Hospitality and leisure (H&L) 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 M&A 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.

• 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 US 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 (PE) 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.

Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.

Year-to-date, PE-sponsored H&L deals have declined 85% YoY, from 43% of total deal value YTD 2024 to 7% YTD 2025, indicating that financial buyers have largely stayed on the sideline, while strategic players remained active for strong assets.

Looking ahead

Despite persistent economic uncertainty, H&L operators and investors should remain alert to emerging value plays. Distressed and underperforming assets may come to market as prolonged volatility triggers exits. At the same time, resilient demand for high-end travel and the imperative for digital transformation are reinforcing selective capital deployment priorities — particularly those aimed at driving operational efficiency and long-term value creation.

• Watch for clarity on interest rate policy and trade developments — both will shape valuation confidence, transaction pacing and ultimately consumer sentiment toward travel.
• Continue targeting experience-led assets that appeal to high-spending, digitally native consumers — customer segments that support long-term revenue durability and growth potential.
• Leverage joint ventures and strategic alliances to de-risk tech innovation, from AI-enabled customer engagement to cybersecurity and operational automation.
• Use M&A as an active strategy to reshape the brand portfolio for resilience; scalability has the potential for higher long-term returns or profit enhancing strategies versus traditional footprint expansion.

“Forward-looking dealmakers are using this period to position for long-term value — not just through acquisitions, but through strategic focus and transformation.” Jonathan Shing,US Hospitality & Leisure Deals Leader

As the M&A landscape evolves in 2025, three priorities stand out for hospitality and leisure leaders: 1) staying agile amid uncertainty, 2) treating M&A and divestitures as strategic tools, and 3) building digital and experiential capabilities. Operators with disciplined balance sheet strategies and a clear portfolio thesis should be well-placed to capture emerging value in a reshaped market.