Travel industry trends and the opportunity for private equity
Travel industry trends and the opportunity for private equity
https://www.mckinsey.com/industries/private-capital/our-insights/travel-industry-trends-and-the-opportunity-for-private-equity
Ryan Mann is a partner in the Chicago office; Tom Bartman is a partner in the Miami office; Vik Krishnan is a senior partner in the Bay Area office; Daniel Crohmal is an associate partner in the New York office; Grace Kessler and Katherine Stadler are consultants in the Washington, DC, office; Kimberly Chang is a consultant in the Los Angeles office; and Melinda Smith is an associate partner in the Seattle office.
The travel industry is experiencing dynamic growth. For private equity firms, understanding travel industry trends can help guide investments.
In the past five years, global investments have shifted dramatically in response to supply chain disruptions, new technologies such as gen AI and cryptocurrency, and more. As these forces have swept the globe, the travel sector has been a steadily rising star: The industry has grown at a CAGR of 3 percent from 2017 to 2024, which is expected to accelerate as more people from Latin America and the Middle East begin traveling.
The travel equities market has reflected this growth. Market activity has increased and has seen overall positive TSR performance since 2019. At the same time, the average transaction size has decreased since 2020, and the largest private equity buyouts and growth deals have become smaller across most travel segments since 2022, according to McKinsey analysis. This proliferation of smaller deals indicates that new opportunities are beginning to appear throughout the travel landscape.
To participate in this growth, US-based and international private equity firms need to understand today’s travel landscape and the marketwide shifts affecting it, such as AI and the changing preferences of younger generations. In this article, we explore three major trends affecting the leisure travel industry today: traveler preferences for experiences, traveler preferences for luxury travel, and the rise of technology integration in travel.
For decades, people have spent more of their discretionary income on experiences, rather than goods. Travel has benefited from this shift in spending, continuing to capture a higher share of wallet steadily over time. In recent years, in addition to continuing to visit traditionally strong leisure destinations, travelers have increasingly gravitated toward different travel experiences—such as disconnecting, nontraditional experiences, social and community travel, and multipurpose travel.
Traveling to disconnect
Travelers are prioritizing experiences where they can disconnect from day-to-day work, whether by relaxing in remote locations or hiking in nature. Such experiences are often considered “adventure travel.” While a post-pandemic surge in adventure travel has largely stabilized, revenues in the segment continue to grow.
Nontraditional experiences
Several unique experiences are gaining popularity among travelers: noctourism (touring destinations after dark), water-based activities, wellness tourism, culinary tourism, and immersive art and cultural experiences. There is also a growing interest in alternative travel destinations, which can be less crowded, less commercialized, and more affordable than highly touristed hot spots. This trend is driven by rising costs, social media exposure, and a desire for authenticity.
Social and community travel
Travelers are increasingly traveling in groups, whether through guided tours, groups of solo travelers, or multigenerational travel, indicating they are looking for communal and social experiences. Family travel is the largest US leisure segment, with 44 percent of leisure travel in the United States being family trips. Moreover, multigenerational travel is on the rise, with 46 percent of family travel involving multiple generations (parents, children, and grandparents). This trend is driven by increased accessibility to multigenerational travel options, such as diverse accommodations and travel activities.
Multipurpose travel
Travelers are more often combining travel types (such as business, leisure, and visits to friends and family) and want multiple experiences in the same trip. For example, wellness travel has grown in popularity as people seek to combine relaxation, mental health practices, and physical well-being with their vacations. Wellness resorts with diagnostics and medical spas with travel components are growing in popularity, and the global spa market is projected to reach $66 billion by 2029, growing at about 8 percent CAGR from 2024 to 2029. Other multipurpose travel trends include event tourism, volunteer travel, and digital nomadism. Major hotel chains and travel companies recognize this and have developed platforms to facilitate booking multifaceted travel experiences (for example, Airbnb, Marriott Bonvoy Tours & Activities, and ALL [Accor Live Limitless]).
Traveler preferences for luxury travel
The global high-net-worth population is expected to increase by almost 26 percent from 2023 to 2028, driven in part by the increase in wealth in emerging regions and among women and younger generations. This has fueled demand for exclusive, high-end travel experiences, and as a result, luxury travel is growing at about 6 percent CAGR, outpacing the broader travel sector by two percentage points, according to McKinsey analysis. The fastest growth is in North America (12 percent CAGR from 2015 to 2025), Asia (8 percent), and the Middle East (6 percent). Luxury travelers are likely to take several trips a year and show a disproportionate appetite for adventure and experiential trips.
As luxury travel has increased in popularity, the luxury-hotel pipeline has grown, buoyed by the higher pricing power of these assets. Across hotel segments, luxury-hotel revenues are forecasted to grow the fastest, and travelers are increasingly comfortable paying four-digit nightly hotel rates, especially in the Americas and Europe. In response to this demand, luxury travel brands are evolving to capture a higher share of wallet. This is demonstrated by Aman’s foray into membership clubs, Ritz-Carlton’s expansion into luxury cruises on yachts, and Four Seasons’ private jets and yachts. Fashion brands are also increasingly making inroads into travel, such as hotels by Bulgari, LVMH (Cheval Blanc), and Versace.
The rise of technology integration in travel
New digital technologies such as gen AI are changing the way travelers plan, as well as how travel companies offer experiences to guests.
Gen AI–enhanced travel planning
Travelers are using gen AI to enhance how they discover destinations, pick lodging, and craft itineraries, raising the bar on the value proposition for travel advisers and suppliers. There has been a proliferation of travel planning tools with added AI capabilities in the past five years, and travelers are independently leveraging AI-powered planning tools. For example, 29 percent of respondents to a recent survey reported using gen AI for travel-related tasks, including travel inspiration, local food recommendations, and transportation planning. AI is also expected to drive web traffic, which will change the search engine optimization (SEO) landscape. For instance, the survey showed a 45 percent lower bounce rate among consumers directed to travel websites by a gen AI source, indicating that travelers are trusting gen AI to match them with useful sites.
Using data to make magic happen
Travel companies are using data and analytics behind the scenes to surprise and delight guests by creating personalized experiences and anticipating guest needs at every point in the guest journey. For example, hotels can collect internal data on guest purchasing habits and use it to enhance guest experiences, such as logging that a guest orders hot tea at the same time every weekday and using that data to preorder tea for them for the duration of their stay and for stays at other hotel locations. Other examples include Shangri-La Hotels’ “door to door” jet bridge pickup service (powered by travel data input from the guest or travel agent) and The Peninsula Hotels’ offering of hot meals prepared and waiting for guests’ arrival and departure.
Customization and personalization at scale
Companies are unbundling and rebundling attributes of hotel stays, flights, and tours, allowing for high customization and offerings tailored to “segments of one.” As a result, leisure travel companies such as IHG are beginning to introduce attribute-based selling, in which guests pay for exactly the features they want instead of leaving options such as view types and room location up to chance. For example, hotels can allow guests to choose à la carte whether they’d prefer a high floor or a beach view or if they’d like access to open mini bars, spa facilities, or hotel golf courses.
Investment themes for private equity firms
The dynamic shifts toward new experiences, luxury travel, and technology integration are giving rise to many investment opportunities in today’s travel industry, which private equity firms can consider exploring.
Adventure and outdoor experiences
As travelers look for novel and unique experiences, companies offering unusual adventure and outdoor experiences may be in a position to earn market share. About 46 percent of travelers plan to increase their spending on adventure travel, and the demand for luxury adventure travel experiences is increasing. In fact, the number of passengers sailing on expedition itineraries increased 71 percent from 2019 to 2023.11 As a result, expedition cruises, such as those operated by specialized companies with a focus on remote scenery and wildlife viewing, are in a strong position in this evolving market.
With the number of passengers embarking on expedition cruises on the rise, private equity firms may increasingly look toward expedition cruise operators, including those that specialize in themed cruises, educational voyages, or cultural expeditions. According to McKinsey analysis, the cost and time to build a cruise ship are increasing, with waitlists nearing a decade. Accordingly, players are examining the possibility of retrofitting existing ships into expedition cruises and building brands using existing hospitality assets.
On the theme of outdoor adventure, demand for luxury yachting experiences continues to increase. Over the past decade, yachting demand has grown by about 50 percent, according to McKinsey analysis. At the same time, consumers are turning away from yacht ownership, spending $1.4 billion less on the same number of yachts in 2024 than they did in 2023. This dynamic is creating tailwinds for yacht charter models. Industry players could consider integrating private travel and yacht offerings to create seamless travel packages through strategic partnerships, consolidate regional boutique charter operations, or build a book service that includes air charters, yacht charters, hotels, and tour activities.
Moreover, luxury consumers are increasing demand for marinas, but there is a geographic mismatch between marina infrastructure and demand, creating a white space for strategic investment. According to McKinsey analysis, there are about 6,000 seaside marinas globally, with about 65 percent located in the United States. At the same time, McKinsey analysis finds that about 70 percent of yachting activities are concentrated in the Mediterranean region—and that there is a global marina shortage, with about 210,000 yachts competing for about 160,000 berths. With about 6,500 new yachts delivered annually and marinas adding only about 300 berths every five to ten years, the supply-and-demand gap is widening.
According to McKinsey analysis, the marinas industry is a $15 billion market growing at an 8 percent CAGR through 2030, and many Mediterranean marinas have waitlists that are 12 months or longer. Demand has remained resilient, with consumers in this market valuing quality, convenience, and other attributes, in addition to price. Codeveloping marinas alongside or adjacent to high-end resorts or branded residences, offering bundle packages, investing in premium upgrades, and verticalizing marinas with branded services could further position private equity firms in strong positions.
Fully integrated destination experiences
The revenue generated from Taylor Swift’s Eras Tour and the FIFA World Cup are not isolated examples: They speak more broadly to the power of live events to draw consumer spending. A growing share of travelers are choosing trips based on live events (about 20 percent of travelers in 2025). Sports tourism alone was worth $565 billion in 2023 and is projected to grow beyond $1.3 trillion by 2032, while music tourism is expected to reach $15.5 billion within the next decade. Luxury travelers also represent a large share of the experiences market—their share of spending on experiences rose from 34 percent in 2019 to 46 percent in 2023.
As consumers transform experiences such as concerts and sporting events into multiday trips rather than just hours-long activities, there is a growing opportunity for live-event hospitality platforms. Private equity firms could partner with or acquire event management companies for sports, music, and cultural event travel, create bundled packages, and develop recurring revenue through membership or loyalty programs.
Luxury travel agencies
Notably, luxury travel brands are moving into adjacencies and reaching people through a wider array of channels, including a more diffuse luxury travel agent system. These independent agents are being trained with tools from consortium channels and are being provided with digital, self-serve sales tools and agent-oriented planning software. These solutions could become more attractive as companies continue exploring new ways to build networks of luxury travel agents and connect with travelers in new ways (membership programs, new travel agencies, and more).
Experience-focused, members-only clubs
Memberships at members-only clubs grew at 19 percent CAGR from 2016 to 2024, with continued momentum expected as affluent consumers seek curated spaces. While early-stage clubs can see 30 to 50 percent of first-year revenue spent on member acquisition, mature clubs (five years or older) typically achieve 20 to 35 percent EBITDA margins due to high retention and steady recurring revenue, according to McKinsey analysis.
As consumer demand for live events and exclusive dining experiences continues to increase, there’s an opportunity to invest in members-only clubs in preexisting spaces, stadiums, arenas, and ski resorts that avoid higher member acquisition and investment costs. Private equity firms could partner with stadium and arena owners to build private lounges with luxury food and beverages, concierge services, and exclusive access. Further, they could launch a branded series of clubs in partnership with hospitality operators to deliver consistent, luxury clubs with reciprocal access; create a tiered membership model with regional or national access; and program the space for private events.
Wellness-integrated lifestyle concepts
A generational shift in wealth, wellness priorities, and community structure is creating an opportunity for wellness experiences. This is especially true for postpartum treatment, where wellness offerings can support restorative care. In 2024, 82 percent of US consumers said wellness was a top priority in their daily life, versus 42 percent in 2020. In addition, women are becoming more educated and wealthier, with their global wealth projected to increase 31 percent by 2030. However, they are also increasingly likely to be living farther from traditional support systems, with about 27 percent of higher-income adults (earning $125,900 or more annually) living away from family. As a response to this trend, postpartum retreats started coming to the United States three years ago after having been established in Asia for decades with widespread appeal. Private equity firms could partner with postnatal care companies to reserve space in existing urban assets, or they could acquire or partner with stand-alone postnatal care companies.
Opportunities in new technologies and technology integration
New technologies are attracting interest throughout the leisure travel industry. Companies are offering AI- and cloud-based systems to upgrade legacy revenue management, pricing, and travel systems (for example, property management systems, rental management systems, enterprise resource planning). These systems could, for instance, use machine learning to power real-time pricing optimization, as well as bookings more broadly. Consumers and businesses alike are also looking for more and flexible features that legacy reservation systems do not offer, such as the ability to specify check-in and check-out times during reservation, add activities and spa services online prior to hotel stays, and provide AI-powered customer service. Private equity firms can also look to companies enabling the transition from traditional to AI-powered technology. For example, consumer-facing AI- and voice-powered search functionality are giving rise to new companies and B2B service providers. With the growing role of AI-powered search and the decline of traditional SEO-driven search, private equity firms can invest in marketing technology companies leading the charge for setting businesses up to be recommended by AI.
Last, there is an opportunity to invest in companies offering solutions that unlock efficiencies from automation and robotization of high-cost traveler touchpoints. As labor costs mount and travelers expect a more seamless experience, travel companies are turning to technology to automate and streamline low-value-add and manual tasks. For example, facial recognition technology is starting to be more widely adopted for airport security, hotel check-in, and more, and robotization for luggage handling and room service delivery is also gaining scale.
As growth in the travel market begins to accelerate over the coming years, US-based and international private equity firms have an opportunity to play a role. The key will be understanding travelers’ desires—for experience- and luxury-based travel in particular—and how they’re using technology to plan and enhance their experiences.
The evolving role of experiences in travel
https://www.mckinsey.com/industries/travel/our-insights/the-evolving-role-of-experiences-in-travel
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Travelers increasingly plan trips around activities. How can the travel industry make it easier to discover and book the magical experiences that travelers crave?
Since the dawn of leisure travel, people have journeyed in search of new experiences. They long to meet friendly locals, eat new foods, stroll through unfamiliar landscapes, and witness (or maybe even join) cultural traditions that remind them that they’ve left home.
More and more, experiences have become powerful decision drivers for travelers: the possibility of a life-changing travel moment motivates people to book a trip. The quest for the right type of moment even influences which destinations people will choose. But despite the enduring excitement about experiences and the large pool of value they represent, the travel industry has yet to crack the code on an approach that can simultaneously please travelers, make sense for experience providers, and produce profit at scale for distributors and larger stakeholders.
Today’s travelers often find the breadth of available experiences overwhelming, and they crave easy-to-navigate platforms that can sort through experiences and offer seamless, real-time booking anywhere in the world. Experience providers (often small, passionate outfits, sometimes run by a single tour guide) want to create broad awareness of their offerings. But operators can become frustrated when a booking platform’s thumbnail descriptions fail to capture the appeal of a quirky activity—or when an intermediating player fumbles customer relations. Distribution platforms want to become comprehensive sites for one-stop experience shopping but face challenges as they try to scale profitably while cobbling together a fragmented array of experiential offerings. Meanwhile, legacy travel institutions, such as airlines and hotel chains, are still searching for ideal ways to fit magical travel moments into the machinery of complex corporate enterprises.
The global marketplace for travel experiences offers a more than $1 trillion opportunity. Younger generations, in particular, demonstrate an eagerness to splurge on experiences, suggesting the sector will continue to expand. Yet nearly half of the business of experiences is still transacted offline. As experience booking goes digital, a considerable share could be claimed by organizations that can anticipate and eliminate pain points at every stage of the process, up and down the value chain.
How can operators quench travelers’ thirst for magical experiences while finding new customer streams from around the world? How can distribution platforms simplify and scale the discovery and booking process while creating an attractive proposition for operators? How can airlines and hotels learn from the awe and wonder that a terrific tour guide can conjure, becoming distributors for experiences and also injecting the essence of that magic into their core businesses?
A new report, The evolving role of experiences in travel, produced by McKinsey and Skift, examines the world of travel experiences—ranging from stadium rock concerts to guided nature hikes to in-home culinary gatherings and everything in between. The report offers an assessment of the experience industry as it stands today, presents ideas that could help address current dissatisfactions, and looks at opportunities for various players to capitalize on growing interest.
Desire for experiences is reshaping travel demand
Once upon a time, travelers might have picked a destination first and only later started choosing what to do upon arrival. But today’s travelers don’t treat experiences as afterthoughts. Their travel decisions are increasingly based on specific activity interests. This can invert the trip-planning funnel, placing experiences at the top and destination choices further down the cone.
A recent McKinsey survey asked about the factors most important to travelers when selecting a destination. Survey respondents cited the range and quality of local activities on offer at a rate that trailed only the rates of their citations of essential needs, such as safety, navigability, cost, and accommodation range and quality. Respondents were nearly as likely to cite, as a decision factor, the ability to experience authentic local customs and culture.
Interest in experiences is unlikely to dissipate soon, as evidenced by the preferences of younger travelers. According to McKinsey survey data, 52 percent of Gen Zers say they splurge on experiences, compared with only 29 percent of baby boomers. And Gen Z travelers say they try to save money on flights, local transportation, shopping, and food before trimming their spending on experiences.
Travel experiences could compose a market worth more than $1 trillion
The travel experience market is large and, by some estimates, rapidly growing. To size it, we began by examining the value represented by the entirety of the world’s tours, attractions, and activities. Our analysis indicates that this global market could be more than $3 trillion.
Many local residents participate in the experiences offered at a given destination. But per our research, destination visitors—both domestic and international—account for roughly 30 percent of the experience market, spending about $1.1 trillion to $1.3 trillion on experiences. This is how we defined the total addressable market for travel experiences.
Next, we quantified the serviceable available market by assessing the proportion of travel experiences that are in some way structured (for example, a professionally guided tour or a live ticketed event) versus those that are independently undertaken (for example, a tourist strolling up to an art museum’s ticket window and then perusing its galleries). The segment involving paid, structured activities represents a large part of the market that’s in play for experience providers (such as tour operators), intermediaries (such as online-booking platforms), and stakeholders from other parts of the travel industry (such as hotels and airlines).
We estimate that paid, structured tourist activities account for roughly 25 percent of global experience spending, totaling about $250 billion to $310 billion per year. This number comprises tourist spending on rock concerts, baseball games, history walks, nature hikes, theme park visits, spa treatments, museum tours, and a host of other activities. And it continues to expand: experts estimate growth in this segment of more than 14 percent per year by 2025.
There’s an emerging recipe for creating magical experiences
A top-notch experience can be the cornerstone of a trip, lingering in a traveler’s memory for years to come. In our conversations with 19 experience providers, several crucial components for creating great experiences became apparent:
*- Entertainment comes first. Experience operators observe that, no matter the type of experience, what travelers want above all is to have a good time and be entertained.
*- Well-trained guides set the tone. Because creating a magical, guided experience depends so much on the guide, experience operators focus on molding high-quality frontline employees.
*- Authenticity and local engagement matter. Visitors appreciate thoughtfully crafted itineraries that bring a specific locale to life.
*- Expectations should be managed—and then exceeded. Overcommunicating and overdelivering are crucial.
*- Guests need to feel they’re in sure, safe hands. Travelers like to feel that a tour guide is in control every step of the way.
Booking platforms might consider these components when deciding which experiences to give prominent visibility. Larger travel players, such as hotel chains and airlines, might also keep these ingredients in mind—both when thinking about add-on experiences to offer through their own platforms and when exploring how to scale magical experiences across a chain of hotel lobbies or a schedule of transoceanic flights.
Finding and booking experiences remains a frustrating process—offering opportunities for improvement
Many travelers enjoy the process of planning a vacation. They have fun searching for the individual elements that will add up to a perfect trip. But the discovery and booking process for travel experiences can be alternately thorny and exhausting. It can present travelers with an overwhelming menu of options but doesn’t always surface the best ones. It sometimes fails to accurately describe an activity, which can create expectation mismatches.
Meanwhile, the experience industry’s move to digital is still in progress. According to 2023 data, 47 percent of experience booking still happens offline—either via walk-ups or telephone calls or through offline conduits, such as hotel concierges and traditional travel agents.5 Only 22 percent of booking occurs through online intermediaries, such as booking platforms.
Many experience providers have faced difficulties as they shift their booking operations toward online distribution platforms. And for the platforms, scaling while maintaining or expanding margins has been a challenge.
Travelers aren’t always getting what they want or need from online booking
Booking platforms that offer experiences sometimes serve up a large database presented as a list, which might not have been carefully curated. These lists can be overwhelming for a customer who isn’t sure what to look for. And they might fail to surface hidden gems. What’s more, the tours and activities that appear on platforms aren’t always especially well vetted. They might not meet travelers’ expectations for quality or value—or might not align with the thumbnail descriptions travelers see on the platforms.
There’s an opportunity here to create a discovery and booking process that features more fun and fewer hiccups. Travelers could benefit from simplified and more enjoyable discovery systems (including ones linked with social media), a streamlined booking process in which platforms become seamless (or even invisible), and a detangled customer service approach (in which it’s always clear who to contact, even on short notice).
Experience operators can benefit from the transition to digital—but may also encounter challenges
Of the 19 operators we interviewed in June 2024, 78 percent already receive at least half of their bookings through platforms. Platforms can help attract online eyeballs and raise product awareness in ways an experience provider couldn’t on its own. One reason is that platforms tend to perform better in search engine results than an individual operator’s website does on its own—in part, because platforms can afford to pay more for local language translation, search engine optimization, and search keyword marketing than a typical experience operator could.
Despite all the advantages that online platforming can offer operators, it also presents some structural challenges. For instance, the variety of experience offerings—ranging from strenuous outdoor adventures to quiet cooking classes and from giant group tours to intimate gatherings—is difficult to fit into the one-size-fits-all listing approach that platforms sometimes take. Unlike, for example, air travel, where the ticket offerings tend to be fundamentally similar and easily compared, distinctively crafted activities and tours can often benefit more from a bespoke framing of offers.
The intermediary role of the booking platform can also create frustration for experience providers. When service issues arise or customers wish to cancel or reschedule a booking, execution isn’t always smooth. For instance, the customer might attempt to interact with the platform when it would be more effective to interact directly with the operator. The operator might become aware too late of a service issue or booking change request—or might not become aware at all.
Online booking platforms are hoping to scale a fragmented industry
Online-booking platforms enjoy natural advantages when it comes to selling experiences to travelers. Because the experience space is so fragmented—full of countless smaller operators—travelers look to save time and effort by turning to a platform that can aggregate and sort through an overwhelming number of options. Platforms can also lower payment and communication hurdles for a traveler, particularly when experience operators speak foreign languages or transact in foreign currencies.
Many booking platforms have thus far focused on prioritizing top-line growth instead of maximizing profitability. Building a large platform can incur significant expenses related to both acquiring a large supply of inventory and ensuring that the platform’s tools and algorithms can handle it. A central question for platforms will be how effectively they’ll be able to expand revenue while also growing margins.
Other players are seeking profitable ways to get involved with experiences
Experiences are gaining enough traction in the travel ecosystem that other players are now eyeing the market. The margins for sales of experiences can be high: operators told us they typically achieve up to 60 percent margins, even after deducting a booking platform’s commission (with labor constituting the bulk of the operator’s cost). That can make this an appealing space for businesses to enter.
Which strategies might help stakeholders find success in the experience marketplace?
The evolving role of experiences in travel could create favorable circumstances for stakeholders across the value chain. Industry players in various sectors should consider how best to capitalize on emerging opportunities.
Experience operators should generate the magic that will enable industry growth
For experience providers, it begins with delivering the distinctive, authentic moments that travelers crave. Once this crucial prerequisite is met, other success factors can be considered:
*- Meeting consumer demand. This requires monitoring changing trends, catering to evolving traveler tastes, and making guests feel they’re in safe hands from start to finish.
*- Savvy marketing. Using the right words and images can communicate an experience’s value proposition.
*- Discovery systems. For experiences, discovery systems are still in flux, so it’s important to find customers where they are—including on social media.
*- Booking strategy. Different operators can benefit from different booking strategies. It’s important for operators to consider how their needs could evolve over time when evaluating the trade-offs that come with various booking approaches.
Booking platforms could profit from making sense of a large and growing market
Distributors might find themselves in a sweet spot, as demand for travel experiences grows and the corresponding rise in supply creates an ever-more-confusing marketplace. Platforms might consider how to effectively gather, intelligently curate, artfully display, and smoothly broker the sale of experiences in ways that will appeal to overwhelmed travelers who want one-stop activity shopping:
*- Building supply might involve building relationships with operators. Experience providers want to list on platforms that offer visibility and value.
*- Curation can make a traveler’s discovery phase relatively easy and fun. Most travelers don’t have the time, ability, or desire to conduct a long, difficult search for a hard-to-find experience.
*- A seamless booking process is likely to draw customers in and keep them coming back. Customers shouldn’t need to wade through multiple pages and filtering tools to find what they’re looking for.
*- Platforms might advise—or even become—experience providers. Booking platforms have a high-level vantage point and an ability to access large amounts of data, so they are in a good position to spot unmet demand in the marketplace and help generate supply that’s likely to be appealing to travelers.
As demand for experiences grows, travel industry players could look for new ways to get involved
Stakeholders across all travel sectors could benefit from viewing their roles through the lens of serving up memorable, positive experiences to travelers. This might involve reframing services a company already provides, or it might mean looking for new opportunities to integrate experiences into a traveler’s journey:
*- Hotel stays. Hotels might use experiences as incentives for travelers to book stays. Strong brand recognition and existing digital infrastructure can help hotel chains act as distribution channels for experiences. There might also be an opportunity to improve on-premises experiences that a hotel more closely controls—for instance, at the hotel’s spa or through a pop-up event in the hotel’s lobby.
*- Short-term rentals. Short-term-rental platforms might offer experiences alongside accommodation bookings. Given that many short-term-rental bookings already happen online, it might make sense for short-term-rental platforms to claim a share of experience booking. These platforms have established online relationships with many customers, and they have already integrated online payments and scheduling into their operations.
*- Flight packages. Many airlines already generate significant revenue from package holidays, which could be supplemented with add-on experiences. Airlines might take advantage of customer data and contexts to surface attractive experience options at the time of flight booking, which tends to happen early in the trip-planning process.
*- Reframed core products. Travel stakeholders can view their core products through the lens of experiences. Hotels might consider how to turn lobbies into experiential opportunities. Airlines might examine what travelers want from experiences and then apply the insights to create in-flight presentations and improve cabin atmospheres. Spaces might be revamped in ways that make them social media worthy.
Destinations could offer support for the experience ecosystem
Visitor bureaus and destination management organizations have roles to play in helping meet traveler demand for great experiences. The distinctive capabilities and resources of these groups could aid them in shaping the experience landscape.
Magical experiences are what leisure travel is all about. They bring people joy. They shape people’s identities. They can be the chapters of people’s lives that they’re most eager to tell the world about.
The business of travel experiences is quickly growing and evolving. Today’s marketplace could be at an inflection point, poised to transform in ways that will better connect travelers, providers, platforms, and other players. The travel industry should look for opportunities to collaborate and innovate to improve the commercial elements of travel experiences while never losing sight of the essential magic that turns a travel experience into a life-changing event.
Download the full report: The evolving role of experiences in travel
Travel, logistics, and infrastructure: Firms are finding opportunities in technology, changing consumer demographics, and global trade
https://www.mckinsey.com/capabilities/m-and-a/our-insights/travel-logistics-and-infrastructure-firms-are-finding-opportunities-in-technology-changing-consumer-demographics-and-global-trade
Arsenio Martinez is a partner in McKinsey’s Washington, DC, office; Ludwig Hausmann is a senior partner in the Munich office; Philipp Rau is a partner in the Berlin office; and Rebecca Stone is an associate partner in the New York office.
M&A among travel companies has been soft, but travel dynamics are changing, presenting growth opportunities. In logistics, technology-oriented deals may loom large in 2025 as solutions in the space improve.
The industry overview
Deal activity in the travel, logistics, and infrastructure sector increased markedly in 2024 compared with the previous year, with a total deal value of $157 billion in 2024 versus $115 billion in 2023. However, activity was still below prepandemic levels (with a total deal value of $173 billion in 2019) and substantially below peaks in 2021 and 2022.
Similarly, the proportion of private equity (PE) deals in the sector increased—from 14 percent of all deals in 2023 to 22 percent in 2024—but PE activity was still well below that of previous years. Some PE holdings are nearing their maturity and will likely come to market in the next year or two; given the current interest rate environment, it will be interesting to see to what extent valuations will stabilize or improve.
Subsector activity and opportunities for 2025—and beyond
M&A among travel companies has been relatively soft over the past few years. The total deal value in 2024 was $35 billion, essentially on par with the total deal value in 2023, which was $37 billion. But both figures are still well below the total deal value of $65 billion in 2021. That’s likely because travel companies, like other businesses in this sector, have been facing high interest rates and inflation and a changing regulatory environment. Rather than seek out deals, many have been looking inward to manage costs. Our research shows that deals in the Asia–Pacific and Europe, the Middle East, and Africa (EMEA) regions account for a higher share of the total number of travel deals than those in the United States (with 34 percent, 37 percent, and 29 percent of deals in those regions, respectively). About 80 percent of all travel deals have been in the hospitality segment—albeit this includes several individual property transactions.
Travel dynamics are changing, presenting leaders with several opportunities for growth and transformation. Our research suggests deal sizes are likely to remain small. In the hotel segment, for instance, we’re seeing large players (such as Hyatt and Hilton) expand into newer brands or locations through bolt-on deals. Some larger deals may still be in the offing—in the case of market or category expansion—but the regulatory environment remains uncertain, making smaller plays more attractive.
At the macroeconomic level, spending on business travel is likely to continue to recover from recent postpandemic levels, potentially surpassing $2 trillion by 2028, according to the Global Business Travel Association.1 This increased spending will likely spur more deal activity as companies seek to keep pace with demand. Travel management companies, for instance, may want to expand their capabilities to better serve corporate customers. And companies across the travel ecosystem will likely reconsider their investments in various products and services as travelers—particularly younger generations—splurge more on experiences and dining and look to save on flights, shopping, and lodging.
And though it’s historically been an area of underinvestment, travel technology should be a core theme for PE and strategic investors—particularly given recent functional advancements in the tools and systems used to manage properties and revenue, engage in marketing and distribution, manage workforces, and so on.
Deal activity among logistics companies is on the upswing, with $98 billion in total deal value reported in 2024, which is higher than in 2020 but still below the $150 billion total deal value reported in 2021. Our research shows that 91 percent of all deals in 2024 were small ones (less than $1 billion), with only a few mega deals announced, and the deals have covered all the major market segments.
Against this context, logistics players may be well placed to capitalize on several trends in 2025. For instance, based on M&A activity among the top 50 third-party logistics companies, there is room for consolidation—with a chance for these players to increase their scale, distribution networks, and access to customers in specific regions or countries. Similarly, there is still a fair amount of fragmentation among large logistics companies; consider that the top ten companies in areas such as truck brokerage, freight forwarding, and contract logistics represent only between 5 percent and 20 percent of their respective segments. There are opportunities, then, for companies to consolidate and capture a range of advantages in procurement, operations, and commercialization.
Another trend that bears watching is logistics companies’ pursuit of select bolt-on acquisitions, with the idea of adding capabilities such as cold-chain storage and digital order fulfillment. Indeed, large providers now see select acquisitions as a way to leapfrog into high-margin segments (such as healthcare and life sciences) that have traditionally been served by niche companies.
Technology-oriented deals will likely also loom large in 2025 as solutions in the transportation and logistics space improve significantly and as more and more start-ups develop and launch tools and platforms aimed at managing specific elements of the logistics value chain. Private investors will likely restart their acquisition engines—to a greater degree than they did in 2022 and 2023—and take advantage of rate corrections and adjusted valuations of medium-size logistics providers. In particular, they are already showing strong interest in assets that provide them with a sound competitive position and rate stability—think specialized logistics services or contract logistics.
And finally, transportation infrastructure deal activity dipped to $24 billion in 2024, down significantly from the previous two years. Airports accounted for about half of all transportation deals (18) and 78 percent of the value ($19 billion) of deal activity in this segment. A range of other transportation services accounted for the other 50 percent of all transportation deals and represented 22 percent of deal value in the segment.
Even as activity dropped, the average size of deals in this industry segment is normalizing to about $670 million. The surge in deal size has been almost exclusively driven by activity in Asia–Pacific and EMEA countries; by contrast, deal size in North America and South America has remained small and stable—about $2 billion to $13 billion per year. Overall, however, infrastructure deals remain a domestic game, with 73 percent of all infrastructure M&A happening within a country’s borders.
What’s more, in 2024, we observed PE investors getting involved in a larger share of infrastructure deals than they did previously (47 percent), although that figure reflects only six large deals—for instance, deals involving Budapest Airport, Malaysia Airport Holdings, Star Leasing, and Transmashholding.
As PE investors consider prospects for 2025, a few trends are emerging that bode well for them: Alliances are reshuffling, trade flows have been reconfigured—and are continuing to shift—and transportation lines continue to have excess funds, which means there could be significant opportunities to invest in strategic ports and terminals. Indeed, investors can continue to leverage infrastructure investments to stabilize their portfolios and cash flow positions.
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