p18 Columnist mar6 3/3/09 18:04 Page 18
news comment
ttglive.com
Chris Lee Barclays Commercial
“There are some bargains to
be had in the travel industry
for those with the funding
and confidence to proceed”
Leisure Group last week, with confirmation that
T
he well-publicised economic the company has £33 million in the bank, and
difficulties mean there has been that it is keeping this sum liquid in the hope of
an understandable emphasis on making some acquisitions.
cost-cutting, efficiency and the Lately, sales of companies in the travel sector
elimination of unprofitable trading. have been at between about four and seven
Feedback from customers with annual times a multiple of their earnings, although
turnovers of at least £20 million about trading there have been some notable exceptions.
in January has been interesting. The average However, expectations have reduced in line
was a fall of about 15%, but there was one top with the number of buyers to three to four
performer up more than 15%. times earnings in many cases, meaning there
In terms of sub-sectors, there were no major are some bargains to be had for those with the
surprises, with short breaks and secondary funding and confidence to proceed.
holidays suffering. The grey market, including There will always be owners who reach a
cruise and true specialist operators, did stage in their life when a sale to facilitate
comparatively well. retirement, a change of direction or for family
Unfortunately, there have been reasons becomes appropriate.
redundancies in many sectors, And with this economic downturn expected
including travel, and this, coupled to be around for at least a couple of years,
with less capacity in the debt and there may not be an appetite for some to
equity markets, has meant the num- hang on in a difficult market.
ber of buyers capable of acquiring Also, with property prices having
companies has fallen dramatically. fallen, some company owners will
Of the relative few in a position to take a view that it may be a good
look at mergers and acquisition activity, time to invest in that property
many are concentrating on other things, abroad or some other asset, if
and some prospective deals, such as the they feel the local market is
acquisitions of Travelzest, said to have been close to bottoming out. In
by one of the big two, and Ideal Cruising by short, some deals at prices
Lowcost Travel Group, have fallen away. attractive to buyers are, and
As a result of this set of circumstances, the will still be, available.
few deals that have gone ahead over the past There is no doubt that these are
nine months or so, following a busy few years difficult times, but the travel community is
of acquisitions in travel, have generally been at extremely resilient, and I expect that
much reduced profit multiples. characteristic to continue.
Against this backdrop, it was a refreshing
change to see the announcement of a positive
set of annual results for the Aim-listed All Chris Lee is head of travel at Barclays Commercial
18 06.03.2009
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