Travel and Leisure: Resurging Demand & Investor Interest

Key Learnings:

  • Recent trends in the travel and leisure sector are contributing to rising investor activity.  
  • As the sector continues to recover post-pandemic, demand for high-quality companies should remain strong.  
  • There are several key attributes of top-performing companies that investors should be aware of.  

Strong and sustained recovery is well underway in the travel and leisure sector, which is benefiting operators industrywide. As a result, investor interest is resurging in top-performing assets.  

Here, senior bankers from the Harris Williams Consumer Group share why M&A volume in the space continues to grow, and which traits are keeping best-in-class businesses ahead of the curve.  

What is causing resurgent investor interest in the travel space?

Pent-Up Demand and Strong Outlook  

Demand for travel and leisure is rebounding rapidly with COVID-19 restrictions falling away. Will Bain, a managing director in the Harris Williams Consumer Group, explains: “Due to pandemic-driven travel restrictions, international travel suffered to the benefit of domestic operators. Even with international routes now reopening, domestic markets have remained strong. There is considerable pent-up demand with a healthy long-term outlook for most types of travel.”  

Most operators are seeing a rise in bookings, and, in many cases, these bookings are exceeding pre-COVID-19 levels. “We expect these buoyant booking levels to continue, despite pressures on the consumer from rising inflation. Many market commentators forecast solid underlying market growth over the next three to five years,” says Bain.  

Consumers Prioritizing Experiences  

Consumers are continuing to prioritize spend on experiences, including travel. This is a long-term trend across the full range of consumers.  

“Operators delivering a top-notch holiday experience are seeing strong re-book rates among consumers who recently took a domestic or international trip, especially after not having one for years,” notes Ed Arkus, a Harris Williams Consumer Group managing director.  

Long-term consumer behavior trends further support sustainable demand for travel. “There is a shift from spending on products to services, and consumers crave the experiential nature of travel,” says Bain.  

“It’s a sector that can be enjoyed by all,” adds Arkus. “People can spend what they’re comfortable with and get a great holiday experience. In our recent joint study with OC&C, we found that higher-income households are more likely to book a vacation in the near term, although the differences across income brackets are small (Read the Full Report). The travel sector serves a wide consumer demographic, and research suggests that spending on holidays is highly resilient through economic cycles.”  

Increasing Investor Activity  

Due to these positive trends, investor activity is increasing with a greater desire to put money to work from both private equity and strategics.  

“During the pandemic, strategic buyers with long-term strategies took advantage of M&A opportunities. In many ways, COVID-19 unlocked once-in-a-generation consolidation plays—often including multigeneration family-owned businesses—that might not have happened otherwise,” says Zach England, a director in the Harris Williams Consumer Group.  

“It’s a sector that suits a range of M&A strategies,” adds Bain. “The buyer universe in travel is incredibly varied, from infrastructure-type investors to tech-heavy, asset-light investors. It presents plenty of ways to play the sector.”  

This was exemplified in Harris Williams’ recent sale of Forest Holidays, a leading U.K.-based operator. This transaction involved buyers from infrastructure funds, traditional private equity, and family offices, as well as asset-light and asset-heavy strategics from both Europe and the United States.  

“We’ve had a significant uptick in conversations with potential investors who are new to the travel sector, especially within private equity,” says Bain. “These investors have a fresh lens and perspective. Buoyed by the positive medium-term outlook, we will see more new investors to the travel segment in the coming months.”

What differentiates best-in-class travel and leisure assets? 

Brand and Product  

“Companies with a truly differentiated offering have an advantage,” says Arkus. “These unique platforms are building direct and loyal customer bases through high-quality experiences, customer service, and tailor-made options for customers. The companies doing this best can grow quickly and take market share.”  

For instance, after COVID-19 rules loosened, business models featuring isolated holiday experiences attracted investor attention the fastest.  

Arkus shares an example surrounding two recent Harris Williams transactions: “Travel Chapter and Forest Holidays both give travelers the ability to be separated from others by offering cottages and cabins, respectively. You can be socially distant in an exciting, comfortable, and engaging setting. These companies do a great job of targeting consumers who want a break from their hectic lifestyles.”  


Technology is another clear enabler of leading companies in the space, and can drive a differentiated offering, better customer experiences, and more efficient business operations.  

As England puts it, the better funded, more professionalized players have invested heavily in tech—and are reaping the rewards. “Thanks to better tech, these businesses drive greater customer demand at much lower costs, decrease acquisition and retention costs, and engage consumers in a better way than before.”  

Bain highlights Sykes Cottages as a great example: “Sykes generates significant value through its tech for both owners and customers. The more it has harnessed technology, the more scalable it has become. Sykes’s advanced algorithms optimize yield through effective demand generation and sophisticated pricing analytics, making them a very profitable business.”  

Arkus adds another layer: “The best operators use data extensively to drive their businesses, providing investors with large datasets to evaluate them. This is a big change in sophistication led by the digital players but has expanded to all operators within travel.”  

“These well-capitalized operators that increased their tech investment during COVID-19 are at the forefront of the recovery with the fastest acceleration out of the pandemic,” says Bain. “This is becoming even more important given inflationary pressures and the resulting difficulties in hiring staff and managing wage costs.”  

Revenue Visibility  

Top operators also have clear revenue visibility, which gives investors better confidence in their near-term outlooks. “For the best brands, over 65% of annual revenue often comes from repeat customers. It’s incredibly attractive for investors that this level of yearly revenue can be counted on, especially for private equity,” says Bain.  

This is because private equity has grown accustomed to assessing travel businesses through the lens of customer lifetime value and customer acquisition costs. “The better visibility operators have on how well they monetize customers long term, the more revenue visibility they have for potential investors,” explains Bain.  


Finally, travel and leisure assets can create value and growth through a sustainability angle. England expands: “Consumers care about sustainability. In fact, 65% of consumers want to see more sustainability information from travel providers. However, 70% feel overwhelmed starting the process of becoming a more sustainable traveler (Read the Full Report). The best operators take care of sustainability for you. Forest Holidays, for example, generates significant economic benefits for local communities while educating customers on environmental matters and the importance of forest land.”  

“Sustainability is a multilayered differentiator for consumers. By supporting a sustainable business, they’re doing a social good, putting money into local economies, and engaging with a company that cares about employee and environmental well-being,” says Arkus.

Continued Recovery in Travel and Leisure 

For the travel businesses that survived COVID-19 difficulties, the opportunity ahead is exciting. The ever-increasing focus on experiential spend, combined with a strong sector outlook, underpins continued recovery in the sector with strong M&A activity expected to continue.  

In addition to the travel and leisure sector, the Harris Williams Consumer Group has wide-ranging experience in other high-value sub-verticals. To learn more, please contact our senior bankers.

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