The U.S. hospitality and leisure sector is closing 2025 with a focus on operational optimization, evolving consumer expectations and selective dealmaking, according to new outlook report released by PwC. After several years of post-pandemic normalization, activity across hotels, resorts, gaming and entertainment has shifted from expansion toward efficiency, digital capability and strategic alignment.
Deal volume has remained steady but buyers have become more selective, with strategic acquirers accounting for most transactions. Looking ahead to 2026, dealmaking is expected to continue through traditional M&A while larger strategic bets concentrate on connected ecosystems and scaled AI platforms.
Throughout 2025, buyers prioritized assets that support digital integration, reinforce brand positioning and extend experiential offerings. Premium experiences continued to anchor demand, particularly among younger and higher-income households, even as broader consumer caution persisted. Opportunities increasingly centered on linking hotels, casinos and entertainment assets to encourage loyalty and incremental spending.
Deal activity accelerated in the third quarter. Deal volume in the third quarter of 2025 rose about 40% compared with second-quarter levels, supported by improving financial conditions and greater clarity around trade and macroeconomic risks. While year-to-date deal volume remained comparable to 2024, overall deal value declined. Average transaction size fell by about 55%, reflecting uneven performance across subsectors. Luxury assets showed relative strength, while economy segments and corporate and international travel continued to recover.
Private equity participation declined significantly during the year. Private equity accounted for about 10% of disclosed deal value year to date, down from more than 50% in 2024. The limited number of private equity transactions focused primarily on luxury resort acquisitions. High interest rates, the asset-heavy nature of the sector and persistent valuation gaps raised return thresholds and constrained deal activity outside top-tier assets.
Strategic buyers filled much of the gap left by private equity. Strategic transaction value increased about 7% year over year. Cross-border investment held steady despite geopolitical and macroeconomic uncertainty, indicating continued international interest in US-based assets. Gaming emerged as a focal point, with all three of the largest hospitality and leisure deals in the second half of 2025 involving digital gaming assets and foreign counterparties.
Alongside deal activity, operators and investors increased focus on back-office transformation. Modernization efforts targeted finance, HR, logistics and event technology to improve efficiency and scalability. At the same time, guest-facing platforms that support personalization, loyalty and digital engagement continued to reshape the customer experience. Across both areas, investment centered on building integrated digital infrastructure that combines AI, operations and experience-led monetization.
Data governance remains a constraint to wider AI adoption. Assets that combine brand equity with data integration, omnichannel engagement and embedded personalization are positioned to stand out as AI moves from experimentation to broader deployment.
“Hospitality and leisure are no longer defined by venues or categories, but by the seamless delivery of interconnected experiences to value-focused consumers,” said Jonathan Shing, U.S. hospitality and leisure deals leader, PwC.
As capital costs remain elevated, value creation is expected to depend on disciplined execution after close, with attention to data readiness, customer identity integration and loyalty platforms to support long-term performance.
