The Private Equity Firm Behind Some of France’s Smartest Travel Startups

For 16 years, private equity firm Montefiore Investment has avoided the spotlight while making small investments in travel and other sectors — with its best-known travel deal being its sale of Auto Escape Group to Expedia Group. But in the past year, Montefiore has gotten a very public role in helping several French travel companies escape the pandemic trough.

When 16 French institutional investors put together an approximately $210 million (€173 million) fund to help the country’s tourism and leisure businesses during the pandemic, they sought applications from a few dozen firms and institutions to manage it. Last October, Montefiore was picked by the French Insurance Federation to lead the new fund, called Nov Tourisme – Relance Durable France.

Montefiore is a Paris-based private equity firm that manages about $2.74 billion (€2.3 billion) of equity, about 43 percent of which it raised in 2019.

It separately has discretionary management of the Nov Tourisme fund, deciding which French companies in the tourism, restaurant, and leisure sectors the fund will bet on.

The Nov Tourisme fund’s check sizes average between $6 million (€5 million) to $18 million (€15 million). The fund takes equity or quasi-equity stakes, usually becoming a minority shareholder. The fund has deployed about $85 million (€70 million) of investment so far.

Travel companies the Nov Tourisme fund has invested in include Voyageurs du Monde Group, a travel agency group whose holding company is Avantage. Nov Tourisme invested as part of a $155 million (€130 million) fundraising announced in March that brought in investment firm Certares, with participation from existing investors Crédit Mutuel Equity, Bpifrance, and BNP Paribas.

“It has a fantastic, profitable business model when there isn’t a pandemic,” said Eric Bismuth, CEO of Montefiore Investment. “It has zero debt and plenty of cash.”

Voyageurs du Monde puts together bespoke, complex, multiday trips with its Voyageurs du Monde and Comptoir des Voyages brands. They help make travel agents more efficient through tech tools, with agents planning and servicing vacations through a mix of calls and chat-based interactions with consumers.

“It offers bespoke travel directly to consumers with a digitally enabled service model,” Bismuth said. “So it’s not competing with others on the sales of a standardized offering.”

International rivals include Audley Travel.

The group also offers adventure travel with its Terres d’Aventures, Allibert Trekking, and Nomade Aventure brands.

As the pandemic wanes, the next strategic move by the investors is to help further internationalize the group’s brands through targeted acquisitions.

“The company’s global exposure remains quite small at this stage,” Bismuth said. “It needs to be positioned to accelerate.”

Bets on Travel Experiences and Activities

Nov Tourisme has also invested earlier this year in Paris Expérience Group, which runs specialized tourist excursions. The group’s brands in the tours and activities space include Paris City Vision, Paris Seine, and Localers. The brands were serving about 400,000 guests a year before the pandemic.

Nov Tourisme took a significant minority share (well above, say, 15 percent), representing a capital raise of about $13 million (€11 million). Paris Experience Group has been controlled since 2015 by Ekkio Capital. Montefiore is fine-tuning the group’s strategy, aiming to reduce its debt while looking for back-office and marketing efficiencies between its two brands specialized in excursions and cultural activities.

The fund has also bet on MMV, a specialist in mountain holidays in France. Nov Tourisme participated in a $19 million (€16 million) capital raise that included co-founder Jean-Maorc Filippini, Bpifrance, and Arkéa Capital. MMV has benefited from a rise in domestic European holiday travel. It recently hired a new chief operating officer to accelerate the company’s growth through the opening and acquisition of hotels and club residences in the Alps.

Active Investor in the Travel Industry

The choice of Montefiore to run the Nov Tourisme fund underscored the firm’s high regard in France for its investments in travel and tourism.

“One of our key characteristics is our ability to support the development of strategic thinking at companies and, as needed, to suggest the best way to implement components of a strategy,” said Bismuth, the president of Montefiore and a past managing director at Boston Consulting Group.

About 30 percent of the firm’s cumulative investments since its founding in 2005 have been in the travel sector, Bismuth said.

Montefiore’s best-known travel sector exit from an investment was probably its sale of Auto Escape Group, a European online car rental company, to Expedia Group in 2014. Expedia didn’t disclose the purchase price, and folded the group into its CarRentals.com brand.

Its largest holding is European Camping Group. It also has stakes in tour agency Voyageurs du Monde, the cruise travel distributor Cruiseline (formerly known as QCNS Group); and the online travel agency Misterfly.

Montefiore typically takes a strategic, long-term approach to its investments.

“We’ve been able to stimulate and sustain profitable growth in our portfolio companies,” Bismuth said. “The businesses in which we have invested in — and not just the best ones, but all of them, across sectors — have grown their toplines 18 percent a year on average over the past decade.”

The travel companies in its portfolio had, however, a rough 2020.

Helping Travel Companies Strategize for Growth

Private equity has swept back into the travel sector during the pandemic. It has a chance to learn from past mistakes and use less leverage and complexity in today’s deals. Consider Montefiore’s light touch in its history of investments.

Bismuth said his team doesn’t look at distressed assets but instead seeks to invest in companies with good models for applying the jet fuel of growth capital. He was particularly proud of his team’s contribution to the success of B&B Hotels, a France-based hotel company and a former investment. Its story reveals the contours of Montefiore’s approach as a private equity firm.

In 2005, B&B Hotels was an independent, budget chain which had 45 properties at at time, Bismuth said. Montefiore teamed up with private equity firm Eurazeo to acquire B&B Hotels from Parquest Capital and Duke Street Capital for €385 million (approximately $460 million).

Montefiore and Eurazeo helped the chain grow to about 223 properties by 2010, when Carlyle Group took an 80 percent stake for $645 million (€480 million), while Montefiore kept a 15 percent stake, with the founders owning the rest of the equity. In 2016, private equity firm PAI Partners took over B&B Hotels with Carlyle and Montefiore Investment selling in a transaction that valued the company at $882 million (€790 million).

The B&B Hotels chain now has more than 620 hotels with about 55,000 rooms, making it the third-largest French hotel company after Accor and Louvre Hotels.

While a minority strategic shareholder, Montefiore helped reposition B&B Hotels’ brand to an “econochic” category, meaning it helped make it hipper and moved it to the higher end of the budget segment.

Montefiore also recognized that quickly scaling B&B Hotels through acquisition would help the chain reach a critical size and make international development profitable by making brand marketing investments worthwhile and finding operational efficiencies. Over ten years, Montefiore saw the company go from roughly $95 million (€80 million) a year in sales to approximately $415 million (€350 million) a year.

Other investments have been similar in taking mid-sized players and scaling them up.

A Cruise Bet Gone South?

In 2017, Montefiore took an approximately 80 percent stake in Monaco-based QCNS Cruise (known as Cruiseline), which distributes cruises online through its various websites, such as croisieres.fr, Cruceros.es, croisierenet.com, and its call center. Debtwire reported at the time that the deal was valued in the approximately $80 million (€70 million) range.

Between 2017 and 2019, Montefiore saw Cruiseline boost its turnover from €128 million euro to about $200 million (€170 million) a year.

“We took it from a leading position in France to the number-one position in France, in Spain, Italy, and parts of South America,” Bismuth said.

In February 2020, Montefiore announced it had closed a deal to sell its stake to Abénex, another private equity firm.

“We had signed a contract to sell the business pre-Covid, but the buyers forgot to come,” Bismuth said. “So there’s a court case.”

Not Afraid of Consumer-Facing Travel Businesses

Some France-based travel businesses have shown stronger-than-expected resilience during the crisis, and it is mid-market, profitable companies that have most interested Montefiore historically.

In 2017, Montefiore made a minority investment in MisterFly, an online travel agency that distributes to consumers, business-to-business, and through affiliate sales with a variety of innovations for the French market. Montefiore joined with Vente Privée, a French retailer that also owns flash travel sale brand Voyage Prive, to invest $20 million to finance accelerated growth for the company.

With the help of Montefiore’s advice and capital, MisterFly went from about $110 million (€100 million) in sales in 2017 to about $600 million (€500 million) in sales in 2019, Bismuth said.

Today, Montefiore’s largest direct investment in the travel sector is the European Camping Group, which offers stays in high-end campsites in France and Southern Europe to customers from the United Kingdom, France, and Northern Europe. Its main brands are Homair Vacances, Eurocamp, and Al Fresco Holidays.

The Group owns and manages more than 20,000 mobile homes spread over 300 sites in Europe and served more than 1 million vacationers a year before the pandemic.

In 2006, Montefiore Investment took a majority stake. It worked with the founder to transform the French small business into a European leader — boosting turnover and enterprise value tenfold. The group went public in 2007, but Montefiore has remained involved.

In 2015, Montefiore Investment became a strategic minority investor in a deal with Carlyle that took the group private again. The camping group has since acquired companies such as Eurocamp in the UK, exploiting synergies and regularly invested in campsites, accommodation quality, and the management structure. The group generated about $430 million (€360 million) in annual sales in 2019.

“The market is much bigger than glamping,” Bismuth said. “European Camping Group has an opportunity to be what Club Med was 30 years ago in becoming a reliable, comfortable, affordable vacation brand for families.”