Global mergers and acquisitions in tourism more than doubled in value last year as low borrowing costs and competition fuelled the busiest year in seven for deals in the industry.
Purchases of hotels, travel-services companies and tour operators announced in 2014 totalled US$64.4 billion, more than twice the value in any of the previous six years, data collected by Bloomberg show.
The 596 announced deals included Anbang Insurance Group's purchase of the Waldorf Astoria hotel in Manhattan and Blackstone Group's acquisition of the Cosmopolitan of Las Vegas hotel and casino.
The pace of dealmaking may not slow much this year. The increasing clout of online travel agencies and other web-based services is threatening the earnings of hotels and tour operators, pushing them to become bigger and go digital.
"In tourism there are great opportunities because it is a growing market, but it is also very competitive, and competition is growing," said Angelo Rossini, a tourism analyst at Euromonitor International.
"This is a period of very fast changes for the industry due to the arrival of online and mobile travel."
Last year was the busiest by number of deals and total value since 2007, when Blackstone bought Hilton Worldwide Holdings for US$26 billion at the height of the real estate bubble.
Among deals involving online or mobile services, Sabre announced plans to sell lastminute.com, and Accor, Europe's largest hotel operator, bought Wipolo, a mobile app allowing users to plan trips. Accor was among the most active buyers last year, also acquiring three hotel portfolios for US$1.3 billion. Companies that survived 2008 and 2009, two of the worst years for the industry, today have more cash, benefit from lower borrowing costs, and enjoy an economic recovery that feeds them a rising stream of tourists.
Online travel agents and intermediaries such as Priceline Group and Expedia are pushing down room prices and taking commissions from hotels. TUI and TUI Travel merged, and a group led by Fosun International agreed to buy French resort operator Club Mediterranee.
Bank of America Merrill Lynch was the most active financial adviser for deals, with market share of 9.9 per cent followed by Lazard, 9.2 per cent.
The spree may continue. Accor, owner of the Sofitel and Ibis brands, plans to spend 225 million ($343 million) through 2018 to improve its digital presence. Kuoni Reisen Holding of Zurich last month said it wanted to divest its tour operator business with 2.2 billion Swiss francs ($3.2 billion) in revenue.
"Kuoni was not able to compete successfully in tour operating, a shrinking market," Rossini said.
"Five years ago that was their core business. It shows how incredibly fast the industry is changing."
Deal time
• US$64.4 billion of purchases of hotels, travel-services companies and tour operators announced last year.
• Last year was the busiest by number of deals and total value since 2007.
• More than twice the value in any of the previous six years.
- Bloomberg