Travel: Tour operators are attracting investor attention again
Demand for tour operators is ramping up; assets locked in because of Brexit and COVID are coming back to market, and bookings are remarkably strong.
Attractive travel assets
For investors in the travel sector, tour operators have been better protected from inflation and the cost-of-living crisis. Booking activity in 2023 suggests travellers are continuing to choose holidays over other forms of disposable spending, and on the back of years of disruption, they value the reassurance that booking through an operator brings.
Do your diligence
Destinations, reputation and the customer experience will be key, but it’s also important to understand the value drivers for specific businesses.
Here’s what to look for:
- Destination markets and local expertise
Our recent work on Inside Travel Group and other live projects is highlighting the importance of end market destinations. Market research can help quantify demand in these locations, and customer insight will confirm if the business has the local expertise to differentiate against other more generalist providers.
- Get your pricing right
Surveys suggest that consumers are less willing to forgo their holidays and are prepared to sacrifice other non-discretional spend instead. Price increases are tolerated, provided standards do not fall. What is the pricing strategy? Can the sales team clearly articulate it? How well is the business managing the customer experience given the squeeze on resources and staff?
- Talent
Getting and keeping the right people is still a key concern. Management teams will need to be able to present a clear plan of how they are addressing staff shortages now and in the future. What flexible working arrangements are in place? How is talent rewarded? What are the levels of churn in key roles?
- Be aware of the environmental impact
Holidaymakers are also more environmentally conscious and aware of their ecological footprint than ever before, a trend that is set to continue. Promoting resorts with a sustainable energy focus and the use of carbon credits are on the rise; tour operators would be well advised to embrace these changes. Those businesses that are conscious of their environmental reputation are likely to be more attractive to investors.
Tour operator deals we’ve supported
Please contact a member of the team about opportunities in the travel sector.
Jack Hibbs, Engagement Manager
[email protected]
+44 7883 296 346