Travel Industry Sees Increase in Transformative Transactions
Over the past year, the travel industry has seen a growth of transformative transactions – both in size in scope. From strategic investments to mergers & acqusitions, this increased activity highlights the trend to grow thoughtfully in a rapidly innovating environment. Below we highlight 5 interesting transactions (recognizing there are others out there):
In April 2016, Accor (Europe’s largest hotel company) acquired high-end home sharing player Onefinestay for €148 million while also pledging to invest €64 million to grow the business as an independent unit. Onefinestay was founded in 2010 and operates 2,600+ high-end home properties in cities including London, New York, Paris, Los Angeles and Rome with plans to expand to 40 more cities over the next five years.
This transaction was significant because it was the first major action by a large incumbent hotel company to acquire and incorporate a sharing economy disruptor under the umbrella of its product offerings.
See this relevant entry from our Education section where we talk about how incumbents can respond to the threat of disruption
2) Marriott International Acquires Starwood Hotels & Resorts Worldwide
In September 2016, Marriott completed its $12+ Billion acquisition of Starwood Hotels & Resorts which, as a combined entity, operates or franchises 5,700+ properties and 1.1M+ rooms across 30 brands in 110+ countries.
This transaction was significant because both companies were among the largest incumbent hotel companies in the world and therefore the merger creates the world’s largest hotel company.
3) HNA acquires 25% stake in Hilton
In October 2016, Hilton announced that China’s HNA would acquire a 25% equity interest in Hilton valued at approximately $6.5 billion from affiliates of Blackstone, establishing a long-term strategic investment in Hilton and Hilton’s spin-offs of Park Hotels & Resorts and Hilton Grand Vacations. HNA’s tourism business is a fast-growing, vertically-integrated global player with market-leading positions in aviation, hotels and travel services.
This transaction was significant because it expands Hilton’s long-term strategic relationships in China while broadening the reach and scope of each company’s travel-related offerings.
In November 2016, Ctrip (China’s leading online travel agency and the 2nd largest in the world) announced an agreement to acquire Scottland’s Skyscanner for £1.4 billion or approximately $1.74 billion. Skyscanner is a travel metasearch company enabling users to compare prices from hundreds of travel sites when searching for flights, hotels, and rental cars – serving 60 million monthly active users and available in over 30 languages.
This transaction was significant because it strengthens Ctrip’s global footprint amid its global ambitions while travel becomes a much larger share of the Chinese economy.
5) Airbnb Acquires Luxury Retreats
In February 2017, Airbnb (the world’s largest home-sharing platform) acquired Montreal’s Luxury Retreats International for an undisclosed amount (estimates range from $200 million to $300 million). Luxury Retreats is a luxury vacation rental company offering over 4,000 homes in 100 destinations around the world.
This transaction was significant because it gave Airbnb – which started as a lower-priced, fewer-services alternative accommodation player and has gradually moved upmarket – a significant footing in the high-end home sharing / rental space.
See this relevant entry from our Education section where we talk about how disruptors move upmarket (and eventually possibly become incumbents).
We will continue to keep an eye on the interesting transactions in the travel space and discuss them as they make an impact on the travel + experience businesses