Edinburgh and London Take the Crown in Latest UK Hotel Development Index from Colliers
London has leapt five places to become the second most attractive hotel development and investment market in the UK, according to Colliers’ annual Hotel Development Index 2026, a ranking of 35 UK locations measured against nine indicators including land prices, build costs, occupancy, ADR and investor appetite. Edinburgh retains the number one position for the second consecutive year, with the two cities cementing their status as the UK’s most resilient and sought-after hotel markets.
Edinburgh once again tops the index, underpinned by a strong occupancy rate 84.6% for 2025 and an average daily rate (ADR) of £165, a 3.19% year on year increase.
Its development/RevPAR index reflects not just strong hotel trading, but favourable economics for new development relative to that performance. This robust performance is supported by the city’s appeal as Scotland’s capital, a thriving tourism market, and a strong financial and business district. An active pipeline of 9.5% of existing room supply signals that developers and operators remain firmly committed to the city.
Rising from seventh to second, its strongest showing in years, London recorded the highest ADR of any UK market in 2025 at £194, up 3.13% year on year, while occupancy held at 81.2%. Despite elevated land prices, the diversity and depth of London’s demand, spanning corporate travellers, domestic guests and international tourism, ensures it remains one of the most sought-after hotel investment markets in the world. For major hotel brands, a London presence remains a must-have location, with Rosewood opening their global flagship, the Chancery Rosewood, IHG introducing Six Senses in the UK and The July launching their new brand in the city.
Richard Candey, Head of Hotel Development & Consulting at Colliers, commented: “Edinburgh and London continue to attract a disproportionate share of hotel investment activity in the UK. Their position at the top of our index is not simply a reflection of strong performance, it is the combined weight of market scale, investor appetite and the depth of brand and operator demand that sets them apart.”
Investor appetite is visible in the transactions, in London, Arora’s acquisition of the Ministry of Justice building for £245m and the Singaporean Royal Group’s purchase of 63 Piccadilly for £60m are prime examples of the global capital the city continues to draw. Edinburgh has also seen notable investment activity, with the sale of the W Hotel to Schroders for just over £100m and boutique Bruntsfield House to Dubai-based Dutco Group serving as prime examples.
As Richard notes: “These are markets that have demonstrated their resilience across multiple economic cycles and continue to attract global capital despite turbulent geopolitical environments. This is as true today as it was a decade ago.”
What the index ultimately captures is something harder to manufacture – enduring status. Edinburgh and London are the markets that international hotel brands and institutional investors look to first, and the data consistently reflects that.
Siddhika Shah, Director in Colliers’ Hotel Advisory Services, added: “Edinburgh and London score highly not just on hotel trading metrics, but across the full range of investment fundamentals, from market appetite and valuation exit yields to the scale and diversity of demand that underpins new development. The consistency of that picture, year on year, is what makes these two markets genuinely distinctive.”