Investor Appetite For Uk Hotels Amid A Resilient Market, Christie & Co Report Reveals

Business property adviser Christie & Co has today launched its Hotel Market Review 2025, which provides insights on demand, profitability and trading performance, the impact of global tourism shifts, and distress and insolvency trends in the hotel market, as well as an outlook for the rest of the year.

The report notes that, despite the persistent headwinds of the global economy, politics, and national cost pressures, the sector continues to demonstrate resilience, with the UK maintaining its appeal as a ‘safe haven’ for investment. Hotel owners and operators who strategically focus on cost control, active asset management, and operational innovation, will navigate these challenges and continue to perform well.

TRADING & PROFITABILITY

The report reveals that the hotel performance landscape has been mixed since the start of the year. According to Hotstats figures for May 2025 YTD, London experienced a 2.4% year-on-year decline in RevPAR, driven by softening of ADR amid heightened price sensitivity and intensified market competition.

However, regional UK markets witnessed a more contained erosion of RevPAR, with some healthy growth led primarily by ADR, including York, Liverpool, Southampton and Edinburgh.

Labour costs have risen, following April’s increases to employer’s National Insurance contributions and a 6.7% Minimum Wage hike, disproportionately affecting select-service hotels, although the full impact of these measures remains to be seen. Utility costs have however declined by over 4.5% year-to-date, thus offering some relief, while still carrying some uncertainty in connection with international trade and the current geopolitical environment.

These forces contributed to a setback in GOPPAR, down 9.1% year-on-year over the same January to May period in London, and 6.7% regionally. However, these headwinds may benefit the industry in the medium-term, by calling for hotel operators to show ingenuity and agility, identifying opportunities to drive incremental ancillary revenues and challenging operational efficiency to help preserve profitability.

TRANSACTIONAL ACTIVITY & OUTLOOK

Last year marked the strongest year for UK hotel transactions since 2018, with volumes exceeding £6.6 billion – 3.5 times higher than in 2023. In H1 2025, activity saw a marked slowdown, with London recording about a fifth of the £1.7 billion recorded in 2024 over the same period, which was boosted by a portfolio-led surge in investment. Regional UK markets saw £758 million in H1 2025, raising the share of domestic investment sharply to 48% of volume.

GLOBAL TOURISM SHIFTS

The report explores the potential impact of geopolitical movements at the start of the year on tourism flows. After a period of boosted spending power for American travellers, the proposed US tariffs on Chinese imports may further reduce inbound travel from the US and China. The report also emphasizes the UK market’s reliance on European and domestic travellers who may also be impacted by measures such as the recently introduced ETAs and possible hike in tourism tax depending on the hotel segment and purpose of travel.

DISTRESS & INSOLVENCY

While the sector has proved its resilience in recent years, the report reveals a rise in consensual and insolvent distress hotel sale mandates Christie & Co has been instructed on. Rising labour and energy costs, creditor actions, and persistently high interest rates remain key distress drivers, and with inflation forecast at 3.1% in 2025 and RevPAR growth expectations rather in the range of 1.5%-3.0% depending on markets, financial pressure is expected to persist.

Pierre Ricord, Head of Hotel Consultancy at Christie & Co, said,
“As we pass the midpoint of the year, our Hotel Market Review highlights that the UK hotel sector continues to demonstrate extraordinary resilience and adaptability, even in the face of growing complexity across global tourism and funding conditions. Investor appetite remains strong, particularly in regional markets where operational models align with cost pressures and evolving guest demand.”

To read the Hotel Market Review 2025, click here: https://www.christie.com/sectors/hotels/hotel-market-review-2025/