Min Liu is managing director at travel technology
investment bank Cambon Partners
Unless you’ve been living in a cave recently, you will
have noticed a significant wave of consolidation and investment activity
in the corporate travel sector in recent months.
Notable transactions include Gray Dawes Group's acquisition
of Verve Travel and Leisure; Mayfair Equity Partners'
investment in BizAway; Hotel Engine's series C funding led by
Permira Growth Opportunities II; Yatra's acquisition of Air
Travel Bureau; Reed & Mackay's acquisition of
Regent International; ISON Travel's takeover of Screen & Music Travel; and Talma Travel Solutions' purchase of Blue Cube Travel – all within the last six months.
There’s been many more smaller deals too and, more
importantly, we anticipate further additional deals emerging in this sizeable yet
fragmented market.
One swallow may not make a summer, but this really is a
flock. What is driving it? Firstly, the
global corporate travel market is on track to rebound to pre-pandemic levels by
the end of this year, with the GBTA projecting the market will reach $1.8
billion by 2027. In particular, there is significant growth potential within the small to
medium-sized business sector and the unmanaged segment.
To capture this opportunity, travel management companies must develop products and services that meet the increasing demand for
efficient corporate travel solutions, competitive rates, flexible options, and
seamless integration with corporate travel policies.
All this means that as customers seek better rates, enhanced
services and consistent local support, achieving economies of scale becomes
essential. A global presence is often necessary to deliver these benefits,
which is commonly achieved through mergers and acquisitions.
Therefore major players in the corporate travel industry are
capitalising on this trend. For instance, American Express GBT and CWT are
pursuing a large-scale merger, pending regulatory approval, to further solidify
their positions.
Traditional TMCs continue to hold valuable competitive advantages, especially
in customer relationships and service quality. However, they must invest in
technology and form strategic partnerships to remain competitive – another key driver of M&A activity. Perhaps
that’s why online travel agencies (OTAs) are expanding their corporate travel
offerings or entering the market through targeted acquisitions, establishing corporate
travel as a new growth vertical.
Meanwhile, private equity firms are increasingly looking at
backing good platforms, or corporate travel technology solutions, in order to
capture the sector's organic and external growth. That’s a great opportunity
for anyone looking to attract capital.
A TMC looking at acquiring or being acquired should consider two things: firstly, they should not underestimate how long such
processes take, including just the discovery phase, so the sooner they begin
the better. And secondly, they should not be shy about having conversations and seeing
what’s out there – you don’t know until you know. Too often we see people
completely closed to the idea of acquisition when their business could actually benefit enormously, and
then they only realise way too late once the opportunity has passed.
The coming years represent perhaps a once in a
lifetime opportunity for those looking to rapidly expand their business or
those simply looking for an exit. It is imperative that TMCs take advantage of
this by assessing their strategic options. Those who don’t might well end up
finding themselves falling behind or, worse still, acquired under unfavourable terms.
Play or be played? That’s the real question for many TMCs right now.