AGC's Q1 2025 Travel and Hospitality Market Update

We are excited to share with you our latest update on the Travel & Hospitality Technology Market.

As we move into 2025, the sector is on its strongest footing ever. Travel spending is expected to surpass pre-pandemic levels, providing operators with ample capital, which they are investing aggressively in technology to support their businesses. Strong end-market momentum has helped the 25 companies that make up AGC’s Travel & Hospitality Tech Index grow topline by nearly three times the S&P 500, while expanding margins. Hungry for growth, investors have rewarded the T&H sector handsomely, pushing public share prices to all-time highs while driving the value of M&A up an estimated 147% year-over-year to a record-breaking level in 2024.

With five travel & hospitality tech deals closed in just over a year and nine more currently in the market, we are one of the most active banks in the sector globally. This puts us in daily contact with the most active buyers and sellers, giving us unique insight into where the market is headed—we believe the party is just getting started.

In our Q1 '24 report, we anticipated that easing financial conditions would set off an avalanche of deal making activity. Twelve months later, with junk bond yields down ~275bps and issuance up nearly threefold, the M&A market is on fire.

Driven by the need to scale up in preparation for an eventual exit—and fueled by cheaper debt and over $330B in tech PE dry powder—PE-backed platforms are poised to drive M&A into 2026 and beyond. This cohort of businesses needs to buy revenue to gain the scale for an eventual IPO.

Over the past couple of years, deal activity has been dominated by software for hotels, primarily focused on PMS and core systems of record. In late ’24, we started to see the market broaden—first to marketing tech for hotels, and then to aviation and other travel verticals. We expect this broadening to continue as the investor community doubles down on their conviction around travel.