Hotel investment at its highest since 2018
Over the past few years, the hotels sector has faced challenges unlike any before, from Covid-19 pandemic shutdowns to staffing shortages. Yet, in 2024 UK hotel investment roared back to life in a way few predicted, attracting billions of pounds and capturing headlines around the world.
Savills put it bluntly in their March 2025 report: “UK hotel investment activity totalled £5.73 billion in 2024, the highest full-year total since 2018, up 157% year-on-year and 20% above the ten-year annual average.” For an industry that had been written off during lockdown, this resurgence is remarkable.
Understanding this boom means understanding the many different ways investors engage with hotels. Some purchases are single properties—a lone hotel in a prime location, such as a Mayfair townhouse or a modernised coaching inn in an area of outstanding natural beauty. Others involve large portfolios, where investors acquire multiple hotels in one deal.
It’s a picture that Carine Bonnejean, Managing Director – Hotels, at Christie & Co, recognises from her experience. “We work with hotels of all sizes, from small, owner-operated independents where the business is the owner’s main livelihood, to regional, national and international group operators with large portfolios, as well as institutional investors, and we are seeing appetite at all levels of the market for acquisition opportunities.”
Portfolio transactions, often running into the billions, are favoured by large institutional investors and private equity groups because they deliver scale quickly. Savills noted the dominance of portfolio deals in 2024. “Portfolio transactions represented 54% of total volumes, well above the long-term average of 34%,” it said.
At the same time, single-asset transactions were far from absent. Savills found that single-property activity was up nearly 50% compared with 2023. This suggests a market in which both small and large investors found room to manoeuvre.
Who is buying?
In terms of where the investment is coming from, American private equity was by far the leading player. As Savills reported, “US private equity dominated portfolio acquisitions in 2024, investing nearly £2.6 billion, which is almost five times the ten-year average.”
Domestic investors were also prominent. Owner-operators and UK asset managers spent over £1 billion, showing that local confidence has not been drowned out by global capital. European investors almost doubled their activity compared with 2023. Conversely, Asian investors slowed down, which Savills attributes in part to higher financing costs and different risk appetites.
Then there is the question of where investors want to deploy their capital. For decades, London dominated the UK hotel investment scene and it remains one of the world’s top destinations, combining tourism, business travel and international finance. In 2024, the capital attracted £2.4 billion in investment, more than double the previous year, “driven by both portfolio and single-asset activity,” according to Savills.
Yet, what really stood out in 2024 was the rise of regional investment. The rest of the UK saw £3.34 billion of deals, a staggering 217% increase year-on-year. Cities such as Manchester, Birmingham, Edinburgh and Glasgow have become genuine hotspots. Indeed, regional investment volumes exceeded London for the first time since 2015, the Savills report notes.
Why now?
The reasons behind this surge are both practical and psychological. First, tourism has bounced back strongly. Domestic travellers are filling hotels across the country, while international visitors are returning in greater numbers. Second, hotels are attractive in times of inflation. Unlike offices or retail, hotel operators can adjust room rates daily, allowing them to respond quickly to rising costs.
Third, the broader economy is stabilising. CBRE’s UK Real Estate Market Outlook 2025 highlighted that “falling inflation and lower debt costs will support improved investment returns and promote increased real estate transactions next year”. That combination—cheaper debt and rising demand—makes hotels an appealing investment option.
For its part, JLL highlights shifts in investor preferences. Lifestyle hotels, those with strong design and local identity, are gaining attention, it says. Sustainability is also moving to the forefront. As JLL notes, “investors are increasingly targeting hotels that combine operational resilience with ESG performance.” In practical terms, this means green buildings, energy-efficient operations and brands that appeal to eco-minded travellers.
When it comes to regional transactions, Bonnejean thinks she’s spotted another trend. “Regionally across the UK, we are seeing that, when owners reach a certain age, they start planning their retirement and thinking about the next step. If they don’t have a family who wants to follow in their footsteps and continue running the business, it makes sense to sell and find the right buyer to take it forward, and this is driving a lot of the decision making in the market.”
Risks, challenges and the road ahead
For all the optimism, risks remain. Staffing shortages continue to bite. Many hotels struggle to recruit chefs, cleaners and front-of-house staff, pushing up costs and straining operations. There are also concerns about oversupply, particularly in London’s luxury segment.
The Financial Times reported in 2025 that the capital was set to see “757 additional rooms in Greater London, the biggest annual increase since 2014,” warning that the influx might create “a bit of a slump” as new capacity outpaces demand.
Costs remain high too. Energy prices, construction materials and financing costs, while easing, are still a challenge. Then there is the increase in employer national insurance contributions, as announced by chancellor Rachel Reeves in her first budget last year. “The budget has not helped,” says Bonnejean. “Now that we’ve had four or five months of numbers, we’re seeing the impact on profit and loss accounts. There has been a ripple effect. However, in the face of these headwinds, the sector continues to show resilience and attract domestic and international investor interest.”
Savills also sees investor sentiment remaining buoyant, despite the risks, and expects 2025 to continue strongly, albeit at a steadier pace than 2024. “We anticipate further growth in single-asset activity, particularly in London, alongside an increase in M&A activity across the sector,” it said.
The regional story also looks set to deepen. Savills pointed out that the North West of England has already seen a 45% increase in investment in early 2025, underlining the momentum outside London. Meanwhile, JLL continues to stress that investor focus will increasingly rest on hotels that can deliver more than just a bed for the night. “Capital will flow into properties that differentiate themselves, whether through design, experience, or sustainability,” it said.
For travellers, all this may translate into more choice, better facilities and fresh concepts. For investors, it means opportunities both in the capital and beyond. And for the UK economy, it signals a sector once hit by the pandemic now standing tall as one of the brightest spots in real estate.
Sources:
- Savills – UK Hotel Investment Report 2025
- Savills – UK hotel investment hits £5.75 billion in 2024
- CBRE – UK Real Estate Market Outlook 2025
- CBRE – UK Mid-Year Market Outlook 2025
- JLL – Global Hotel Investment Trends
- FT – London hotel oversupply warning
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