Savills reports that UK hotel investment volumes are estimated to have reached £5.0 billion in 2025, representing a 15% year-on-year softening, while remaining closely aligned with longer-term market trends.
Despite ongoing geopolitical and macro-economic challenges, total investment activity is anticipated to exceed the 10-year average of £4.7 billion by 7.8%, highlighting the continued resilience of the UK hotel sector and sustained investor demand.
The final quarter of the year showed particular strength. According to the international real estate advisor, Q4 2025 investment volumes surpassed £2.0 billion, more than 40% higher than in Q4 2024, suggesting that momentum has started to build once again and positioning the market on firmer footing heading into 2026.
For the full year, portfolio transaction volumes declined, reaching just over £750 million, materially lower than the £3.1 billion recorded in 2024. Yet while large-scale portfolio sales were subdued, activity in the single asset market strengthened significantly, accounting for 85% of investment volumes in 2025, up 68% year‑on‑year. The single asset market has been driven by investors executing wholesale to retail business plans from portfolio acquisitions made in 2024, supported by strong liquidity for smaller deal sizes.
According to Savills, investment in London significantly outperformed the regions in 2025, attracting both global and domestic investors to deliver £3.0 billion of investment volumes, a 25% year‑on‑year increase and 41% above the 10-year average. By contrast, regional market investment volumes slowed, with fewer portfolio deals contributing to a reduction in activity to £2.0 billion, compared with £3.3 billion in 2024.
David Kellett, Head of Hotel Capital Markets - EMEA, Savills, says, "UK hotel transactions proved resilient in 2025 driven by a liquid single asset market, and the enduring appeal of London, which had its strongest year of investment volumes since 2018. Despite continuing cost challenges for hospitality businesses, we anticipate a strong year ahead in 2026 with more portfolio deals, building on the positive momentum in the fourth quarter of 2025."
