Profitable travel businesses...

Profitable travel businesses...

Travel business owners who have put in the hard yards are being rewarded with good prices when selling in the current market, according to an Auckland based accountant who specialises in the industry.

 

Paul Davies of TA Accounting Limited says there is a lot of buying, selling and merging activity going on right now and a number of travel business owners are taking advantage. ‘Businesses where owners have been working on them for a few years and are profitable are commanding a good price,’ he says. He says TA Accounting ranks travel businesses each year. About 75 are in the mix with sales from $1 million to $30 million. ‘Anyone in our top 10 can achieve a good sale price – usually greater than the three times net profit before tax.’

 

Davies says the average profit in the top 10 in 2018 was 35.2% of income. ‘This compares favourably with 2017, where net profit before tax was 31.7%.’ Davies says 2017 was a great year in its own right. ‘The figures have really gone up. In 2016 the net profit before tax (in the top 10) was 27.6%, in 2015 it was 28.5% and in 2014 24.4%. ‘The last couple of years have been great for the well groomed business and it is good for the buyers too, because they can see a decent return. ‘The market at present is rewarding those who make the effort to work on their business.’ He says TA Accounting is currently working on five purchase and sale transactions, plus assisting with the set-up of new businesses in travel. ‘They can be very profitable if they have the right product, staff and advice.’ www.taaccounting.co.nz

ProMag