Private equity firms are stepping up their investments in the global travel and tourism industry, targeting hotels, resorts, restaurants, and tour operators as they seek to capitalise on a sector rebounding strongly after the COVID-19 pandemic.

In the second quarter of 2024 alone, private equity (PE) deals in Europe’s tourism and leisure industry totalled nearly $823 million (€724.4 million), according to GlobalData. One standout transaction saw Ares Management Corporation and EQ Group acquire Landsec’s hotel portfolio in the UK for £400 million (€466.7 million).

Analysts say this uptick in activity is driven by multiple factors, including improved travel demand, constrained supply in prime tourism locations, and a growing preference for luxury and wellness experiences over material goods. During the pandemic, PE firms had already begun snapping up undervalued travel assets, anticipating future growth.

“Private equity now accounts for around 40% of M&A activity in the UK travel sector,” said Andrew Keller, director at Stax Consulting. “We’re seeing strong interest in tech-enabled and experiential travel firms, with many PE players adopting buy-and-build strategies.”

Graham Miller of the Nova School of Business & Economics notes that the hotel, resort, and restaurant sectors have seen significant PE interest. Investments are also rising in travel infrastructure and service firms, especially in emerging destinations like Central Asia and Scandinavia.

Demographic trends are also playing a role. “Affluent baby boomers nearing retirement are expected to drive higher future demand, while regulatory and construction cost barriers make acquiring existing hotels more attractive than building new ones,” explained Dr. René-Ojas Woltering of EHL Hospitality Business School.

To boost profitability, PE firms often remodel properties, streamline operations, introduce new technologies, and target high-margin segments such as luxury and group travel. In some cases, they also restructure debt and integrate AI tools to improve operations.

However, this aggressive transformation comes with challenges. Labour shortages, rising costs, regulatory barriers, and cultural clashes between investors and company founders can complicate the path to profitability. Maintaining service quality while implementing cost-cutting measures also remains a delicate balancing act.

“The alignment of investor goals with the company’s long-term vision is essential,” Miller said. “If not managed well, private equity involvement can threaten brand identity and sustainability.”

Despite macroeconomic uncertainties, the resilience of the travel sector continues to attract PE interest, as consumers remain eager to explore—albeit on shorter or more budget-conscious trips.

Amazon posted robust first-quarter earnings and revenue that exceeded Wall Street expectations, highlighting the tech giant’s continued dominance in e-commerce and cloud computing despite mounting global economic and trade headwinds.

The company reported a net income of $17.13 billion, or $1.59 per share, for the three months ending March 31, up significantly from $10.43 billion, or 98 cents per share, during the same period last year. Revenue rose 9% year-over-year to $155.7 billion, topping analysts’ forecasts of around $154 billion.

Amazon Web Services (AWS), the company’s highly profitable cloud arm, was a major driver of growth, with sales climbing 17% to $29.3 billion. AWS remains central to Amazon’s broader strategy, especially as the company ramps up investment in generative artificial intelligence and custom-built data center infrastructure.

CEO Andy Jassy emphasized the company’s resilience amid economic uncertainty, telling analysts that Amazon’s value proposition — low prices, wide product selection, and reliable delivery — makes it a preferred choice during turbulent times. “When there are uncertain environments, customers tend to choose the provider they trust most,” Jassy said. “We have emerged from these eras with more market share and are better positioned for the future.”

Jassy also addressed the impact of the Biden administration’s new tariffs on Chinese imports — including a 145% duty rate — noting that many third-party sellers on Amazon had accelerated shipments ahead of the changes. While this helped avoid immediate price hikes, Jassy warned that long-term effects are still uncertain. He pledged the company would do all it could to maintain affordability for customers.

Amazon could benefit from the policy shift as it raises costs for rival platforms like Shein and Temu, which have taken advantage of previous trade exemptions. However, Amazon’s own cross-border operations may face higher expenses, particularly through its newly launched storefront “Amazon Haul,” which ships low-cost goods directly from China.

Beyond e-commerce, Amazon is spending heavily to expand its AI capabilities and rural delivery infrastructure. The company announced a $4 billion investment through 2026 to speed up deliveries in remote U.S. regions. Capital expenditures in Q1 surged to $25.02 billion, up from $14.92 billion in the same quarter last year.

Looking ahead, Amazon expects second-quarter sales to range between $159 billion and $164 billion. It also projects operating income of $13 billion to $17.5 billion — slightly below Wall Street’s average forecast of $17.6 billion.

Despite the upbeat report, Amazon’s shares dipped more than 2% in after-hours trading on Thursday, reflecting investor caution amid evolving trade dynamics and earnings expectations.

Tech giants Microsoft and Meta Platforms reported stronger-than-expected earnings for the March quarter, buoyed by surging demand for artificial intelligence technologies, which helped offset broader economic uncertainty and recent global trade tensions.

Both companies posted results that outperformed Wall Street expectations, triggering a positive reaction in after-hours trading. Microsoft shares climbed 7%, while Meta gained 5.4%, providing a lift to U.S. stock futures.

Microsoft’s AI Momentum Boosts Azure Growth

Microsoft’s fiscal third-quarter earnings showed significant growth in its cloud computing segment, with Azure and related services rising 33% year-on-year—beating analyst expectations of 29%. The company said that AI services contributed 16 percentage points to Azure’s growth, up from 13% in the previous quarter.

CEO Satya Nadella emphasized the central role of AI in the company’s strategy, stating: “Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth.” Microsoft has aggressively integrated AI into its offerings, including its Office 365 suite and GitHub Copilot assistant, now used by over 15 million developers.

Microsoft’s total revenue reached $70.1 billion, a 13% increase from the same period last year. Earnings per share rose to $3.46, well above the consensus estimate of $3.22. All major business units, including LinkedIn, Microsoft 365, and Dynamics cloud services, reported double-digit growth.

However, recent U.S. tariffs could pose a challenge going forward. Microsoft has already scaled back some global data centre projects. Nevertheless, the company plans to invest $80 billion in infrastructure by the end of fiscal 2025.

Meta Posts Solid Growth, Eyes AI Expansion

Meta also exceeded expectations, with revenue rising 16% to $42.31 billion. Earnings per share jumped 35% to $6.43, well above the forecasted $5.28. Advertising, which makes up 98% of the company’s revenue, totaled $41.39 billion, beating estimates.

CEO Mark Zuckerberg highlighted the company’s continued momentum: “Our community continues to grow, and our business is performing very well. We’re making good progress on Meta AI and our AI glasses.” Meta AI, a generative AI tool, now boasts nearly one billion monthly active users.

To support its AI ambitions, Meta raised its capital expenditure forecast to between $64 billion and $72 billion for 2025. The company said most of the increase will go toward expanding its data centre capacity and acquiring advanced AI hardware.

Still, Meta flagged potential regulatory headwinds in Europe, noting that new rules could affect user experience and revenue in the region starting as early as the third quarter.

Both companies’ strong quarters underscore how AI continues to drive revenue and investor confidence, even amid global economic headwinds.