West Midlands corporate deals review in association with Clearwater International

By Gareth Iley, partner at Clearwater International

Whilst we all continue to discuss the success of “staycation” – a word which seems to have become a permanent fixture in British vocabulary – it seems that the travel market is performing well. The UK package travel industry is currently worth £33bn per year (as measured by annual turnover of ABTA members), while more than 50% of all holidays taken by UK consumers are package holidays.

In February, Blue Bay Travel, a specialist travel agency based in Stoke-on-Trent, received an injection of £6.5m from mid-market private equity firm LDC, a company who is no stranger to the world of travel; in 2015 they invested in online travel agent Iglu.com.

Founded in 2003, Blue Bay specialises in long-haul holidays to the Caribbean, Mexico and Indian Ocean and provides holidays to more than 16,500 passengers per year – with a 31% increase in bookings in 2016. Its new journey with LDC will include introducing new facilities for online-only booking, new collaborations with travel operators for direct sales solutions and a white label website framework called Orcastra, plus expansion to new countries and destinations.

As a drop in the Pound against the Euro and the Dollar has caused an increase in the cost of holidaying abroad, however despite this, and a number of geopolitical factors, customers are still wanting to go on holiday and the market is performing well; customers’ appetite for overseas travel is returning to pre-recession levels.

The deal by LDC was just another in a string of transactions since the start of 2017:

• US private equity firm, KKR, agreed to purchase specialist travel group, Travelopia, from TUI AG, the listed German travel and tourism company for $407m. Travelopia has a portfolio of 53 specialist travel groups, with an international customer base of over 800,000 travellers each year to over 70 destinations globally.
• Travel Leaders Group, one of the US’s largest travel companies, purchased Colletts Travel, a luxury travel agency, integrating the business into its Travel Leaders UK operations which was established in 2014. Colletts joins Travel Leaders’ others UK brands, Protravel International UK and Tzell UK.
• France based Voyageurs du Monde, a leading tailor-made travel company, made a significant strategic investment in acquiring a 60% stake in Original Travel, a fast growing bespoke travel company. The acquisition followed a 12 month review of the UK market by Voyageurs as it sought to expand its international operations into key English-speaking markets.

People want to travel and want to explore other cultures and countries and the rise in the cost of holidaying abroad at present hasn’t put too many people off. However at what point does the monetary cost outweigh people’s desire to travel? And is this the point at which the market starts to struggle?