After a year marked by hesitancy by private equity firms to back U.S. hospitality deals amid inconsistent corporate travel demand and a tenuous economy, 2026 could feature more M&A activity as AI adoption increases, according to a new PwC report released Tuesday.
Continuing trends PwC last noted in June, the number of U.S. hospitality industry deals was similar to that of 2024 but deal value has dropped substantially, with transaction size down 55 percent on average.
"The gap reflects uneven recovery across [hospitality and leisure] subsegments: strength in luxury, softness in economy, and a still-recovering corporate and international travel base," according to PwC.
Private equity firms contributed about 10 percent of total deal value so far in 2025—much of which has been centered on luxury resort acquisitions—down from about 50 percent in 2024. PwC blamed high interest rates for the lack of private equity activity, noting that they along with valuation gaps "made it more difficult for PE buyers to justify deals outside of top-tier assets."
Strategic transactions, though, have increased, especially those that enhance loyalty ecosystems or bolster digital platforms, according to PwC. Plus deals in the third quarter of 2025 outpaced those in the first two, "amid greater clarity on trade and macroeconomic conditions."
PwC suggested 2026 M&A activity could increase as AI deployment and use increases. "As AI moves from experimentation to scaled deployment, the sector is entering a new phase of competitive differentiation," according to PwC.
This year nevertheless has featured a few large traditional hospitality deals, including Hyatt Hotels Corp.'s acquisition of all-inclusive resort chain Playa Hotels & Resorts for $2.6 billion and Marriott International's $355 million deal for Dutch upscale select-service hotel chain CitizenM.
RELATED: PwC's June 2025 hospitality M&A report