Harry Stoakes, M&A Partner – Leisure at BDO reviews the 2019 travel sector and what to look for in 2020.

2019 was the year of climate change, and actually doing something about it became even more real. One year ago Greta Thunberg was a solo activist, yet in September 2019 millions demonstrated across the world. Travel by its very nature has an important role to play and this should be on every Board’s agenda. Consumers still want to travel long distances by plane but if they know their carbon impact has been eliminated then this will go a long way for brands to keep up with this important movement and stay relevant with consumers. Saying ‘we have a plan to offset’ is no longer good enough.

Looking for positives, the challenging outbound UK booking environment does not reflect the fact that UK employment is at a record high and interest rates remain at record lows (and will not be increasing soon), both good reasons for consumers to spend. The disposable income is in consumers’ bank accounts and when Westminster can provide more certainty on our long term macro-economic outlook, I’m confident we will see a consumer rebound. Of course, Sterling is very important for outbound travel and we see the impact on Sterling since 2016 which has made international travel more expensive and domestic travel much more appealing.

What does 2020 have in store?

As an M&A advisor, I am always looking for silver linings and there’s plenty to be optimistic about. We are sitting in a liquidity boom with unseen levels of global money raised by private equity investors that needs a home. This is currently at $2 trillion and a significant sum of this is in the UK as the second largest global private equity market. What this means is that in 2020, the inevitable consumer rebound will be in full swing, growing travel businesses will attract strong investment interest with the right advice behind them.

A second reason to be cheerful is domestic UK operators and inbound operators such as Destination Management Companies will continue to increase their relevance. Domestic operators are trading strongly and in the last 12 months, Travel Chapter (UK accommodation listings) has attracted its second round of private equity investment from ECI and Away Resorts (UK holiday parks) has traded from LDC to Bregal Freshstream.

Gain more insights into the travel sector by reading the latest edition of The Travel Diaries where we highlight more key trends and opportunities in the sector.

Harry Stoakes in an M&A partner in the Leisure sector at BDO.

“Private equity has invested consistently over the last decade and will return strongly to the sector in the second half of 2020 following a ‘wait and see’ year in 2019.”

Harry Stoakes, M&A Partner – Leisure at BDO

Can UK travel operators find the silver lining in a sluggish M&A market this year?

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