Leisure sector gets a ‘pick me up’ from PE

A recent article shows the number of UK private equity acquisitions of companies in the leisure sector has more than doubled from 12 to 26 in the past year.

According to the article, PE firms took the opportunity to pick up assets at low prices while the leisure sector recovers from the pandemic. Because UK-only businesses as a whole have been trading at a discount to their international peers, some UK leisure businesses have become particularly attractive to PE funds.

Some high-profile transactions were:

  • LDC buying a stake in hospitality and leisure venue operator, Boxpark.
  • Promethean Investment completing a growth capital round of $60m for mini-golf company Puttshack.
  • Fortress buying up the pub and bar operator Punch Pubs, in a deal believed to be worth as much as £1bn.

This interest in the leisure sector was in good faith, considering the summer boom for the leisure and travel sector this summer. According to a Reuters article, WH Smith and Whitbread are seeing business return to pre-pandemic levels, with pent-up demand for summer vacations boosting the leisure industry’s recovery from the COVID-19 crisis.

Whitbread stated previously hotel stays were above pre-crisis levels and said its Premier Inn brand in Britain was about 40% booked for the second quarter, giving it confidence that it would stay ahead of the market for the rest of the year.

This makes sense considering we all had cabin fever being locked down for the past two years. People were ready to get their holiday time back due to various lockdown restrictions being lifted across the globe. Reuters explains this phenomena as “revenge travel” – a term trending on social media that refers to the scramble to book overseas trips that were delayed by coronavirus restrictions.

Will this rush in the leisure sector remain, especially during a cost-of-living crisis? We can only wait to see.

By Anusheh Khan on 03/08/2022