January is already waving at us in the rearview mirror. Christmas is a distant memory and if the peak booking season is anything to go by, travellers are prioritising their 2025 holidays.
But what does the next year look like for the travel sector? While we haven’t got a crystal ball, based on what our regulatory, strategy, and finance teams are seeing, here are the key trends set to shape 2025.
Transformation of travel finance teams – smarter, faster and more effective
Like a boiler or a set of car tyres, the internal finance team rarely attracts investment until things go wrong. That’s because, in the past, they’ve been seen as a functional necessity, rather than a driver of value. But all of that is changing, and our financial consulting team is seeing a big increase in travel businesses wanting to elevate their financial operations beyond transactional processing and statutory reporting.
Armed with the latest finance and reporting tools, we’ve been helping clients to cut processing times and automate their reporting, leaving more time to dig into the drivers of business performance.
It’s an exciting time in the world of back-office finance…
M&A boom – a bumper year for travel business deals
There has been a flurry of M&A activity in the travel sector recently and 2025 is shaping up to be a big year for travel deals. We’re seeing a surge of interest from business owners looking to exit, particularly smaller operators who recognise that buyer appetite is strong right now.
One big driver is the impending Capital Gains Tax changes. With reforms on the horizon, many owners are accelerating their exit plans to maximise value before the new rules take effect.
At the same time, private equity firms are back in the game. After a few years of post-pandemic caution, they’re sitting on a significant amount of ‘dry powder’, and are now actively seeking to invest in strong brands and experienced leadership teams.
Despite cost-of-living pressures, travel demand is holding firm and investors see the sector as a resilient, high-potential space. We expect to see many more deals over the next few months.
Cost efficiency – how smart travel businesses are staying ahead
With staff costs on the rise, travel businesses are feeling the squeeze and in 2025 and our clients are looking for smarter ways to manage their costs.
We’re working with companies to identify savings opportunities by benchmarking cost lines against competitors and, for example, ensuring they’re getting the best merchant acquirer rates.
In the current environment where FX rates are fluctuating, a strategic hedging plan is essential for managing costs. Many different solutions are available and we’re helping businesses model the impact of different approaches to find the right fit.
Keeping a close eye on these costs will help you stay competitive. Agile businesses are getting more proactive, making their budgets work harder without cutting corners where it really matters.
ATOL reform – is 2025 finally the year we see change?
It’s been four years, and as many Prime Ministers, since the Civil Aviation Authority (CAA) first announced plans to overhaul ATOL regulations. So after multiple consultations, several rounds of feedback, and plenty of speculation, is 2025 the year that we finally see progress? From the conversations we’re having, this year could see the clarity that we’ve all been waiting for.
The delays haven’t been for nothing. The CAA seems committed to creating a system that works across different travel business models rather than rushing out a one-size-fits-all approach. Early adopters testing the initial proposals by implementing trust accounts, for example, flagged issues that wouldn’t work for many licence holders.
From what we’re hearing, the CAA is taking these issues on board before rolling anything else out. We expect to hear more in the coming months, so watch this space.
For tailored advice and support to navigate 2025’s opportunities and challenges, reach out to our team today.
If you like this, we think you’ll love:
- March 2025 ATOL renewal: changes you need to know
- 5 key findings from the 2024 ATOL authorisation data
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