Chuck Zsebik covers Mergers and Acquisitions news for several business publications. Below, Chuck Zsebik recaps some of the major travel industry acquisitions making waves in recent months.
While most of us have been confined to our homes over the last couple of years, with vacations seemingly a pipe dream, there’s still been plenty of buzz within the travel industry. Catastrophic dips in stock market values of travel companies were an almost overnight result of the Covid-19 pandemic restricting travel.
As a result, Charles Zsebik points out that someone was always going to benefit from the plunging share prices. Recent months have seen the perfect time for investors to snap up a bargain with forecasts of a tourism recovery on the horizon, and these are the biggest deals of the past few months.
AerCap Acquires GE Capital Aviation Services
Dublin-based AerCap became the largest clients of Airbus and Boeing overnight when they acquired GE Capital Aviation Services from General Electric in November in a deal worth over $30 billion.
Chuck Zsebik says that AerCap is number one in the world of aircraft leasing, combining aircraft, helicopters in their substantial fleet. Selling off GECAS means that General Electric may have cut any further losses from the Covid-19 pandemic, but once travel returns to normal, AerCap will dominate the aircraft leasing industry.
Acquisition of Bombardier Transportation by Alstom
While the aviation industry was crushed by the restrictions on travel that Covid-19 brought, rail industries have fared differently. The pandemic may have greatly impacted passenger transport, but freight transport has not just remained consistent but has grown in recent months.
Based in France, multinational company Alstom is nearly 100 years old, providing rail infrastructure all over the world. By merging with the Canadian-German company Bombardier Transportation in a deal worth $6.2 billion, it would appear the deal benefits both companies.
Chuck Zsebik notes that Alstom continues to add to its portfolio of rolling stock and rail sector services across the globe while purportedly concentrating on the growing need for greener, smarter mobility.
Time will surely decide how successful they are in their quest for sustainable rail solutions, and in the meantime, Bombardier will get back to its core concentration, that of supplying business aircraft.
Blackstone and Starwood Capital Acquires Extended Stay America
Hotels were always going to be some of the hardest-hit industries in the recent economic downturn according to Charles Zsebik. Despite people having the funds and the desire to holiday even without leaving the country or indeed the state, hotels were closed for months to all business.
Smaller firms may have gone under, but larger firms have found reprieve, though it comes with a huge price tag. Blackstone and Starwood Capital together paid a hefty $6 billion for their latest acquisition, and for Blackstone, it’s a familiar situation: this is the third time they’ve owned Extended Stay.
Chuck Zsebik notes that Extended Stay were somewhat of an exception to the pandemic rule, as their business was supported by essential workers and those requiring temporary housing during the pandemic.
Either way, Blackstone and Starwood were interested long before the acquisition was guaranteed, and the price they’ve paid has shown that stakeholders even in the most troubled of industries aren’t prepared to let their businesses go without a fight.
Hertz Bought Out by Knighthead, Certares and Apollo
2021 saw the rescue of Hertz Car Rental by the KHCA Group, otherwise known as Knighthead, Certares and Apollo, who acquired Hertz and saved them from bankruptcy, at a cost of $4.7 billion.
It comes as no great surprise that the rental car company had become one of the many casualties of the travel industry. Hertz had filed for Chapter 11, the term used regarding reorganization bankruptcy Chuck Zsebik reports.
While Hertz, under Chapter 11, may have been able to continue its operations, there was no guarantee of its recovery in time before post-pandemic uplift in business. Its acquisition by the KHCA Group has meant Hertz now has the capital to complete its reorganization and exit from Chapter 11.
Notable Mentions
It might have been a year most in the tourism sector would wish to forget, but even those in the hardest hit areas of the travel industry were still able to not only hold onto their businesses but make their own acquisitions, too.
Chuck Zsebik notes that Hyatt bought out the hotel chain Apple Leisure Group for $2.7 billion, with big plans to make a greater claim to the luxury travel market.
Travel agencies sought to cling onto life for another year of waiting out the Covid-19 scourge, but Expedia sold Egencia to AMEX Global Business Travel. Egencia president Mark Hollyhead might be bragging of having “the best people and technology in the industry” but only when travel truly gets back to normal will customers be able to test the validity of such a claim.
