We are pleased to share with you our latest thoughts on the travel and hospitality tech market. As we move into Q2 '24, the vertical is on its best-ever footing. Travel spending is poised to surpass pre-pandemic levels in '24, share prices for most public operators are at all-time highs, and travel and hospitality tech shares are within a hairsbreadth of record territory with multiples up ~40% vs. pre-COVID. What's more, key areas still have not fully bounced back (e.g. cross-border travel, GDP weighted spend) suggesting that there is still room for above-trend growth.

In our Q4 '23 report, we predicted that any easing in financial conditions would spur an acceleration in deal making. 3 months into '24, the cost of high yield debt has come in modestly and issuance is up ~3x YoY. This has helped spur a sharp acceleration in M&A – deal counts are up +30% (run-rate vs. '23), deal values are up +40%, and the size of companies trading hands is up +58% (based on headcount).

At the heart of the recent acceleration in deal activity is a cohort of great companies that have outgrown their existing sponsors, but are still too small to go public or get bought by one of the mega public strategics who are for the most part only writing $1B+ checks. In recent weeks, several of the larger platforms in the space have announced $100M+ financings and / or kicked off recap processes with others quietly raising without announcing it publicly. These companies stuck in the middle will be the critical driver of M&A activity over the next 24+ months as they look to bulk up.

Just recently, we announced the sale of the leading provider of hospitality network management software, Nomadix, to ASSA ABLOY. This marks AGC's 3rd travel and hospitality tech deal in just over 6 months and our 13th over the last few years. Based on our recent deal activity, the companies we expect to bring to market soon, and the acceleration in deal activity so far this year, we are doubling down on our prediction that the next 2 years will be a record period for travel and hospitality tech deal making.

AGC's Q2 2024 Travel and Hospitality Tech Market Update

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