blantyre Capital Limited and Fairtree Hotel Investments of Crerar Hotel Group’s portfolio of seven luxury hotels.
In February, Australia-based Flight Centre Travel Group signed an agreement to acquire UK luxury travel brand Scott Dunn for £121 million. The deal gives Flight Centre a foothold in the UK and US luxury travel markets, noted the report.
It said hotels activity is picking up but warned of “headwinds” such as the need to prove the value of business travel trips; recruitment problems; inflation and borrowing costs.
The report was written by partner Nicola Sartori, head of M&A for retail and consumer brands, and Matt Goodbourn, M&A manager.