The headline numbers might look confusing at first glance. Overall, UK hotel deal volumes are lower than last year, trading performance has been patchy, and costs – especially labour – are stubbornly high. Yet when you look beneath the surface, one thing is clear: the UK hotel investment industry is booming in all the ways that actually matter for long-term investors.
Here’s why.
1. Deal activity is rebounding – one hotel at a time
Start with the transaction market. Yes, total UK hotel investment volumes are down year-on-year because there were fewer big portfolio sales. But that’s only half the story.
In Q3 2025, UK hotel investment hit around £1.04 billion, a 28% increase on the same quarter last year. Crucially, around 90%+ of that volume came from single-asset deals, and these were almost 60% above the 10-year Q3 average.
In other words, investors aren’t walking away; they’re just being more surgical. Rather than writing one huge cheque for a portfolio, they’re picking individual hotels with clear upside – better pricing, clearer underwriting, and more control over the business plan.
Why that matters:
- It shows real conviction about the underlying hospitality product, not just financial engineering.
- It improves price discovery – you see what buyers will actually pay for a specific asset, in a specific market, right now.
- It makes the market more liquid for owners who want to sell a hotel without restructuring an entire platform.
A “one property at a time” comeback is often healthier than a boom fuelled by mega-portfolios. It signals depth, not froth.
2. The UK is still Europe’s hotel deal heavyweight
Zoom out and the UK is still the continent’s big beast.
In 2024, UK hotel transaction activity totalled about £5.7 billion, the highest since 2018 and roughly 20% above the 10-year annual average. That momentum is carrying into 2025. Savills now expects 2025 deal volumes to exceed the 10-year average of £4.85 billion if assets currently on the market complete.
Other industry commentators echo the same message: even with macro headwinds, the UK remained the largest and most liquid hotel investment market in Europe in the first half of 2025, across real estate sectors.
So while headlines focus on a “slowdown” relative to last year’s blockbuster portfolios, the reality is:
- The UK is still attracting more capital than any other European hotel market.
- Activity is much closer to long-term norms than the sector’s pandemic-era lows.
- Investors can buy and sell hotels here with a level of liquidity that’s hard to find elsewhere.
For long-term capital – pension funds, private equity, sovereigns, family offices – that liquidity is a core reason the UK stays top of the shopping list.
3. Resilient demand and high occupancy underpin the story
Investment doesn’t happen in a vacuum. It’s ultimately a bet on beds being filled at profitable rates.
Here again, the UK is quietly outperforming. As of mid-2025, UK hotel occupancy is sitting in the mid-70s percentage range and remains one of the highest in Europe, ahead of France, Germany and Italy and just behind Ireland.
In London, STR reported record room rates in July 2025 – ADR of about £235 and RevPAR over £200, with occupancy close to 89%, the highest since 2018. That’s not what you see in a weak market.
Yes, RevPAR growth has cooled after the post-Covid surge, and there have been months where rates softened or occupancy slipped a touch. But taken in context:
- Supply growth is modest – UK room supply is growing at roughly 1% a year and the forward pipeline is thinner due to high construction costs.
- Demand is remarkably sticky – domestic and international travellers continue to prioritise trips even as the wider economy sputters. VisitBritain, for example, forecasts around 43 million inbound visits and £33–34 billion in spend in 2025, close to or above pre-pandemic levels.
For investors, that combination – steady demand and constrained new supply – is exactly what you want to see before committing to a long-dated asset.
4. Domestic tourism and regional cities are doing more of the heavy lifting
The Covid era reminded UK residents that they live in a country people fly halfway round the world to visit. That memory hasn’t faded.
Recent Great Britain Tourism Survey data show domestic travel volumes have been volatile, but 2025 is seeing a rebound in city trips, particularly among working-age travellers, with strong growth in business and leisure travel to regional cities.
What this means in practice:
- Regional cities are catching up – markets like Manchester, Liverpool, Cardiff and parts of the North West are seeing robust growth in business and events-led demand, often from cost-conscious corporates looking for value outside London.
- Leisure-led destinations are outperforming – staycation hotspots and spa/wellness resorts have been posting double-digit RevPAR gains in some cases, fuelled by health-focused leisure spend.
For investors, this matters because it broadens the opportunity set. You’re no longer limited to the capital and a handful of gateway cities; there is a convincing thesis for carefully chosen regional product, particularly where supply growth is limited and domestic demand is strong.
It also explains why 2025 transaction data show big percentage increases in deal volumes in Scotland, the South West and the West Midlands, even as national volumes look flat.
5. Single-asset deals, domestic capital and new buyer profiles
Who’s actually buying all these hotels? The profile is shifting in ways that support the “booming but disciplined” narrative.
A few notable trends:
- Domestic owner-operators are back in force, accounting for a large share of 2025 acquisitions and significantly above their long-term average share of the market. They tend to buy with a long-term operational view rather than chasing a quick flip.
- International asset managers and private equity are re-entering, but with a focus on value-add single assets rather than mega-portfolios. That suggests a “selective confidence”: they like the UK, but they want to be hands-on and choose their battles.
- Institutional capital, including UK pension funds, is experimenting with new structures, sometimes moving away from fixed leases into operating structures that offer upside participation.
This is what a maturing market looks like: more varied structures, more sophisticated local buyers, and international capital that’s willing to be patient and operationally engaged.
6. Operational headwinds – but a clear playbook for value creation
If the industry is booming, it’s not because trading is easy. Employers are grappling with higher wages, NIC changes and recruitment challenges; energy costs and business rates remain painful. That’s why hotel profitability (GOPPAR) is under pressure, even where top-line revenue is holding up.
Paradoxically, this is exactly why investors remain interested:
- There’s inefficiency to fix
Many assets – especially older stock or non-core disposals – have obvious levers: fresh brand positioning, smarter revenue management, more efficient staffing models, and capex that improves both ADR and cost efficiency (for example, energy retrofits). - Technology is finally being taken seriously
From AI-driven pricing tools to labour-scheduling software and digital guest journeys, tech is moving from “nice-to-have” to “core margin protection”. Owners who can fund and implement decent systems can realistically grow profit even if revenue only rises in low single digits. - Ancillary revenues are getting attention
Golf, spa, wellness and F&B are no longer afterthoughts. Recent performance data show double-digit growth in some ancillary categories – a lifeline when room-rate growth slows.
For sophisticated buyers, this all screams “value-add”. They’re not buying perfect hotels, they’re buying fixable hotels in a fundamentally healthy demand environment.
7. Structural demand drivers – not just a post-Covid sugar rush
We’re now far enough beyond the immediate pandemic bounce to ask a harder question: is UK hotel investment just coasting on pent-up demand, or is there a structural case?
Several long-term drivers suggest the latter:
- Strong inbound market – the UK retains huge appeal to US, European and long-haul visitors; VisitBritain’s 2025 forecast of more than 43 million inbound visits reflects that.
- World-class events and culture – from concerts and festivals to sporting spectacles, the UK’s events calendar continues to fill hotel beds and support rate. Cardiff and other smaller cities have shown just how powerful a few major dates can be for market-wide ADR.
- Regional renaissance – large-scale mixed-use schemes and branded hotel-residence projects in cities like Manchester, Birmingham and Edinburgh are reshaping skylines and creating new, investable sub-markets.
- Limited new supply pipeline – elevated construction costs and tighter financing mean fewer speculative builds. Over time, that caps supply growth and supports existing asset values.
Put simply: this isn’t a speculative bubble; it’s a market with deep, diversified demand and a noticeably cautious approach to adding new rooms.
8. Why education and specialist insight matter more than ever
All of the above also explains why investors are leaning harder on specialist advisors, asset managers and education partners. The easy deals – buying anything with a bed and hoping for tourism to rise – are gone. Today’s UK hotel investment thesis is about:
- understanding micro-markets street by street
- underwriting operational performance as carefully as lease covenants
- navigating planning, ESG requirements and capex from day one
For investors, operators or future asset managers wanting to sharpen that edge, a structured hotel real estate guide – like the one offered through Glion’s dedicated hotel real estate and finance programmes – can provide a framework for evaluating location, asset strategy, capital stack and exit routes in a way that goes well beyond headline RevPAR.
Professional insight matters more than ever
Today’s UK hotel investment market rewards investors who understand both the operational and real-estate fundamentals behind an asset. Evaluating deal feasibility, underwriting future demand, and navigating capex cycles requires specialist knowledge. Institutions such as Glion offer hotel real estate and investment programmes that help professionals understand asset valuation, financing structures, and hotel-specific investment strategies — skills that are increasingly essential in a market where yields, costs and performance vary sharply across segments.
So, is the UK hotel investment industry really “booming”?
If by booming you mean a frothy, rate-agnostic frenzy – no. Deals are taking longer, buyers are choosier, and lenders are still cautious.
But if you define booming as:
- record post-pandemic investment in 2024 and above-trend volumes forecast again for 2025,
- the largest and most liquid hotel transaction market in Europe,
- strong single-asset activity with a deep bench of domestic and international buyers, and
- a demand base that keeps filling beds in spite of choppy macro headlines,
Then yes – the UK hotel investment industry is booming in exactly the way serious capital likes: less noise, more substance, and plenty of opportunity for those who know where – and how – to look.
