Trade v Private equity

We are seeing a level of activity in the UK travel sector similar to pre pandemic levels: six deals have been completed this year so far achieving in excess of £350 M in H1 2023 [iii], compared with five completed in 2019 for the same period [Figure 1]. Similarly, trade acquisitions have been most active so far this financial year, accounting for four out of six deals, resuming their robust activity seen before the pandemic, particularly in 2019, when 10 out of 12 acquisitions in this space over the year were trade led [Figure 2].

In order to expand into new destinations where they feel underrepresented, firms are acquiring international partners to penetrate new markets and customer bases. In recent expansion plans, TUI announced it has launched new international flight routes from the UK[iv] as well as adding new destinations to its hotel portfolio across four continents through international partnerships[v]. Trade buyers are eager to accelerate their post-pandemic recovery and are using M&A solutions to fast track this growth by prioritizing internationalization. Recent examples include:

  • October 2022: EasyHotel, UK based international budget chain hotel network, acquired eight franchised hotels in the Benelux region for €145 M. The acquisition supports the firm’s growth plans to expand its international reach to 13 countries and reach 100 franchised hotels by 2026[vi]
  • March 2023: Travel Counsellors, the fast-growing technology platform for travel entrepreneurs based in the UK and Ireland, made its first acquisition this year with Holidaysplease, a specialist travel advisor network[vii]. This partnership should expand the international reach for Travel Counsellors, increasing their operations from six countries to enter the 11 continents[viii] in which Holidaysplease operate

Additionally, in some cases, M&A is being used to secure new business models, revenue streams, systems, and technology. Recent examples include:

  • January 2023: Flight Centre’s acquisition of Scott Dunn[ix], the UK-based tour operator specializing in luxury holidays, provided Flight Centre with an entry point into the UK and US luxury market and expedited its plans to create a luxury collection of travel brands
  • June 2023: Hyatt’s acquisition of Mr & Mrs Smith for £53 M[x], enhanced Hyatt’s luxury offering to a global market by providing access to over 20 countries where Hyatt currently has no presence. Additionally, Hyatt gained access to a reported membership base of one million luxury-focused travellers

Private equity activity is subdued in comparison to trade-led M&A but remains in line with 2018/19 levels, as can be seen in Figure 2 below. Current conditions in the debt markets restricting the availability and cost of financing means that private equity firms have been finding it more challenging to be competitive. However, there have been some recent examples of success for private equity, including:

  • June 2023: ICG invested in Direct Ferries[xi], the largest ferry ticketing platform globally[xii], aggregating ferry routes though 250 operators. Direct Ferries can now continue its international growth strategy for consumers and freight utilizing the experience of ICG, developing the technology and digital / data capabilities that underpin both channels
  • June 2023: Perwyn acquired Cruiseline[xiii], a Monaco-headquartered online travel agent specializing in cruise holidays. Cruiseline is now well positioned to continue its expansion into new geographies under Perwyn’s ownership, capitalizing on the growing demand for cruise holidays
  • July 2023: Primary Capital acquired Diversity Travel[xiv], a travel management company providing fully integrated service to the charity, academic and not-for-profit sectors. Having recently expanded services into Europe[xv], Diversity Travel is now well positioned to expand into further territories, leveraging the expertise of Primary Capital to become a global leader in this niche

The backlog in private equity assets

Recent data suggests a material backlog of private equity deals in the sector, driven by travel restrictions imposed by the pandemic. This data shows that there are over 30 UK travel assets currently backed by private equity: 23 of which have been held for over five years, and 11 for over eight years[xvi]. Whilst improved financial performance alone will not trigger M&A activity, more completed transactions should provide comfort for investor demand and valuation benchmarks. A busy summer of bookings should improve faith in the sector rebound, driving more appetite for the sector and helping to reduce the bid-ask spread between buyers and sellers.  

The latest updates for major players show good reason for optimism: Saga Travel booking revenue for 2023/24 is up 37% compared with the same time in 2022 driven by the uplift in touring[xvii]; Expedia gross booking for the first quarter of FY 2023 was up 20% compared with 2022 at $29.4 BN[xviii]; Booking Holdings’ revenues have grown 40% year-on-year[xix] with the booking window having expanded for the first time since the onset of the pandemic; and EasyJet Holidays have seen +200% customer growth year on year in H1 2023, expecting to make an end of year profit exceeding £80 M[xx].

If this summer proves as busy as predicted for bookings, we are optimistic it will pave the way for exits in 2024. Comparators will be become more challenging as the year progresses but operators will welcome a period of relative stability to prove a sustainable level of performance.

Potential challenges posed by regulatory reform

Threatening to dampen the positivity surrounding travel this year is the impending CAA Atol reform[xxi]. Under CAA plans, all travel operators may be required to operate under a trust model as part of an Atol reform[xxii] aiming to segregate customer money following high-profile failures during the pandemic – most notably, Thomas Cook’s collapse in late 2019[xxiii]. This plan would remove the ability for operators to utilize customer cash until after the fulfilment of those customers’ holidays.

Following confusion and concern amongst travel operators, the CAA attempted to reassure market participants in May[xxiv] noting that segregation of monies will not necessarily be mandated, and that trust accounts were not necessarily the proposed approach. Companies such as On The Beach that already operate under the trust model[xxv] will be unaffected, however for those that are not, having to make the move could lead to tighter working capital positions, a lower level of debt capacity and potentially the need for external investment. The lack of clarity from the CAA does lead to uncertainty for M&A and debt financing.

Preparation is key

As operators look to kickstart the exit process, we envisage increased sell-side pitch activity in H2 2023 and H1 2024, even for processes that will not launch in the near term. We see operators and vendors bringing advisors onboard earlier to assist with the strategy and behind-the-scenes preparation, optimising the positioning of the company for the exit process. Vendors will be asking themselves is it better 'to travel or to arrive'? This is not straightforward and our experience over the Covid recovery period implies that exit windows may be short and volatile and trying to pick perfect conditions is not without risk.  


To discuss any of the themes explored get in touch with the global Consumer, Leisure & Retail team here >


This article has been prepared solely for information purposes and is not intended to function as a “research report.” In particular, this means that it is not intended, nor does it contain sufficient information, to make a recommendation as to the advisability of investment in, or the value of, any security.   

Additionally, this article does not constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of any offer to buy, or any recommendation with respect to, any securities. You should not base any investment decision on this article; any investment involves risks, including the risk of loss, and you should not invest without speaking to a financial advisor. 

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[i] ‘Unlocking travel’s potential’, ABTA and SBiT report, page 2

[ii]Airlines defy gravity as economic gloom fails to bring them down to earth March 1 2023

[iii]Mergermarket data export (including only those deals where this information was publicly shared)













[xvi] Mergermarket data export (including only those deals where this information was publicly shared)