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Key findings
Fewer deals are happening, but premiums remain for the right assets. Deal volume fell over the last six months, with activity concentrated in premium, wellness-anchored, and data-rich assets.
Wellness has moved from the spa menu to the balance sheet. Buyers are paying premiums for assets where wellness is built in, not bolted on.
Gaming is regaining M&A interest as investors see an opening at attractive valuations. Notable recent large-scale transactions underscore how acquirers are increasingly valuing digital gaming platforms, loyalty ecosystems, premium brands, and omnichannel customer relationships alongside traditional casino assets.
AI readiness, loyalty, and first-party data are table stakes. Operators that have underinvested face a capability gap that is increasingly reflected in deal pricing.
Platforms with cross-generational appeal gain traction. Single-profile assets face headwinds. Multigenerational platforms command higher conviction.
So far in 2026, travelers are still traveling through higher airfares and stickier inflation, but capital has gotten more cautious. Deal volume over the trailing six months is down approximately 2.5% from the prior six month trailing period, and the activity that is happening is heavily concentrated. Upscale, upper-upscale, and luxury accounted for 73% of hotel deals in the last six months—the highest concentration we’ve seen in two years. This aligns with increased revenue available per room (RevPAR) expectations in these segments, with luxury RevPAR expected to rise 5.4% in 2026, upper-upscale 2.1%, and upscale 2.7%. Deal value, on the other hand, has exploded as a result of the two large casino transactions announced in late May / early June 2026, and even excluding these transactions deal value is up almost 4x over this period, showing an increased appetite for significant, transformative M&A in the space for the right assets.
The market has stopped treating the hospitality and leisure (H&L) sector as a single asset class. The middle is thinning out—not in operating performance, where mid-tier RevPAR remains robust, but in deal conviction, where buyers are concentrating capital at the premium end. The top is getting more expensive, more competitive, and more crowded with private capital. And gaming is in the middle of a structural shift that few buyers saw coming 12 months ago. Recent public gaming transactions suggest buyers are increasingly underwriting digital gaming optionality as a core source of value creation. In several cases, acquirers appear willing to pay strategic premiums for access to established loyalty databases, digital customer acquisition channels, and scalable online gaming platforms, even when traditional casino operations remain the primary source of current cash flow.
What’s driving deals in 2026
Trophy assets are scarce, and buyers are paying for scarcity. New-build economics remain difficult to underwrite, as construction costs, financing costs, and entitlement timelines are obstacles to ground-up projects. So acquiring, repositioning, and converting premium assets, whether independent-to-brand or upscale-to-luxury, has become the preferred path to scale. Luxury development now represents an outsized proportion of construction spend, compared to representing 3.1% of the existing room count, a clear overweight bet on premium positioning.
The deal driver in many cases is the balance sheet. Higher-for-longer rates have raised the bar on every deal model, and sellers with quality assets are holding out rather than selling into a weaker market. But a meaningful share of the activity we're seeing isn't in distressed operations. It's in distressed capital structures. Operations are generating free cash flow, but well short of maturing debt balances. Recapitalization plays are emerging as one of the most attractive risk-adjusted entry points in the sector, where a well-capitalized sponsor takes out a stretched balance sheet at depressed valuations.
Wellness has moved from amenity to expectation. Buyers are paying premiums for assets where wellness is purpose-driven and embedded across the guest journey, not where it's a treadmill and a juice bar. New partnerships between major hospitality brands and specialist wellness operators point to a broadening base of buyers seeking those integrations.
AI, loyalty, and first-party data are now in the deal model. GenAI-driven traffic to US travel sites has surged dramatically over the past year. Early in the deal process, sometimes even at the letter-of-intent stage, buyers are now explicitly modeling AI as a source of upside—asking how much additional value AI tools can unlock from a target’s operations, and whether the target’s customer data is clean enough to actually drive personalization and direct bookings. Operators that can’t answer those questions are seeing bids suppressed or even withdrawn, while those with direct customer relationships and AI-enabled operations are commanding premiums.
Gaming M&A may be nearing an inflection point. Land-based casino revenues continue to grow even as digital sportsbooks and prediction markets expand. That durability, combined with the announcement of several large-scale gaming transactions, could serve as a catalyst for broader M&A activity as investors see an attractive entry point open. Successful deals that do not face significant structural remedies (i.e., force divestitures) may restore confidence on both sides, especially with public valuations at relatively attractive levels. Expect more transactions in gaming over the next 12-18 months and expect digital sportsbook and prediction markets exposure to become a named diligence category.
Demand is fragmenting by generation and wallet. According to PwC’s US Consumer Poll on Summer Spending, Gen Z and millennials are planning to take more trips, but they might trade down on the length of stay. Meanwhile, Gen X concentrates spend into fewer, higher-value trips. And Gen Alpha, the next decade's travelers, are already shaping family decisions in ways operators are only beginning to underwrite. Finally, rising airfares are accelerating the shift toward travel destinations within driving distance. Assets locked into a single traveler profile face headwinds, but platforms with multigenerational reach and personalization capability command higher conviction.
What to watch over the next six months
The next phase will test whether buyers can convert premium exposure into true competitive advantage. A few things to watch:
Hotels: Capital will continue flowing toward upscale, upper-upscale, luxury, and lifestyle, particularly those that offer new and creative experiences in under-explored and / or high structural barrier to entry markets for the well-traveled consumer seeking something unique.
Gaming: Expect more dealmaking and a sharper focus on digital control, omnichannel loyalty, and prediction-market exposure. Land-based casino revenues remain resilient, while digital sportsbooks, iGaming, and prediction markets are reshaping how buyers evaluate gaming platforms and potential upside in transactions.
Travel technology: Focus on platforms that materially improve revenue management, property operations, customer data, AI automation, AI-enabled contact centers or distribution efficiency and that reduce dependence on AI intermediaries who increasingly sit between operators and their customers.
Recapitalizations: Expect more activity around good operations and broken balance sheets, especially in middle-market lodging where 2021-2022 vintage capital structures are coming due in a higher-rate environment. Preferred equity structures in particular have gained traction over the last six months, giving investors a path into quality assets at attractive positioning while preserving optionality for existing owners who aren't ready to sell outright.
Consumer segmentation: Underwriting by generation and trip behavior, not by aggregate demand. The averages are increasingly misleading.
“Five years ago, the physical asset was the deal. Today, the asset is half the deal. The other half is the data, the loyalty program, and the intentionality of the consumer experience.”
Jonathan Shing,Partner, PwCThe bottom line: what hospitality and leisure dealmakers should watch
The next phase of H&L M&A will test whether buyers can separate premium exposure from true pricing power, and whether they can underwrite reinvention without overpaying for the legacy. The winners will be the ones who turn those advantages into repeat visits, direct bookings, and margin expansion that compound long after close.
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