Mergers and Acquisitions (M&A) in Travel and Tourism Industry, Top Themes in H1 2021 - Thematic Research

In the first six months of 2021, M&A deal value in the T&T sector totaled $84bn, up 82.6% from the same period of the previous year. Q1 2021 saw 189 deals with $26bn total deal value, which is a 16.1% drop when compared to Q1 2020. However, global M&A deal value recorded a 123% increase in Q2 2021, which was the highest quarter-on-quarter growth percentage over the last five years.

The key themes of premiumization and indulgence, the sharing economy and low-cost evolution have driven M&A activity in H1 2021 due to the pandemic impacting travelers’ financial positions. According to the publisher's Q2 2021 Consumer Survey, when global respondents were asked if they were concerned about their personal financial situation, 15% stated that they were ‘not concerned’. Although this is still significantly less than the 31% that stated they are ‘extremely concerned’, it means that potentially three in twenty of the global travel market could be financially unaffected by the pandemic and may have even become wealthier during this period. This has driven high value deals such as the Star Entertainment Group merger with Crown Resorts. As already stated, 31% of global consumers said that they are still ‘extremely concerned’ about their personal financial situation, this has driven deals that involve the themes of the sharing economy and low-cost evolution. The Blackstone and Starwood Capital Group acquisition of Extended Stay America (ESA) is an example of this.

The first section of this report provides a specific deep dive into M&A activity in H1 2021. Deal frequency, value, location, and individual tourism sub-sectors will be assessed, also factoring in how the pandemic has impacted activity in this period. In the second section, the key themes behind recent T&T M&A activity market are displayed. In this section, we highlight the most interesting T&T M&A announcements across the first two quarters of 2021. For each announcement we provide the key themes - or theme - that is driving the deal to provide an overview of companies’ differing strategic directions.

With the impact of the pandemic now seeming to substantially subside in particular destinations in Q2 2021 due to successful vaccine rollouts, acquiring companies now feel that investing in countries that are emerging from the pandemic at a swift rate is a safer bet than before.

Key Highlights

• According to the publisher's Q2 2021 Consumer Survey, when global respondents were asked if they were concerned about their personal financial situation, 15% stated that they were ‘not concerned’. Although this is still significantly less than the 31% that stated they are ‘extremely concerned’, it means that potentially three in twenty of the global travel market could be financially unaffected by the pandemic and may have even become wealthier during this period.
• A key deal in Q2 2021 that was driven by this trend was the Star Entertainment Group merger with Crown Resorts, worth $7bn. The Star Entertainment Group is a gambling and entertainment company, which means it very much focuses on the indulgence aspect of this theme. The Star’s Chairman, Mr John O’Neill, said that bringing together The Star and Crown would create an estimated AUD12bn ($8.9bn) ASX-listed national tourism and entertainment leader. In the letter detailing the merger proposal, Star stated that it estimates that a merger with Crown would result in indicative cost synergies of between AUD150m ($111m) and AUD200m ($148m) per annum.
• Several T&T transactions in Q2 2021 involved special purpose acquisition companies (SPACs). Two notable deals involving US SPACs occurred in this quarter. Lodging company Sonder going public via a merger with SPC Gores Metropoulos was the first and the second was Grab Holdings, the largest ride-hailing and food delivery firm in Southeast Asia, announcing a merger with SPAC - Altimeter Growth Corp. SPACs are companies that are created solely to merge or acquire another business and take it public. Once a SPAC has been funded, it has two years to find an acquisition target or risk being liquidated and see the funds returned to the original investors. For the target company, one benefit is that SPAC deals include a less intrusive IPO process with fewer disclosure requirements.

Who should buy?

• CEOs and Senior Executives within the travel & tourism industry should utilize this report to assess how the T&T M&A market is evolving.
• Marketing Directors and CMOs within travel & tourism companies can gather an insightful understanding on trends occurring within the T&T M&A market and deal themes that are shaping specific sub-sectors.

Scope

• This report provides a comprehensive overview of the T&T M&A market.
• This report assesses the impact of COVID-19 on M&A activity.
• This report identifies the main themes contributing to M&A activity in H1 2021.
• We highlight companies involved in recent M&A activity in T&T, such as HomeToGo, The Star Entertainment Group, Sonder, Marriott, Canadian National Railway.

Reasons to Buy

• Understand the T&T M&A market.
• Assess the themes that are driving M&A activity in T&T.
• Discover how SPAC deals are becoming increasingly common in T&T M&A activity.
• The publisher's thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors.
• It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.