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Connected experiences and AI propel dealmaking in hospitality and leisure
Across hotels, resorts, gaming and entertainment, the US hospitality and leisure (H&L) sector is closing out 2025 with a renewed focus on evolving consumer expectations, AI-enabled innovation, and strategic M&A activity. Following several years of post-pandemic normalization, the industry has shifted from expansion to optimization. Deal activity has remained steady but more selective, with strategic buyers accounting for the majority of transactions. These buyers are looking for differentiated assets that extend digital capabilities, reinforce brand strength, and unlock new experiential value.
Premium experiences continue to anchor demand. Younger and higher-income households are prioritizing leisure spend, even as broader consumer caution persists. Opportunities may lie in bringing together experiences across hotels, casinos, and entertainment to build loyalty and encourage more spending. This year, third quarter deal volume rose about 60% over the second quarter, fueled in part by improving financial conditions and greater clarity around trade and macro risks.
While year-to-date (YTD) deal volumes are generally more comparable to 2024 levels (down ~10% YTD), deal value has declined, with average disclosed transaction size down about 45%. The gap reflects an uneven recovery across H&L subsegments: strength in luxury, softness in lower-tier segments, and a still-recovering corporate and international travel base. Private equity (PE) remains cautious, contributing just ~35% of disclosed deal value YTD—a sharp drop from almost 60% in 2024. The few notable PE deals this year have focused on luxury resort acquisitions. The reason for this is likely related to the same issues affecting other sectors. High interest rates—combined with the asset-heavy nature of the sector and persistent valuation gaps—which have raised the bar for expected returns and made it more difficult for PE buyers to justify deals outside of top-tier assets. Meanwhile, gaming has become a hotspot for activity: all three of the largest H&L deals in the second half of 2025 involved digital gaming assets and foreign counterparties.
Back-end transformation is gaining traction alongside guest-facing innovation. Operators and investors are targeting back-office modernization—including finance, HR, logistics, and event tech—to boost efficiency and scalability. At the same time, platforms that elevate personalization, loyalty, and digital engagement are reshaping the front-end experience. The common thread: building end-to-end digital infrastructure that blends AI, operational excellence, and experience-led monetization.
What defined dealmaking in late 2025
Corporate buyers sharpened focus on ecosystem fit. With less competition from private equity, corporate acquirers concentrated on properties that expand loyalty ecosystems, enhance personalization capabilities, or deepen cross-channel customer engagement.
Luxury and digital segments led activity. M&A interest skewed toward premium resorts and digital gaming assets, as investors pursued differentiated demand drivers and high-margin experiences.
Gaming attracted strategic interest. The largest H&L deals in the second half of 2025 involved digital platforms—underscoring the sector’s convergence with entertainment and international capital flows.
Cross-border activity remained steady. Deal volume from international buyers held flat year over year, despite geopolitical and macroeconomic uncertainty.
Infrastructure and integration gained focus. Investments targeted both guest-facing innovation and back-office systems, including loyalty integration, event logistics, and AI-driven personalization engines.
Customer data is emerging as a value lever. Buyers placed increasing emphasis on unified customer identity, loyalty ecosystems, and personalized engagement as part of their dealmaking.
What’s next: AI at scale, experiential ecosystems
Traditional M&A will continue to drive H&L deal volume, but the biggest bets in 2026 are likely to center on creating connected ecosystems and scaling AI-driven platforms. Data governance, however, remains one of the constraints preventing organizations from fully capitalizing on AI opportunities. Winning assets will blend brand equity with data fluency, omnichannel research, and embedded personalization. As AI moves from experimentation to scaled deployment, the sector is entering a new phase of competitive differentiation.
Key developments to watch in hospitality and leisure
AI shifts from tool to teammate. Agentic AI use cases are accelerating across H&L. In travel, AI assistants are rebooking itineraries in real time. In hospitality, predictive analytics and digital concierges are enhancing service and efficiency. In gaming, adaptive platforms are redefining personalization. Rather than replacing workers, the most valuable use cases empower staff to deliver better, more human experiences.
The brand becomes a competitive moat. In a world blending digital and physical experiences, trusted brands offer more than familiarity—they offer strategic insulation. Investors are seeking assets where loyalty, recognition, and content ecosystems drive monetization and margin.
Data quality is the new constraint. As AI deployment scales, data governance is separating leaders from laggards. M&A strategies increasingly hinge on the ability to unify, activate, and protect customer data across platforms and regions.
Experience platforms are the new perimeter. Buyers are investing in full-stack platforms that combine content, loyalty, booking, and analytics. The goal: create seamless, end-to-end guest journeys that blur traditional sector lines.
Loyalty becomes an asset class. Engagement is now a quantifiable enterprise value. Dealmakers are assigning real valuation to loyalty ecosystems and their ability to drive cross-brand conversion, retention, and upsell.
Discipline defines value creation. With capital costs still elevated, deal success will depend on post-close clarity. Day One integration plans should prioritize data readiness, customer identity unification, and loyalty platform integration to accelerate value capture.
“Hospitality and leisure are no longer defined by venues or categories, but by the seamless delivery of interconnected experiences to value-focused consumers.”
Jonathan Shing,US Hospitality & Leisure Deals LeaderThe bottom line
Improving capital market conditions and strong sector fundamentals are setting the stage for renewed M&A activity in hospitality and leisure. As travel demand stabilizes and AI adoption picks up pace, investors are focusing on experience-led platforms that deliver both value and differentiation. Future dealmaking is expected to center on acquiring properties and capabilities that support an evolved ecosystem strategy where AI, loyalty, and experiential design converge to nurture growth, deepen customer relationships, and unlock lasting advantage.
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