Leisure & Hospitality

The sector booked just 28 deals in Q1 of this year versus 34 in Q1 2022 – this represents the lowest first quarter volume of deals since the onset of the pandemic (Q1 2019). There have been no mega deals in the sector since Caesars Entertainment's 2021 $4bn acquisition of William Hill. 

2023 Q1 activity was limited to small-scale deals including:

• Dalata Hotel Group’s £44m acquisition of Tide Developments Ltd.
• Travel Counsellors' acquisition of Holidayplease.

Deals activity in this sector has been curtailed as a result of:

• A tight credit market with UK rates at 4.25%.
• Substantial cost inflation issues, especially with respect to food ingredient, labour and utility costs.
• A cost of living squeeze that has held back volumes. While the top-line has grown in nominal terms, in real terms it has not been enough to offset substantial cost inflation which has adversely impacted both margins and cash generation.

We expect the scope for restructuring to remain at an elevated level as a result of these factors which has created structural profitability issues and especially for some large-space restaurant operators. In recent months, for example, the Prezzo Italian restaurant chain has decided to close 46 stores via a Restructuring Plan.