UK Hospitality Marketbeat Reports

KEY TAKEAWAYS FOR Q2 2025

• Investment Activity: UK hotel investment volumes reached £1.6B, with a total of 110 hotels and 10,945 keys transacting over the first half of the year, a 59% decline compared to H1 of last year.
• Prime Yields:Prime yields have stabilised with factors such as interest rate cuts and more accessible financing expected to expedite a sharpening of these towards the end of the year.
• Supply & Demand: To date, year-on-year demand has aligned with supply however this equilibrium is expected to shift as supply growth outpaces demand throughout the rest of the year.
• Performance: Hotel performance has experienced a marginal decline in RevPAR of -1.4% compared to H1 2024, occupancy is expected to compress over the next 12 months whilst ADR should continue to grow. Investors remain cautious as the bottom line continues to get squeezed by rising cost pressures.
• Future Projections: Bottom-line profitability will remain under pressure as rising business rates and other cost increases dampen investor confidence. However, performance is expected to improve, with domestic and international accommodation spending forecast to rise by 13% and 9%, respectively.