investment in travel M&A deals set for take-off


MERGER AND acquisitions (M&A) activity in travel appears poised to take off in 2025 after activity in 2024 proved slower than expected despite a small flurry of deals in the run-up to the Budget in October, with some business owners worried by the prospect of a sharp rise in capital gains tax on the profit from asset sales. Deloitte director for transaction


services Anika Keys noted: “Where deals were ongoing, there was a push to get things done if possible before the October deadline. But the rise in capital gains tax wasn’t as big as people were expecting.” She suggested the increase in employers’ national insurance contributions was more of a blow to businesses and “to the hospitality sector, in particular”, saying: “Hospitality businesses are going to think about scaling back investment, cutting recruitment and potentially making redundancies. Businesses are revisiting their forecasts to see what impact it’s going to have on their five-year plans.” However, Keys argued: “Hotels has


been a busy sector for M&A in the last year and that is expected to continue. There is a lot of private equity (PE) interest in the sector. Hotels seem to


FIGURE 54:


CORPORATE PRIORITIES IN 2025 Average ratings by CFOs on scale of 0-100


Reducing costs


Increasing cashflow Reducing debt


New products/services Disposing of assets Acquisitions


Increasing capital expenditure 0 42%


22% 25%


10% 12%


10% 10 20 % 30 40 50 52%


% age point change YoY


+1 -5


+1 +10


-5 -5 -4


60 Source: Deloitte CFO Survey, Q4 2024


High interest rates and a wait-and-see attitude among investors saw fewer acquisitions than expected in 2024


have been able to maintain relatively high room rates since the pandemic. People want to travel – which is one reason why the hotel sector is attractive to PE – and it seems that will continue.” Her colleague Alistair Pritchard, Deloite


lead partner for travel and aviation, agreed saying: “I’m reasonably confident we’ll see a pick-up in M&A activity during 2025. We knew 2024 would be challenging but thought it would pick up in the second half. It didn’t on any sort of scale because of high interest rates and because investors wanted confidence that there wasn’t just a post-pandemic boom in bookings. “There was a little flurry before the


Budget driven by private owners trying to sell businesses. [But] we’ve gone into 2025 in a different place because businesses now have evidence of a strong track record in 2023 and 2024. Interest rates are still relatively high but have come down, which makes debt less expensive. “Quite a lot of businesses are looking


REDUCING costs dominated corporate priorities going into 2025 (Figure 54)


at refinancing because interest rates are not as high as when they had to refinance during the pandemic. Businesses can access the capital markets to reduce their interest costs and can refinance at better rates on the back of two years’ good performance.” Pritchard added: “A lot of investment in


travel is private capital. Private equity has held businesses for longer than planned and lots of funds have been raised that need to be spent. So, we’ll see 2025 pick up on the back of that. There are some deals already in play which could complete in the first quarter or first half of the year.” He noted: “There is less money


being tied up as security. The regulators still have requirements around that, but some of the banks and credit card companies have eased [conditions] a little. So, financing for the industry is in a better place than it was.” Keys agreed, noting: “Businesses


have a post-Covid track record of two full years now and are performing well. Investors see that track record not


Travel Weekly Insight Report 2025 35


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