BTN Europe only published its annual Europe’s Leading TMCs 2025 report in June, but it already needs a comprehensive update. In September alone,
American Express Global Business Travel (number one in Europe) bought all
of CWT (number 3), except for CWT’s German business, which was acquired by ATG Travel
Worldwide, Europe’s seventh-largest travel management company network. ATPI (number eight)
was snapped up by its US partner Direct Travel, and the EMEA business of Key
Travel (number 30) was bought by Chinese-owned Trip.com Group, while Key Travel’s US division
was purchased by Globespan Travel Management.
In France, Marietton Développement, parent of Havas Voyages (number 15) and Ailleurs
Business (number 21), acquired Supertripper, the 16th-largest travel
management company in France. Meanwhile, Navan Group (number 5) filed paperwork for a
stock market listing. October has been quieter but has still yielded a deep
“strategic alliance” between Amex GBT and the online booking and expense
technology provider SAP Concur.
The buying frenzy is far from finished, according to industry insiders. “I don't think we're done with the consolidation process.
There'll be more acquisitions and mergers over the next 12 to 18 months,” says
Martin Warner, a corporate travel strategic advisor.
Deborah Potts also expects more M&A action. She
is a director at Summit Advisory, a boutique corporate finance firm that
specialises in matchmaking companies in the travel sector wanting to buy and
sell. Summit Advisory advised on Talma Travel’s purchase of Blue Cube Travel in
October 2024.
“In the UK TMC space, we've got probably more buyers
than sellers,” says Potts. She had expected even more deals this year, but
activity has been slowed by “a bit of a valuation gap between seller and buyer
expectations”. Potts also saw “a deal going on ice because of the Trump
tariffs”, although she believes market confidence has started to rebuild since the
infamous White House Rose Garden tariffs announcement of 3 April.
Potts advises TMC owners to cash in now. “A seller who has recovered well from Covid,
has got good figures and rebuilt their balance sheet, and has a very good
quality of life again with healthy profits... they don't want to give that up
easily if there isn't a pressing reason like retirement, divorce or death,” she
says. “But even if you've got a business ticking over nicely, there is still a
lot of geopolitical uncertainty, and it's always better to sell in the good
times when you choose, rather than when you're forced to.”
Value identified
As to why so many buyers are sniffing around the TMC
sector, several factors are aligning to create unusually high demand. One
veteran travel manager’s theory is that venture capital funds and other
investors have grasped “how profitable the travel management sector can be.”
This may come as a surprise given how frequently and vehemently
TMCs complain their fees have been driven so low. “In the immortal words of
Christine Keeler, well they would, wouldn't they?” says the travel manager,
speaking on condition of anonymity. “Most of them make good double-digit profit
if they're run properly. What the VCs see are organisations that could be run even
better. They have the funds to buy two, three, four TMCs, fuse them together
and make a multiple of what their individual net worth might be.”
Mike Bor has overseen 17 acquisitions in recent years in his position
as a non-executive group director of Gray Dawes Group. He believes for some
players in the managed travel sector, growth is less an opportunity and more a
necessity. “The tech companies have got all this money invested but unless they
grow their volume rapidly they aren’t going to get the return on investment,”
he says.
Pat McDonagh, CEO of Clarity, Europe’s ninth-largest TMC, agrees. “If we take ATPI as an example, what
you've got is is tech trying to find volume,” McDonagh says. “The acquisition
of Direct Travel by Madrona Ventures [owner of challenger travel tech company
Spotnana] and other partners [in 2024] was also tech trying to find volume, and
ATPI has been a long standing partner of Direct Travel so it made perfect
sense. They've now got the opportunity to put Spotnana technology into that new
global business.”
McDonagh points to Navan, and to the SAP Concur/Amex
GBT tie-up, as more examples of his tech-seeks-volume thesis, and says it has
influenced his company too. “You've got to have volume. We doubled the size of
our business when we acquired Agiito in 2023. Generating that economy of scale
means we can be participants in this industry change rather than victims of it.”
Staying in the game
Warner predicts Navan will use the war chest raised
by its hoped-for flotation to purchase more TMCs. He also believes the vast size
of Amex GBT following its acquisition of CWT will spur a buying spree by competitors.
Scale, he says, allows “economies of efficiency to spread overheads across an
awful lot more transactions. But secondly, Amex GBT is in the best position to
negotiate with airlines to access the right content at the right price.”
He continues: “Do
other TMCs need to grow other than through organic customer acquisition? I
think the answer is yes. And to do that, do they need to be more global? Yes. Direct
Travel/ATPI is a good example of that, even more so when you think that they're
going to build around Spotnana. Airlines will support anybody using that type
of technology.”
On the other side of the same equation are the TMCs
which have concluded they have neither the technology nor the volume to stay in
the game. “There's so much technological change going on in the industry,” says
Potts. “We have business owners that say ‘I just don't know how I'm going to
keep up with it. I don't have the people to be constantly on top of this.’ The
Blue Cube owners were very cognisant of that. They could see change coming and that
the bigger boys have the budgets to stay ahead.”
Counter-intuitively, an additional factor that could
drive acquisition to add volume is the sluggishness in the global economy caused
by geopolitical volatility. McDonagh believes “geopolitical uncertainty and the
cost of capital have slowed consolidation,” but they have also slowed the
amount that TMCs’ existing clients travel, and how much those clients are
prepared to spend per trip. “You're not going to just grow organically on what
you've got,” he says. That leaves TMCs with two other paths to growth: one is
to win more clients (“there’s a real scrap for new business right now,” says
McDonagh), and the other is acquisition.
But Bor warns that companies need to be considered
rather than reactive with their acquisition strategies. “You don’t wake
up one morning and hear Amex GBT has taken over CWT and at the next board
meeting say ‘We’ve got to keep up with Amex GBT,’” he says. “TMCs need a clear
vision of their own journey. The road to acquisition is fraught with costs,
complexity and cultural challenge. You can raise the investment but if you
don’t get it right there are plenty of examples of acquisitions that flounder.”
Bor warns especially of technology-first TMCs with “a blind belief that the
clients are going to want your tech so much that traditional service doesn’t
matter.”
Travel buyers whose TMCs are acquirers or have been
acquired will need to pay careful attention.
• Next time: How will recent TMC marketplace changes affect
travel managers?