Key Takeaways:

  • PwC's US Deals 2026 Midyear Outlook shows that hotel and leisure M&A deal volume in the first half of 2026 fell 2.5% from the prior six months, but investors are focusing on the upper end of the market, including luxury hotels, wellness resorts, and "data-rich" platforms such as gaming.
  • Investors are primarily focused on upper-upscale, upper-midscale, and luxury assets, which accounted for 73% of transaction volume over the past six months, the highest concentration in two years. PwC notes this shift toward a "narrower portfolio of assets" highlights segments where "pricing power, repeat engagement, and AI readiness" are replacing sheer scale.
  • The report comes as the luxury segment dominates the investment market amid widening wealth disparity—a view echoed by several speakers earlier this month at the NYU International Hospitality Industry Investment Conference. Similarly, JLL reported in June that luxury hotels are entering a "highly attractive" investment cycle, with ultra-luxury hotels showing notable resilience.

Deep Dive:

The report highlights that as economic constraints and inflation rise, affluent consumer spending increases, and investment activity follows. Capital is concentrating at the upper end of the market, aligning with upwardly revised revenue per available room (RevPAR) forecasts. According to PwC, luxury hotel RevPAR is expected to grow 5.4% year-over-year in 2026, while upper-midscale and upper-upscale hotel RevPAR is expected to grow 2.1% and 2.7%, respectively.

Despite the decline in deal volume, two large casino deals in late May and early June—Fertitta Entertainment's acquisition of Caesars Entertainment and People Inc.'s planned acquisition of MGM Resorts International—boosted total transaction value, "showing appetite for major transformative M&A when the right assets are available."

The PwC outlook also explores other deal drivers, including the trend of acquiring, repositioning, and renovating high-end assets as financing for new construction becomes increasingly difficult. Additionally, the report predicts more recapitalizations are coming, consistent with views expressed by panelists at the NYU International Hospitality Industry Investment Conference. PwC states that "a meaningful portion of activity" is occurring in distressed capital structures, as operations "fall well short of covering maturing debt balances."

Furthermore, buyers are "paying premiums for assets that integrate wellness into the design rather than adding it as an afterthought." As a result, wellness is playing a more central role in hotels, evolving from an add-on service to a consumer expectation—a trend corroborated by a recent report from travel technology provider Amadeus, as travelers increasingly view vacations as opportunities to improve their health.

The report also notes that AI is reshaping deal structures. Early in transactions, 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 truly drive personalization and direct bookings." PwC states: "Operators that cannot answer these questions see their bids discounted or withdrawn; those with direct customer relationships and AI-enabled operations command premiums."

Over the next 12 to 18 months, more deals are expected in the gaming sector. The report says continued growth in land-based casino revenue, combined with recent large-scale gaming transactions, could serve as a catalyst for further M&A activity. As demand diverges across generations, assets with "cross-generational reach and personalization capabilities" are more likely to "command greater investor confidence" than those targeting a single customer profile.

"Five years ago, the physical asset was the deal itself. Today, the asset is only half the deal," said Jonathan Shing, PwC partner, in a statement. "The other half is the data, the loyalty program, and the intentional design of the customer experience."