Why are the risky capitalist companies invest more now in the travel sector?

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Last year there was a The recovery of risk capital in the tourism sectorCreating with increased demand for travel. This is mainly due to the recovery of destinations in the Pacific and Asia, as well as the good behavior of large exporting markets. In the second quarter of 2024, 14 risk capital operations were produced with a combined value of 822.9 million dollars (724.4 million euros) in the European Tourism and Entertainment Sector, according to what it said. Globaldata operations database.

Among the main Operations It seems that the European capital of the travel sector in 2024 is the purchase by Ares Management Corporation and its operating partner group EQ The entire hotel portfolio From the British Real Estate Promotion Group, in a process of about 400 million pounds (466.7 million euros). But why are the risky capitalist companies invest more in the global travel and tourism sector at the present time?

Healing after the epidemic

During the epidemic, While the demand for travel was stoppedMany risk capital companies have been made with The assets are less than their value He plans to continue investing in later.

According to Andro Keeler, director of Stax Consulting, “The activity of investment capital funds in the travel sector witnessed a significant increase, which represents about 40 % of the United Kingdom’s integration and acquisitions in 2024, with a particularly strong interest in Technological and experimental travel companiesAnd he adds: “This recovery is driven by a recovery of travel demand yet Covid-19 CRISISBesides the availability of large capital (“from dry dust”), which attracts companies again towards guesthouse sectors, organized flights and travel agencies. Many capitalist risk companies apply purchase and construction strategies, acquire a major company and then add supplementary acquisitions to climb quickly. “

In the words of Graham Miller, Director of the Institute of Tourism and Hospitality at Nova College of Business and Economics: “The hotel and tourism sector, in particular, received, Great investments in the risk capital. Restoration groups were obtained and tourists have received investments from PE (“Special stocks”, or capital investment in Spanish).

Dr. René Ogas Wal Wall, a professor of real estate financing at the EHL College of Hospitality, explained that this recent recovery in the interest of PE companies in the tourism sector may also be due to improving demographic trends and supply factors. “Several factors pay this optimism. First, favorable demographic trends, in particular Prosperos ‘Baby Boomers’, which is close to retirementIt indicates a greater future demand. At the same time, the offer is very limited in the best sites due to High costs (Soil, regulations and inflation), which makes building new hotels more expensive and preferably getting the current assets.

He added: “My own investigations confirm that investment capital companies usually benefit from market dislocation, as is the case during the Covid-19 crisis, the increase in activity acquisitions when there are assets available at attractive prices.”

Change spending towards luxury

The displacement of spending towards luxurious experiences and well, which includes travel, instead of high commodities, has also been established More opportunities Of the risk capital in the travel sector. This usually includes improving hotel facilities and other infrastructure for travel to serve the current travelers. The appearance of relatively most specialized destinations, especially in areas such as Central Asia The northern countries, among other things, also means the need to build new hotels, or to reshape and renew that current, in several cases, to accommodate the highest tourist flow.

Travel Intrepid, which includes more than 4000 consumers in Iceland, also notes this increasing trend in the rest of the Scandinavian countries. “Denmark, Sweden, Norway, FinlandWe will try to get similar personalities in each of these countries. James Thornton, CEO of Intrepid Travel says.

Companies participated in the risk capital more and more, in building new hotels and renewing them in the field of engineering technology, maintenance and operating technology in the travel and hospitality sector. in spite of Take a look at the global economyIn addition to the increase in inflation and interest rates is still a source of concern, consumers find ways to continue traveling, and choose more economic trips and shorter paths, among other things. This may indicate resistance to the travel sector, while contributing to the interest of investment companies in the capital in this industry.

“We are watching a Growth in high rangeBecause other travelers usually choose more profitable solutions. “On the other hand, basic travel experiences are also witnessing strong growth, because they are very reasonable ways to leave and see things,” said Thornton.

How to adjust capital companies risk acquisitions?

Capitalist companies usually provide a series of changes in companies in which they invest or acquire. The goal is to make them More profitable as an active income generator For a certain period of time, then these companies usually sell at a higher price. These changes can range from slight re -view, renewal to a full review or restructuring.

“The risk capital companies promote the transformation of the travel sector through a set of operational and strategic initiatives. From a operational point of view, they rationalize systems, Implementing modern technologiesLike dynamic prices and updated reserve platforms, and integrate new leaders to improve implementation. He also emphasized that special attention is paid to the sectors of high margins, such as experimental, luxury and group trips, as well as for sale or not investing sections and profitable assets.

Keeler added: “In addition, many companies apply purchase and construction growth strategies, and to gain operators or smaller agencies and merge them according to a unified trademark to expand the market share and operational efficiency.” In several cases, Risk Capital Companies They can have a specific goal when getting a travel company.

Miller said: “The investment received by the bold travel from Genairgy, associated with Decathlon, was made with the goal of helping Intrepid It grows as an influence company Who enhances responsible trips. Woltering said: “The hotels benefit greatly from this process, because the risk capital contributes to both capital and operation, resources that often do not have independent or independent hotel companies. “

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Capital companies can also choose Funding and restructuring debts To improve the cash flow of the travel companies they acquire. They can also expand distribution channels by integrating and offering travel technology New artificial intelligence toolsLike agricultural AI. Many capitalist companies also choose to unify services on many real estate to get the maximum profitability.

What are the challenges facing this process?

Although some travel companies and their experience can be received by some travel companies well, the review necessary to convert some of these companies into long -term benefits may suffer from challenges at times. Miller said: “Capitalist companies are famous for risking as they are very demanding in terms of their goals and goals.. Often, the reduction of the cost of balance and the provision of high -quality services can be complex, especially in the turbulent market environment.

“The travel sector faces many challenges that add the complexity of investment and operations. It cannot explode in the market through demand fluctuations, changes in reserve behavior and macroeconomic turbulence, such as geopolitical events – It holds expectations and evaluationsAnd he adds, “At the same time, companies must find an accurate balance between cost reduction and service quality maintenance; Total aggressive discounts can negatively affect customer experience and brand reputation. In addition, magic is increasingly strict regulations and meeting increasing expectations about sustainability and moral practices we assume other obstacles. “

Look for adequate buyers who can bear its costs Pay the highest reviews Even in the competitive market, it can also be a challenge for risk capital companies. In the case of travel companies, it can be one of the biggest problems Brand’s identity lossSince the rapid changes of management, management and prices can change business significantly. Many capitalist companies also focus the risk on immediate or short -term profitability, which may include additional pressure for these travel companies and long -term sustainability leveling and customer loyalty.

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The struggle of ideologies and strategies between the indigenous owners of the travel company and capital companies may increase the complexity of the process. Miller said: “Always the investment challenge Alignment of the goals and deadlines. If the original owners of the company remain involved, they will not want to lose control, but the investment will be necessary to allow them to achieve something they cannot get otherwise. Investors have their own reasons and are less interested in history, or even in the company’s long future. This alignment is very important to the success of the association. “

Los Overal economy challenges Financial, such as high financing costs in high interest rates, can negatively affect the profitability of investments, operations and financing, although they may increase the opportunities for purchase in difficulties, according to Wolvering. The scarcity of work and organizational obstacles can be complex and slow to overcome.

Waltering stressed: “After the epidemic, many European markets face A dangerous shortage of work In the hospitality sector, which holds employment, retaining and operational transformations. Capitalist companies can find resistance from employees or unions, especially if efficiency measures are applied. European cities are usually strict regulations, such as the division of regions, planning and historical memorization. We are The regulations can delay significantly or make efforts From the renewal of hotels and re -placement, and the increase in the time and the costs involved in implementing the business investment strategy. “