Report reveals private equity set to fuel 2020 acquisitions

Consumer confidence

But this lack of M&A activity in the sector is unlikely to continue for long, particularly if there is some sort of resolution to the current Brexit impasse after this month’s general election, which could create more certainty about “what future UK economic growth looks like”.


Harry Stoakes, M&A partner and head of the travel sector team at BDO, said: “The challenging outbound UK booking environment does not reflect the fact that UK employment is at a record high and interest rates remain at record lows – and will not be increasing soon – both good reasons for consumers to spend.


“The disposable income is in consumers’ bank accounts and when Westminster can provide more certainty on our long-term macro-economic outlook, I’m confident we will see a consumer rebound.”

“We are sitting in a liquidity boom with unseen levels of global money raised by private equity investors that needs a home.”


Stoakes added all outbound travel operators had “felt the pinch” this year – beyond the collapse of Thomas Cook in September.


The Travel Diaries charts the high number of deals since 2009 with the “boom” years for M&A deals taking place between 2014 and 2018, followed by the “steep reduction” seen in 2019.


“Private equity has invested consistently in the travel sector over the last decade and will return strongly in the second half of 2020,” added Stoakes.

“We are sitting in a liquidity boom with unseen levels of global money raised by private equity investors that
needs a home. This is currently at $2 trillion, and a significant sum of this is in the UK as the second-largest global private equity market.

“What this means is that in 2020, with Brexit uncertainty (hopefully) behind us and the inevitable consumer rebound in full swing, growing travel businesses will attract strong investment interest with the right advice behind them.’’

Travel targets

BDO said domestic “staycation” businesses would continue to be “particularly attractive acquisition targets” for potential purchasers.

While the number of deals featuring business travel firms, which has remained “reasonably consistent” over the past few years, is expected to continue in 2020 as “a market with historically thin margins remains ripe for consolidation and economies of scale”.

The report also looks at the post-Cook landscape for the UK’s largest tour operators going into peaks for 2020.

“Operators such as On the Beach and Loveholidays are gaining share and becoming more important as their sophisticated customer acquisition techniques continue to help them grow,” added BDO.

“Cook’s three million Atol passengers will all be up for grabs. Tui, Loveholidays, Jet2 and On the Beach will be looking forward to 2020 as the year they all gain market share, and easyJet Holidays could not have timed their entry any better.”