Dive Brief:
- Although hospitality and leisure M&A deal volume was down 2.5% in the first half of 2026 compared to the prior six months, investors are concentrating on the upper end of the market, including luxury hotels, wellness resorts and gaming, or “data-rich,” platforms, according to PwC’s U.S. Deals 2026 midyear outlook.
- Investors are largely focusing on upscale, upper upscale and luxury assets, which accounted for 73% of deals over the last six months — the highest concentration in two years, PwC found. This shift toward a “narrower set of assets” spotlights segments in which “pricing power, repeat engagement, and AI readiness do the work that scale alone once did.”
- The report comes as the luxury segment dominates the investment market amid a growing wealth bifurcation, speakers said at NYU’s annual International Hospitality Investment Forum earlier this month. Similarly, in a June report, JLL said that luxury hotels are set to enter a “compelling” investment cycle, with ultra-luxury demonstrating significant resilience.
Dive Insight:
The report highlights that along with wealthier consumers spending more in the face of economic constraints and rising inflation, investment activity is following that trend.
Concentrated investment on the upper end of the market aligns with increased RevPAR forecasts. Luxury RevPAR is expected to rise 5.4% year over year in 2026, while upper upscale and upscale RevPAR is expected to increase by 2.1% and 2.7% year over year, respectively, per PwC.
While deal volume is down, two large casino transactions — Fertitta Entertainment acquiring Caesars Entertainment in a deal valued at $17.6 billion and People Inc.’s plans to buy MGM Resorts in a deal that values MGM at more than $18 billion — in late May and early June have bumped up deal value, “showing an increased appetite for significant, transformative M&A in the space for the right assets.”
PwC’s outlook also explored what else is driving deals, including a trend toward acquiring, repositioning and converting premium assets, as ground-up projects have become increasingly difficult to finance.
Additionally, the report forecasts that more recapitalizations are on the horizon, echoing a sentiment voiced by panelists at NYU IHIF. According to PwC, a “meaningful share of activity” is taking place in distressed capital structures, as operations are “well short of maturing debt balances.”
Moreover, buyers are “paying premiums for assets where wellness is built in, not bolted on,” per PwC. As a result, wellness is playing a more central role in hotels and has moved from an amenity to an expectation as travelers increasingly look to vacation as a chance to improve their wellbeing, per a recent report from travel technology provider Amadeus.
AI is also reshaping how deals are structured, per the report. Early in the process, buyers are 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,” according to PwC.
More transactions in gaming are also expected over the next 12 to 18 months. Durability, on account of land-based casino revenues continuing to grow, coupled with recent large-scale gaming transactions, could serve as a catalyst for more M&A activity, per the report.
And with demand fragmenting by generation, assets with “multigenerational reach and personalization capability” are poised to “command higher conviction” compared to those targeting a single-profile traveler.
“Five years ago, the physical asset was the deal. Today, the asset is half the deal,” Jonathan Shing, partner at PwC, said in a statement. “The other half is the data, the loyalty program, and the intentionality of the consumer experience.”
