Business advisory firm RSM said while PE investment in travel was limited during the first six months of the year, a handful of “notable” deals suggested PE firms were still optimistic about growth opportunities within the UK travel sector.
RSM’s outlook follows a lengthy period of significant PE investment in travel, which started with Silverfleet Capital’s £250 million acquisition of Riviera Travel in December 2017.
This was followed by Livingbridge’s buyout of Loveholidays in May 2018; Vitruvian Partners investment in Travel Counsellors last June; and Duke Street’s purchase of Great Rail Journeys last July.
“Private equity investment in the travel sector was limited over the first six months of the year with uncertainty surrounding Brexit impacting the flow of attractive deal opportunities,” said Tim Robinson, RSM associate director.
He said ECI Partners’ acquisition this year of The Travel Chapter and Bregal Freshstream’s investment in Away Holidays, both secondary buyouts, underlined PE’s continued interest in travel.
“Other UK-based investment firms have targeted bolt-on acquisitions overseas as part of ambitious buy-and-build strategies where pricing and competition is not as aggressive,” said Robinson.
He added with fundraising within the UK PE market continuing to flourish, there was now record levels of “dry powder” available and an increasing appetite to invest this in high quality businesses.
“Look out for more travel deals being completed by private equity firms in the second half of 2019,” he said.
Other trends highlighted by RSM include the continued growth of the solo travel market; millennial and Gen Z travellers demanding higher quality, more personal, ethical and sustainable trips; and the rise of the staycation driving more hotels into the home rental market.
