UK Hotel Market Signals Stabilisation Phase, Report Reveals
Specialist business property adviser Christie & Co has today launched its UK hotel market review 2026, which provides insights into demand and trading performance, evolving traveller behaviour and tourism flows, profitability and cost pressures, transaction activity, financing conditions and distress trends across the hotel sector.
The report highlights that the UK hotel market is signalling a phase of stabilisation in 2026, underpinned by robust demand, following a period of increased complexity and heightened competition as new supply has been absorbed. While demand remains resilient, travellers are becoming increasingly selective, with the post-covid shift towards leisure-led travel continuing to shape performance.
TOURISM DEMAND & TRAVELLER BEHAVIOUR
The report notes that domestic tourism continues to underpin UK hotel demand, with around 80.5% of stays being one night, linked to business, events, and short leisure trips. Overnight trip intentions remain stable despite cost-of-living pressures, with renewed strength seen in months such as October and December.
The staycation market remains resilient but increasingly competitive, with shorter stays, later bookings and more targeted destination choices driving a redistribution of demand and intensifying competition at a local level.
Meanwhile, inbound tourism is gradually recovering, although flows remain uneven. Travel behaviour is becoming more experience-led, flexible and price-sensitive, creating opportunities for operators to capture greater total guest spend.
TRADING & PROFITABILITY
The report reviews regional performance across the UK and highlights a divergence in year-on-year RevPAR growth trajectories, driven primarily by local supply and event dynamics rather than underlying demand differences.
At the lower end of the year-on-year RevPAR growth spectrum, markets such as Liverpool are showing a softening in performance, with both rate and occupancy declining despite stable demand, while London sits closer to stabilisation, supported by the depth of its demand base. In contrast, Edinburgh and Glasgow lead the pack, with strong growth driven by increases in both rate and occupancy, while Cardiff is also among the stronger performers.
Cost pressures are now a defining feature of the operating environment, constraining profit conversion. Labour remains the largest cost base, with wage inflation and National Insurance increases continuing to pressure margins. As a result, profitability growth is shifting from rooms to total revenue and experience-led spend.
TRANSACTION ACTIVITY
The hotel transaction market in 2026 has been characterised by a number of high-profile deals with activity concentrated at opposite ends of the market. In the first half of the year, approximately £1.95 billion of transaction volume was recorded, with approximately 82% of transactions being single assets and 18% portfolio sales. Around 67% of investment has been driven by domestic capital.
The report explores insolvency trends, with the sector seeing a 15% year-on-year decline in accommodation insolvencies from January to April 2026 compared with the same period last year. However, the operating environment for hotels remains highly challenging, with margins under sustained pressure, leaving businesses with less capacity to absorb shocks.
Carine Bonnejean, Managing Director – Hotels & International at Christie & Co, said, “It’s becoming increasingly clear that performance is no longer being driven by rooms alone. With demand being shaped by shorter stays and event-led travel, operators must work harder to capture value from each guest interaction. At the same time, elevated costs are accelerating the shift towards total revenue strategies, with greater focus on ancillary spend and operational efficiency.
“Against this backdrop, the level of transaction activity we have seen so far this year reflects continued confidence in the sector, but also a more selective approach, with buyers targeting assets best positioned to adapt to these evolving dynamics.”
To read Christie & Co’s UK Hotel Market Review 2026, click here: https://www.christie.com/sectors/hotels/uk-hotel-market-review-2026/