AGC's Travel & Hospitality Tech Update – AI Is Reshaping M&A

Despite a 20%+ selloff in public Travel & Hospitality Tech share prices, M&A remains strong. AI is increasingly driving acquisition strategies as buyers pursue new capabilities to accelerate growth and expand margins, including acquiring businesses that have yet to adopt AI and applying their own AI expertise to improve operating efficiency and profitability. Our latest market update explores what these shifts mean for founders, investors and acquirers.

AI is reshaping the T&H acquisition playbook, with AI-related deals now accounting for nearly half of all transactions. Their share has risen from 25% in 2019 to 48% in 2026 YTD. AI-enabled buyers account for 45% of strategic acquisitions, while 26% of targets bring AI capabilities of their own. Buyers are pursuing both new AI capabilities and businesses where applying their existing AI expertise can accelerate growth and expand margins.

AI is already delivering substantial productivity gains. Many of our clients are experiencing dramatic improvements, including substantial increases in pull requests per engineer and reductions in bugs, with top performers reporting engineering productivity gains of 90%+. Clients are also beginning to see material efficiency gains across sales and marketing and G&A as AI streamlines workflows.

M&A activity is holding near record levels. T&H deal activity is annualizing to approximately 133 transactions, close to 2025's record 142. Median target headcount has increased from roughly 30 to 40 employees, suggesting buyers are pursuing larger businesses even as financing conditions tighten.

Growth remains the strongest valuation differentiator. In our public-market analysis, revenue growth has a substantially stronger relationship with valuation multiples than either EBITDA margin or the Rule of 40. Cost savings matter, but the most compelling AI strategies will also strengthen products, deepen customer relationships and accelerate revenue growth.

Having recently completed our 12th Travel & Hospitality Tech transaction in the last three years, with another 10 deals in process, we see these dynamics firsthand across our customer base, active buyer conversations and negotiations. Charlie and I would welcome a conversation about what they mean for your business and strategic options.