Investment in UK hotels surged to £3.8 billion in 2025, more than double the previous year's total, as the hospitality sector capitalised on record tourism numbers and strong operational performance. The figures, compiled by Knight Frank, show that both domestic and international investors have been drawn to the sector's robust income growth.
London accounted for approximately 55 per cent of total transaction volume, with several landmark deals including the sale of a major Mayfair hotel for in excess of £500 million. However, regional cities — particularly Edinburgh, Manchester and Bath — also saw significant activity, with investors attracted by lower entry prices and strong revenue per available room growth.
The UK welcomed a record 42.7 million international visitors in 2025, surpassing the pre-pandemic high of 40.9 million set in 2019. Average daily rates across UK hotels rose 8.3 per cent year-on-year, while occupancy levels held steady at 78 per cent nationally.
For the commercial property market, the hotel sector's performance provides a counterpoint to the challenges facing retail and secondary offices. Analysts at Savills expect investment volumes to remain elevated through 2026, with particular interest in the extended-stay and lifestyle hotel segments.
