16 September 2008

Mergers and acquisitions slow in UK hotel sector

UK mergers and acquisitions activity in the leisure sector was subdued in the first half of 2008, according to a study by PKF.

The report by the accountants and business advisers found deal volume and value were both down compared to the first half of 2007.

The PKF report, Deal Drivers UK, produced in conjuction with mergermarket, found that M&A activity in the sector was 90% down in value terms and 25% in volume terms, even though growth was seen in the wider leisure sector and room rate and occupancy figures remain steady for hoteliers across the UK.

The larger share of transactions occurred in the first quarter Ã¢â¬' 23 transactions worth Ã&#pound;806m Ã¢â¬' while in the second quarter there were 17 transactions worth Ã&#pound;179m.

The budget end of the spectrum was fairly active and represented 50% of all the hotel sector transactions announced in the first half of the year.

The largest of these was the acquisition of PontinÃ¢â¬â¢s Limited, the UK operator of holiday camps and centres, for Ã&#pound;46m by a private investor-led consortium.

Robert Barnard, partner for hotel consultancy services at PKF, said, Ã¢â¬ÅâœAlthough M&A activity in the hotel and leisure sector was subdued, the sector as a whole has had a steady start to the year. Indeed, hoteliers across the country are holding their own and still maintaining healthy occupancy and room rate figures.

Ã¢â¬ÅâœLooking forward there are M&A prospects in the sector for the rest of the year with murmurings that the UK gaming group, 888, is the target of both its UK competitors, Ladbrokes and Partygaming.Ã¢â¬~

PKF commissioned mergermarket to explore the health of UK M&A across five key industry sectors Ã¢â¬' hotels & leisure, business services, food, real estate and manufacturing.

By Bev Fearis