Private equity deals in hotels, resorts and cruise lines set to continue decline

Private equity and venture capital firms backed a total of $750 million in investments across 64 deals in the global hotels, resorts and cruise lines sector during the year through Aug. 30, data from S&P Global Market Intelligence shows.

The deal value is only 27% of the $2.78 billion of investments made by private equity investors across 135 deals in full year 2022. At this rate, 2023 could mark a second year of annual decline in both the value and volume of private equity funding in companies providing travel and tourism services. The lowest private equity deal totals since at least 2019 are also likely to be recorded in 2023.

The first half of 2023 shows a substantial downturn in private equity investments in the sector. Transaction value in the first half fell 61% year over year to roughly $639 million from nearly $1.63 billion, and deal volume dropped 39% to 53 from 87.

The sector has been on a consistent quarterly decline in deal value from the second quarter of 2022, while deal volume has been falling since the fourth quarter of 2022.

Leading region

The targeted companies in the sector were based mainly in Europe, which accounted for 45% of total transaction value across all regions. Companies in Europe secured $338.8 million of investments across 27 deals. Asia-Pacific followed with $200.8 million of investments in 21 deals. The US and Canada had a combined transaction value of $193.4 million spread across 12 deals.

Top deals

The largest transaction in the year to Aug. 30 was the acquisition by Tikehau Capital of Parisian hotel operator Hotel California for $130.5 million from DigitalBridge Group Inc. Herbert Smith LLP was legal adviser to Tikehau Capital on the acquisition.

In the second-largest deal, Hennick & Co. Inc. entered into an agreement to acquire The Hazelton Hotel in Canada from First Capital REIT for approximately $110 million.

Salter Brothers Asset Management Pty. Ltd. bought Sofitel Adelaide in Australia for $102.5 million in July from Palumbo Pty. Ltd.

– Download spreadsheet with data used in this story. – Check out the top picks of global private equity news stories by S&P Global Market Intelligence.