In recent years, M&A activity in the hospitality and leisure (H&L) industry has grown significantly. Even as global M&A deal values for the first half of this year fell below where they were 12 months ago, large-scale, cross-border M&A activity in the H&L sector has dominated the headlines with a number of high profile deals in 2016.
Certain trends are driving this activity:
- A fragmented industry facing a number of challenges from new players forcing market consolidation and a race to scale up;
- A quest for vertical integration to fill product gaps across the value chain;
- The need for more efficient and effective global platforms to protect and increase market share and provide greater leverage (particularly in response to online travel agents);
- New money from both developing and mature economies in Asia; and
- Innovative platforms, such as airbnb, Travelmob and OneFineStay and the need for more traditional groups to develop a response to these new competitors.
These deal trends and the inherent disruption and consolidation impacting the H&L sector present opportunities for owners, operators and other market participants.
We highlight in this article some of the key issues that prospective participants should bear in mind when negotiating and executing cross-border M&A deals in the H&L sector.