Hospitality merger and acquisition activity slowed in deal count while average transaction values rose, according to new analysis from KPMG.

The professional services firm's latest sector survey reports a clear split between volume and value: fewer transactions cleared during the period examined, yet the deals that did close carried materially higher price tags than in prior years. KPMG's hospitality practice framed the divergence as a sign that strategic buyers remain willing to pay premiums for the right assets even as the overall market tightens.

What does the slowdown in deal count actually signal?

The thinner pipeline reflects a familiar pattern in mature cycle phases. Sellers who can wait are waiting. Lenders have tightened terms on leveraged deals. And operators with limited capital are sitting on the sidelines rather than trading at compressed multiples.

• Bid activity has cooled across mid-market hotel portfolios
• Distress-driven sales remain rare despite higher borrowing costs
• Private equity funds are holding assets longer before recycling capital

Why are deal values still climbing?

The premium pricing on closed transactions points to a different buyer universe. Strategic acquirers and well-capitalized institutional investors are competing for trophy assets, full-service resorts, and luxury-flagged portfolios where scarcity drives the bid. Smaller, older, or franchise-conversion-heavy properties face a narrower field of buyers, which depresses pricing on the long tail of the market.

KPMG's analysts have repeatedly pointed to consolidation among the largest operators as a structural force in hospitality M&A. The top brand families continue absorbing regional managers and independent operators, and those transactions typically clear at higher revenue multiples than asset-only sales.

Who is buying, and who is selling?

The buyer mix has shifted toward:

• Large international operators expanding flag coverage in gateway cities
• Sovereign wealth funds and institutional capital pools targeting stabilized assets
• Real estate investment trusts converting portfolios to long-term holds

On the sell side, private equity sponsors are extending hold periods rather than forcing sales into a thinner market. Family owners of legacy independent hotels remain the most active sellers of single-asset trophy properties, often to strategic buyers willing to pay for brand-conversion upside.

What does this mean for operators and investors?

For sellers with high-quality assets, the message is straightforward: market depth is closing, but the right buyer will still pay full price. For operators reliant on transaction activity to fund growth, the slower volume is a constraint. For lenders, the bifurcation between premium trophy deals and the broader market requires sharper underwriting.

The pattern also complicates valuations for tax, insurance, and partnership purposes. With fewer comps trading, appraisers lean more heavily on adjusted historical transactions, which can lag real-time pricing in either direction.

Where does the market go from here?

KPMG's framing leaves open whether the volume slowdown is a temporary pause tied to interest rates and capital availability, or a structural reset. Either reading carries consequences. A rebound in volume with stable values would suggest a normalizing market. A continuation of the current split would point to a two-tier hospitality sector in which scale players capture consolidation premiums while smaller operators face a narrower exit window.

For now, the headline finding is unambiguous: fewer hospitality deals are closing, and the ones that do are bigger. Operators planning transactions over the next 12 months should underwrite against a buyer pool that is smaller, more selective, and willing to pay premium pricing only for assets that match strategic priorities.