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PwC U.S. Offers 2025 Midyear Outlook: Targeted M&A Takes the Lead in Hospitality and Leisure – Image Credit PwC
Hospitality and leisure (H&L) dealmakers started 2025 with careful optimism, however continued volatility in capital markets and trade policy has actually forced a reassessment of development strategies. While the volume of large, transformative offers remains controlled, targeted M&A is supplying operators with opportunities to adjust portfolios, sharpen strategic focus and scale digital abilities. For well-capitalized purchasers, present conditions use an opening to get differentiated assets at beneficial terms.
- High borrowing expenses, assessment inequalities and policy uncertainty are tempering sector offer volume. Market participants with strong balance sheets and disciplined capital allocation techniques, nevertheless, are well-positioned.
- Tariff uncertainty and trade headwinds are complicating cross-border activity. Domestic-focused and service-oriented H&L operators remain much better positioned for dealmaking.
- Shifting belief around global travel may prompt H&L operators to enhance their United States portfolios, with tactical dealmaking providing a possible fast lane to remain ahead of emerging patterns.
- After several years of investor enthusiasm fueled by the legalization of online real-money gaming, conventional casino and video gaming operators are reassessing their long-term digital techniques. With the slowing pace of new market expansion and shareholder activism increasing, the industry might see a wave of sped up debt consolidation and tactical divestitures.
- Particularly for brands reassessing market direct exposure, group focus and asset-light strategies, divestitures are reappearing as an essential lever for portfolio optimization. For H&L operators, this provides a chance to review which brand names, locations and consumer sectors provide the best potential– and to use M&A as a driver for sped up adjustment.
- Operators are doubling down on experience-driven development, using M&A to go into luxury, lifestyle and bespoke travel sectors dealing with high-income consumers, particularly as the upper end of the income curve continues to drive total consumer consumption development in the United States.
- Technology stays a leading priority. Acquisitions and partnerships are speeding up the shift to digital-first designs, AI-powered tech stacks and enhanced customer personalization.
- 3 of the largest deals by worth in H&L in 2024 were personal equity (PE) buyers getting gaming operators at appealing appraisals. While PE stays cautious in the very first half of 2025, ongoing stock market volatility might present special opportunities for financial buyers to re-enter the marketplace and meaningfully move the needle on M&A activity across the H&L sector.
Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.
Year-to-date, PE-sponsored H&L deals have actually declined 85% YoY, from 43% of total deal worth YTD 2024 to 7% YTD 2025, showing that financial purchasers have mainly stayed on the sideline, while tactical players remained active for strong possessions.
Looking ahead
Despite consistent financial uncertainty, H&L operators and investors ought to stay alert to emerging worth plays. Distressed and underperforming properties might come to market as extended volatility sets off exits. At the same time, resistant need for high-end travel and the vital for digital improvement are enhancing selective capital release priorities– particularly those focused on driving operational performance and long-lasting value creation.
- Watch for clearness on interest rate policy and trade advancements– both will shape valuation confidence, deal pacing and ultimately customer belief towards travel.
- Continue targeting experience-led properties that interest high-spending, digitally native customers– consumer segments that support long-lasting earnings resilience and growth capacity.
- Utilize joint endeavors and tactical alliances to de-risk tech innovation, from AI-enabled client engagement to cybersecurity and functional automation.
- Use M&A as an active strategy to improve the brand name portfolio for strength; scalability has the capacity for higher long-lasting returns or earnings enhancing methods versus conventional footprint growth.
“Forward-looking dealmakers are utilizing this period to position for long-term value– not just through acquisitions, however through strategic focus and improvement.” Jonathan Shing, United States Hospitality & Leisure Deals Leader
The bottom line
As the M&A landscape develops in 2025, 3 priorities stand out for hospitality and leisure leaders: 1) remaining agile amidst unpredictability, 2) dealing with M&A and divestitures as tactical tools, and 3) structure digital and experiential capabilities. Operators with disciplined balance sheet strategies and a clear portfolio thesis must be well-placed to record emerging value in a reshaped market.
Check out nationwide M&A trends.