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An arrival study indicates a slowdown in mergers and acquisitions among tour and activity companies.

An arrival study indicates a slowdown in mergers and acquisitions among tour and activity companies

Recent transactions in the experiences technology sector, like the Rezdy-Checkfront-Regiondo deal and Respax’s acquisition of Livn, raised the bar for mergers and acquisitions.  However, a mid-season pulse poll of U.S. operators by Arival and experts from Chenmark suggests that the North American market is currently slowing down for tour and activity firms themselves.

Only half of American operators reported seeing an increase in business in the first half of 2023, according to a July 2023 study of more than 120 operators from North America and Europe.  Operators in Europe do better in comparison; four out of five report an increase in business through 2022.

It’s never too early to begin putting together a tour company business for sale, according to Trish Higgins, a partner at Chenmark, a family-owned holding company that specializes in purchasing businesses from owner-operators when they desire to retire.  However, business owners should think about how the state of the market can affect their prospects.

In anticipation of her talks at the next Arival 360 | Orlando, which takes place later this month, Higgins provided Arival with her perspectives on the current acquisition environment for North American tour and activity operators as well as some advice for operators on how to get ready to sell.

According to Higgins, “North America is still recovering from its post-pandemic revenge travel boom, which raises questions about whether booking levels will remain high — or decline, as suggested by Arival’s most recent mid-season pulse survey of U.S. operators.”

According to Higgins, “with bookings slowing down and impending economic uncertainty, sellers may want to sell, but buyers are cautious.” “Business data for 2022 may be strong, while 2023 results through June may be weaker.  I predict that for the remainder of the year, buyers will adopt a “wait and see approach” to determine how the outcomes of 2023 will represent the “new normal.”

However, the survey indicates that some businesses might be more enticing to potential customers. Because travelers want distinctive experiences, businesses that provide them may endure even during times of general market uncertainty.

“People are still willing to spend on those special experiences, and I think that is a shift: even if people are giving up spend elsewhere, they’re going to value those things,” says Higgins. “So I think that people offering a special experience are holding up and will continue to hold up,” and since tourists respect them more, potential buyers would value them as well.

“People want to have an experience wherever they go right now, so there are more opportunities everywhere in those areas.”

Higgins shares her top advice for individuals thinking about selling, whether they plan to do so soon or not:

Even if you don’t want to do anything or even think about it, it’s better to be prepared than not. The more you prepare, the better the results will be if you do.  You don’t want to find yourself in a scenario where you have to sell your firm due to health concerns or other circumstances, but you haven’t given much thought to how you should be setting things up.

Organize your home – Maintaining order in your finances will make it easier to convey them to a potential buyer and will ensure that the business can continue without you. This is just excellent business practice and will be helpful if and when you decide to sell.

If you take into account who you might want to sell to, you can locate the ideal buyer far more easily if you invest in relationships with them today, even years before you decide to sell.

Think about the potential value of your company and educate yourself on the various business valuation frameworks. A number of frameworks, including the value of your assets and the multiple of earnings or sales, can be used to estimate the value of your company.  In the end, business valuation is an art rather than a science.  The value is ultimately whatever two individuals determine to be the value.

At the next Arival 360 | Orlando in October, Chenmark’s Trish Higgins will moderate breakout sessions on the current investment, merger, and acquisition landscape in the experiences industry and how to get ready to sell — or purchase — a tour company.

Source- Travel daily

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