Economic Uncertainties Won't Drive More Travel Tech Mergers & Acquisitions

25.08.2023 - 14:35 / skift.com / Justin Dawes / Richard Valtr

The hotel tech startup Mews has completed five acquisitions in the past three years. Its CEO, Richard Valtr, told Skift last week that there are two more underway. 

He also said he expected to see more consolidation deals during this unstable economy. That makes sense because as a buyer, he is probably more tuned into the world of startups that want to sell. 

For Mews and other travel tech startups backed by venture capital, now is a great time to acquire because of low valuations. But, for the same reason, that means it’s also a terrible time to sell.

The larger uncertainties about the economy over the next six months has rattled the broader tech sector with may households names laying off thousands of workers. That is casting a long shadow over travel tech, too. 

Business-to-business travel tech companies are generally doing well right now, but some experts expect the overall number of big mergers and acquisitions to decrease until the economy stabilizes. 

There are still travel tech acquisitions happening right now, but the majority of companies looking to sell are the ones that really need to, said Chris Hemmeter, managing director of Thayer Ventures, a venture capital firm focused on the travel tech industry. 

“I think people who can are going to hold, and then people who just can’t hold are going to have to enter a marketplace where the multiples are going to be much lower. I think that’s all going to net out less activity, not more,” Hemmeter said. 

For companies with big growth goals, which startups like Mews backed by venture capital most always have, acquiring similar companies is a quicker way to do that. Mews provides a property management system for hotels. Its acquisitions have helped the company expand in Europe, where it’s had success in a very old industry that wants to modernize. 

Matt Zito, a mergers and acquisitions broker for travel tech companies, said the startups that need to sell are those that have not started making revenue and therefore have fallen flat during the pandemic. 

“I’m very selective with the ones that don’t really make any money or have no revenue,” Zito said. “There’s a lot of those out there. There’s a lot more than people think, let me tell you.”

Zito is managing partner of travel tech consultancy TSI, where he said he spends about 80 percent of his time on mergers and acquisitions for both buyers and sellers. That firm began Travel Startups Incubator in 2015, which invested in more than 20 startups. 

He expects to see more “acqui-hires” during this time — when a company only acquires another’s employees, and the tech product is usually shelved. That’s often the case when an acquisition price is undisclosed, he said. 

Another problem preventing acquisitions