Shield sector focus: Travel & Leisure

The Travel and Leisure sector comprises holiday and tour operators of all kinds, hotels, restaurants, travel agencies, transportation and logistics companies, ports and related services.

Shield Corporate Finance has considerable experience in the travel and leisure sector. Current or recent mandates include:

Review of strategic options for a major travel company in the portfolio of a major Private Equity house
Value-Building for an international leisure group strong in the golfing segment
Sale of WWT, which specialises in tailor made and luxury holidays, to Travel Angels
Sale of a controlling interest in Country Lanes, the award-winning UK active travel franchise, to a group of private investors identified by Shield, to enable the founder to achieve a national roll-out
Valuation and due diligence relating to a freight-handling simulation equipment company

Travel & Leisure sector M&A comment

The travel and leisure sector continues to expand as consumers enjoy greater disposable income and demand more from their hard earned leisure time.

As the internet becomes an ever more popular way of booking holidays, we have seen traditional "bricks and mortar" travel agencies having to offer greater levels of service, niche holidays or move upmarket in order to survive. Achieving sale at all for such companies is no mean feat.

Meanwhile, in the tour operator sector, the recent mergers of TUI with First Choice and Thomas Cook with MyTravel has seen the number of mainstream tour operating businesses in Europe drop from four to two in a matter of weeks.

Very shortly, the smoking ban in pubs, bars and restaurants will come into effect in England and Wales. Evidence from Ireland and Scotland, where the ban is already in place, suggests that this has had a mildly detrimental effect on the pub trade, while having a generally neutral effect on the restaurant and hotel sector.

Despite the fact that the travel and leisure sector is cyclical and vulnerable to unexpected external factors, such as terrorist attacks, Private Equity interest in the sector is extremely strong at present. Recent deals include Dubai International Capital's acquisition of Travelodge Hotels, BC Partners acquisition of the Hyatt Regency hotel chain, GI Partners acquisition of Punch Taverns, EQT Partners/Macquarie Banks acquisition of Select Service Partner and Blackstone's acquisition of Madame Tussauds Group.

Private Equity's interest in the sector relates to steady cash flows and the fact that many businesses are asset backed. Fragmentation in many segments creates buy-and-build opportunities. Looking forward, it is likely that continued de-regulation will make the gambling industry increasingly attractive to the Private Equity industry.