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Buoyant consumer demand for services like online gaming, luxury travel, and theme parks have fueled a resurgence in Travel, Leisure, and Hospitality. Still, companies in the sector are being careful not to overplay their hand right now when it comes to acquisitions, given the high cost of financing, rising interest rates, and the looming possibility of a US slowcession in Q4�23.

As a result, M&A in the sector fell again in Q2�23, a familiar theme against this backdrop of macroeconomic uncertainty. Playing it safe for now, companies are moving on those deal opportunities with a clear strategic rationale and a path to growth. Among the motivations for dealmaking in this environment are scaling customers, diversifying geographically, and achieving technology excellence.

Though headwinds remain, conditions in subsectors like hospitality and gaming are already aligning toward future M&A. Once the Fed’s cycle of rate hikes is over, investors step up with financing, and the economic picture clears, we will see pent-up deal interest re-emerge in areas undergoing rapid growth and change.