03 Jul 2020
Posted in Travel & Tourism
M&A may help travel agents find route out of pandemic as consumer habits change
Opportunities can arise out of crisis and it is often a time used by organisations to drive significant change. According to GlobalData, a leading data and analytics company, 41% of travellers have increased their social media browsing time, 26% are posting more regularly and 28% are spending additional time reading online reviews and blogs than prior to the pandemic. Armed with the knowledge gained this activity is likely to bring long-standing changes to consumer behaviour and drive further merger and acquisition (M&A) activity as companies seek new ways to service a travellers needs.
Johanna Bonhill-Smith, Travel & Tourism analyst at GlobalData comments: “The effects of this pandemic and the measures imposed to control it has resulted in significant changes to consumer behaviour and confidence in the travel market. To adjust to these changes companies will be looking to increase service quality and safety, utilize digital technology to reach a wider consumer base and if funds allow review potential acquisition targets.”
Independent travel agent Hays Travel, with 180 retail stores in the UK , have recently announced that mergers may be likely to increase the company’s competitive advantage in a post-COVID-19 world. With travel and tourism consumers spending more time online, a number of industry players may look to M&A to help digitize their operations and further improve efficiency.
Emerging start-ups that offer the opportunity to streamline operations, increase operational efficiency or service a new market may prove popular merger and acquisition (M&A) targets for larger travel intermediaries. The majority of mergers and acquisitions in 2019 for travel intermediaries were focused around experiences, digital integration and innovation.
Bonhill-Smith adds: “Right now, M&A activity is at a standstill with the majority of travel agent and tour operator interventions focusing on crisis management and cash conservation. However, larger industry players who dominate the online travel space such as Booking Holdings and Expedia have prospered from an acquisition strategy and this is undoubtedly one way that other travel intermediaries can take to work their way through the current crisis and lead their market segments”.