Transportation

Why Europe's travel sector is attracting international investment


We have recently seen renewed interest from international investors in the European travel sector. In June, the Chinese conglomerate Fosun launched a takeover bid for the tour business segment of travel company Thomas Cook. This move, potentially adding to its stable of assets, which already include Paris-headquartered Club Med. This operation follows the earlier acquisition of travel metasearch engine Skyscanner by Ctrip, a Shanghai-based company. But these investments do not come exclusively from Asia and firms from other regions have also set their eyes on Europe’s travel sector. In fact, American Express’ corporate travel division recently acquired Germany’s DER Business Travel, as well as UK’s Hogg Robinson Group.

In light of these recent moves, many may be wondering why global investors are increasingly looking at European travel companies. One reason is that investors are looking to Europe as a source of global innovation. There are some travel companies that are pioneering in the world of travel, and there are other fundamental reasons why investors find Europe attractive. The reality is that the improved macroeconomic environment, as well as the greater online penetration, makes travel a highly attractive market globally, but most notably in Europe.

Travel is the second-fastest-growing sector in the world (+3.9%), ahead of Healthcare (+3.1%), Information Technology (1.7%) or even Financial Services (+1.7%), and only behind Manufacturing (+4%). In this context, Europe is the undisputed global leader and plays a vital role in the economic wellbeing of the global travel industry. Travel and tourism represent over 10% of Europe’s GDP and supports more than 28 million jobs across the continent.

Furthermore, the largest e-commerce category in the world is travel, and it is two times larger than the next category – Europe has a privileged position in travel. Online travel penetration shows double-digit growth rates compared to only a few years ago, especially in Europe, where over 80% of tourists shop for travel online.

The strong recent performance of the European travel and tourism sector, its position as a global leader, its potential for further growth and at times a source for innovation explain the recent interest from global investors. The capital investment in Europe’s travel sector is estimated to have risen by 4.3% last year and is expected to continue growing to exceed $301billion per annum over the next decade. That means that we will undoubtedly see more businesses casting their eyes over the attractive opportunities available in Europe’s travel sector.

 



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