The global travel and tourism sector continues to rise and rise and is now worth an estimated $8.8 trillion as the world is opened up to more people.
Getting a piece of that pie – or an even bigger slice – is understandably at the top of many companies’ priorities. Just the 10 biggest acquisitions of 2018 in the travel industry were worth an accumulative $21.6 billion.
Here we look at some of the trends behind this growing market and look at what is to come.
What are mergers and acquisitions in the travel industry?
As in any industry, mergers and acquisitions are transactions that see ownership of companies and business change hands and consolidated into larger organisations.
Mergers can often see two mid-sized organisations join forces to take on the superpowers of industry, while those with deeper pockets can consolidate their market share by incorporating smaller businesses into their portfolio.
Financing such deals properly is crucial to their long-term success, whether through existing finance, or through a lender providing unsecured business loans.
Why buy a new business in the travel industry?
Although the travel industry typically comes under threat in times of uncertainty, as the UK is currently living through amid Brexit, the desire for people to get away makes it a strong contender for investment.
Travel and tourism contributes 319 million jobs to the global economy – 10% of the word’s workforce – and its rate of growth is 3.9% – comfortably above global GDP.
Indeed, only manufacturing is growing at a quicker rate than the travel sector, with giant industries such as healthcare (3.1%), Information Technology (1.7%) and financial services (1.7%) all growing at slower rates.
With a growing middle class in many of the word’s fastest-developing countries, it is not hard to see where the next wave of big-money tourists will come from, ensuring more success for the travel industry in the future.
How can investors acquire small travel agencies?
The majority of those major deals listed earlier revolved around property acquisitions, perhaps going some way to explaining some of the dizzying figures involved.
However, the market has been disrupted in recent years by the growing trend for online purchasing and mobile technology.
Airbnb grew from an inflatable mattress in Brian Chesky and Joe Gebbia’s San Francisco apartment into one of the biggest companies in the world, and one that has altered the face of holiday accommodation perhaps forever.
There are a growing number of apps and sites out there that offer travellers levels of comfort and convenience never before seen. Scouring the app stores for highly recommended applications is a place to start, as well as surveying holidaymakers to spot trends in app usage, can be a great place to spot the next up-and-coming business in the sector.