The global travel sector has experienced a significant increase in private equity investment in recent years, driven by a post-COVID-19 rebound in travel demand and the availability of ample capital (“dry powder”). This trend is expected to continue, with many private equity firms targeting high-margin segments such as luxury and experiential travel. According to GlobalData’s Deals Database, fourteen private equity deals worth a combined $822.9 million (€724.4m) took place in the European tourism and leisure sector in the second quarter of 2024.
- Ares Management Corporation and its operating partner EQ Group acquired the entire hotel portfolio of UK commercial property development group Landsec for approximately £400m (€466.7m).
- Intrepid Travel, a tour operator, received an investment from Genairgy, linked to the Decathlon company, to grow as an impact-led company promoting responsible travel.
Private equity firms are increasingly involved in the travel sector, both through new hotel constructions and renovations, as well as in engineering technology, maintenance and operations companies. They are also targeting niche destinations, such as Central Asia and the Nordics, where new hotels need to be constructed or existing ones remodeled and renovated to accommodate the higher tourist flow.
- Intrepid Travel plans to expand its operations in several countries, including Denmark, Sweden, Norway, Finland, and Iceland.
- Private equity firms are driving transformation in the travel sector through a combination of operational and strategic initiatives, including streamlining systems, implementing modern technologies, and bringing in new leadership.
The shift in spending towards luxury and wellness experiences has created more private equity opportunities in travel, which often includes upgrading hotel facilities and other travel infrastructure to cater to current travelers. Many PE firms are pursuing buy-and-build strategies, acquiring smaller operators or agencies and integrating them under a unified brand to expand market share and operational efficiency. Private equity companies typically make a number of changes to the companies they invest in or acquire, including light remodeling or renovation, complete overhaul or restructuring. These changes can be driven by the need to make the companies more profitable as an income-generating asset for a certain period of time before selling them at a higher price.
| Key Challenges | Facing by PE Companies |
| Aligning Objectives and Timeframes | Challenges in aligning objectives and timeframes between the original owners of a travel company and PE companies, as well as between the investors and the original owners. |
| Finding the Right Buyers | Challenge in finding buyers who can afford to pay premium valuations even in a competitive market. |
| Managing Regulatory Hurdles | Complications in navigating regulatory hurdles, including zoning, planning, and historical preservation rules, which can delay or complicate hotel renovation and repositioning efforts. |
| Managing Labour Shortages | Challenges in managing labor shortages, including recruitment, retention, and operational transitions, particularly in European markets. |
Despite the challenges, private equity firms are increasingly involved in the travel sector, and their investment is expected to continue to grow in the coming years. The post-COVID-19 rebound in travel demand, combined with the availability of ample capital, has created a favorable environment for private equity firms to invest in the travel sector.
“The hotel and resorts sector in particular has seen large investment from private equity. Restaurant groups have been acquired and also tour operators have taken on PE investment,” said Graham Miller, director of the Nova School of Business & Economics’ Institute of Tourism and Hospitality.
“Several factors drive this optimism. First, favourable demographic trends, notably affluent baby boomers approaching retirement, indicate potentially higher future demand. Simultaneously, supply is highly constrained in top locations due to high costs (land, regulations, inflation), making it expensive to build new hotels, thus favouring acquisition of existing assets,” said Dr. René-Ojas Woltering, assistant professor of Real Estate Finance at EHL Hospitality Business School. “My own research confirms that private equity firms frequently capitalize on market dislocations, such as during the COVID-19 crisis, by actively increasing acquisitions when assets become available at attractive prices,” said Dr. Woltering. The emergence of relatively more niche destinations, especially across regions like Central Asia and the Nordics, amongst others, also means that new hotels need to be constructed, or existing ones remodeled and renovated, in several cases, to accommodate the higher tourist flow.
“Denmark, Sweden, Norway, Finland, we’ll look to try and be similar numbers in each of those countries. We know there’s real big demand for our style of travel here,” said James Thornton, CEO of Intrepid Travel. “We’re seeing growth in the higher-end premium space because it’s often where luxury travelers are choosing to go on more cost-effective solutions. And equally, we’re seeing our more entry-level type travel experiences grow very strongly as well because they’re very affordable ways for people to get out and see things,” said Thornton. “Private equity firms are driving transformation in the travel sector through a combination of operational and strategic initiatives. On the operational side, they are streamlining systems, implementing modern technologies such as dynamic pricing tools and updated booking platforms, and bringing in new leadership to enhance execution,” said Andrew Keller, director at Stax Consulting. “Additionally, many firms are pursuing buy-and-build strategies—acquiring smaller operators or agencies and integrating them under a unified brand to expand market share and operational efficiency,” said Keller. The hotel and resorts sector in particular has seen large investment from private equity. Restaurant groups have been acquired and also tour operators have taken on PE investment,” said Graham Miller. “Always the challenge for investment is aligning objectives and timeframes. If the original owners of the company are still involved then they will not want to lose control, but the investment will be needed to allow them to achieve something they could not otherwise,” said Miller. “The investors have their own reasons and are less interested in the history, or even long-term future of the company. This alignment is crucial to a successful partnership,” said Miller. “Hotels benefit considerably from this process, as private equity provides both capital and operational expertise, resources often unavailable to smaller, independent, or family-run hotel businesses,” said Dr. Woltering. “Post-pandemic, many European markets face acute hospitality labor shortages, complicating recruitment, retention, and operational transitions. Private equity firms may encounter resistance from existing employees or unions, particularly if implementing efficiency-focused measures,” said Dr. Woltering. “European cities often have stringent regulations, including zoning, planning, and historical preservation rules. These regulations can significantly delay or complicate hotel renovation and repositioning efforts, increasing both time and costs involved in executing a PE firm’s business strategy,” said Dr. Woltering.
