According to PwC’s new Hospitality & Leisure: U.S. Deals 2025 midyear outlook, based on S&P Global Market Intelligence, hospitality and leisure dealmakers began 2025 with “cautious optimism,” but continued volatility in capital markets and trade policy has forced a reassessment of growth strategies.
While the volume of large, transformative deals remains subdued, targeted mergers and acquisitions is providing operators with opportunities to adapt portfolios, sharpen strategic focus and scale digital capabilities. For well-capitalized buyers, current conditions offer an opening to acquire differentiated assets at favorable terms.
Targeted M&A Takes the Lead
- High borrowing costs, valuation mismatches and policy uncertainty are tempering sector deal volume. Market participants with strong balance sheets and disciplined capital allocation strategies, however, are well-positioned.
- Tariff uncertainty and trade headwinds are complicating cross-border activity. Domestic-focused and service-oriented H&L operators remain better positioned for dealmaking.
- Shifting sentiment around global travel may prompt H&L operators to strengthen their U.S. portfolios, with strategic dealmaking offering a potential fast track to stay ahead of emerging trends.
- After several years of investor enthusiasm fueled by the legalization of online real-money gaming, traditional casino and gaming operators are reassessing their long-term digital strategies. With the slowing pace of new market expansion and shareholder activism on the rise, the industry may see a wave of accelerated consolidation and strategic divestitures.
- Particularly for brands reassessing market exposure, demographic focus and asset-light strategies, divestitures are re-emerging as a key lever for portfolio optimization. For H&L operators, this presents an opportunity to revisit which brands, geographies and customer segments offer the greatest potential—and to use M&A as a catalyst for accelerated realignment.
- Operators are doubling down on experience-driven growth, using M&A to enter luxury, lifestyle and bespoke travel segments catering to high-income consumers, particularly as the upper end of the income curve continues to drive overall consumer consumption growth in the United States.
- Technology remains a top priority. Acquisitions and partnerships are accelerating the shift to digital-first models, AI-powered tech stacks and improved customer personalization.
- Three of the largest deals by value in H&L in 2024 were private equity buyers acquiring gaming operators at attractive valuations. While PE remains cautious in the first half of 2025, ongoing stock market volatility could present unique opportunities for financial buyers to re-enter the market and meaningfully move the needle on M&A activity across the H&L sector.