Budget sparks investor ‘frenzy’ Ian Taylor


The Budget on October 30 is driving a “frenzy” of merger and acquisition (M&A) activity in travel as owners and investors fear the chancellor could hike the tax on deals. That is according to Chris


Photi, head of travel and leisure at accountants White Hart Associates, who forecast a “hectic” October in the run-up to the Budget, saying: “There is a huge amount of M&A activity. We’ve never been busier.” Speaking at the Travel Weekly


Future of Travel Conference last month, Photi said: “We’ve seen a frenzy of all types of transactions. It’s off the Richter scale.” He said private equity firms


“have a lot of money they need to spend” and small-business owners who could not sell during Covid are now seeking buyers. The investment in Newmarket


Holidays by Soho Square Capital, announced on October 4, was one such deal, with White Hart advising Soho Square on regulatory approvals. Travel Trade Consultancy director


Martin Alcock agreed, suggesting “a queue of private equity firms are looking to move on businesses” and adding: “There is a bit of panic about capital gains tax (CGT).” Chancellor Rachel Reeves is


expected to raise CGT – levied on the profit from asset sales, most often at 20%. Alcock noted the rate could be aligned with income tax at “up to 45%” and said: “People are trying


Abta chair warns of jobs risk if national insurance goes up


Ian Taylor


A rise in employers’ national insurance contributions in the Budget at the end of this month will increase pressure on agencies to axe jobs or cut incentive schemes, Blue Bay Travel chief executive Alistair Rowland has warned. Rowland, who is chair of


Abta, fears an increase in national insurance will come on top of a rise in the national living wage next April after 10% rises in minimum wage rates in 2023 and 2024. Chancellor Rachel Reeves refused to rule out increasing employers’


4 17 OCTOBER 2024


national insurance contributions this week, insisting: “We need to close the gap between government spending and tax receipts.” At the same time the Low Pay


Commission, which advises ministers on minimum wage rates, forecasts a rise in the national living wage from £11.44 an hour to £11.61-£12.18 next April, with a central estimate of £11.89 – 4% up on the current rate. Rowland noted “there have been


two significant bumps in the national living wage in the last two years” and said: “It looks as though employers’ national insurance is going up on top.” Speaking at a Travel Weekly


Private equity firms


are looking to move on businesses – there is a bit of panic about capital gains tax


to complete deals by October 30.” The time pressure has been


exacerbated where Atol holders are involved because the Civil Aviation Authority must sign off on financial arrangements following changes of ownership and “wouldn’t look at anything” while processing Atol renewals in September. The Budget need not mark a


cut-off in investor deals, according to Rick Jones, corporate finance partner


Alistair Rowland at last week’s Travel Convention in Greece


at consultancy PwC. Addressing the Travel Convention in Greece last week, Jones forecast a spate of deals in the next two to three years, with at least one M&A target, loveholidays, seeking a £1 billion valuation. He told the convention:


“Loveholidays is very publicly coming to market looking for £1 billion.” Loveholidays chief executive


Donat Retif last month denied knowing whether owner Livingbridge plans a sale, but parent We Love Holidays has been widely reported as up for sale. Livingbridge paid £180 million for a majority stake in the company in 2018. Jones said: “Investors see growth in travel today and


potential for growth in future.” i Business, pages 54-56


Business Breakfast at the Travel Convention last week, Rowland warned: “Another significant rise in the national living wage will be difficult. It’s great for people [getting it], but where there is a strong incentive to sell, it will be throttled. The problem is we’re living in a bubble of strong sales and that is going to end.” Rowland told Travel Weekly:


“You’re trying to square a range of salaries, pushing them up at the bottom by 10% when you can perhaps only afford 3% in the middle.” He noted: “We don’t know what the NI rise will be, but the


government has to do something pretty material. So, with NI going up, we’ll probably have a 30% cost hike in just over two years and that is a real problem. All you can do is kill incentivisation or squeeze people. Particularly in agencies, we’re going to see heads lost.” Rowland added: “It would


be lovely to see agents on £15 an hour, but it would kill incentives.” The national living wage is


revised annually in April. It replaced the national minimum wage for workers aged 25 and over in 2016 and


applies to those aged 21 and above. i Business Breakfast, page 12


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