Hotel investment activity in the UK reached an estimated £5 billion in 2025, according to Savills. The total represents a 15% year-on-year decline compared with 2024 while remaining close to longer-term market patterns. Despite geopolitical and macro-economic challenges, total investment exceeded the 10-year average of £4.7 billion by 7.8%, indicating continued activity across the sector.
Investment momentum strengthened toward the end of the year. Savills reported that fourth-quarter investment volumes surpassed £2.0 billion in Q4 2025. This figure was more than 40% higher than Q4 2024 and marked the strongest quarterly performance of the year. The increase suggested renewed transaction activity and provided a more stable platform for the market entering 2026.
For the full year, portfolio transaction volumes declined sharply. Portfolio deals totaled just over £750 million in 2025, down from £3.1 billion in 2024. The reduction reflected fewer large-scale transactions during the year. While portfolio activity slowed, the single asset market recorded a notable increase. Single asset transactions accounted for 85% of total investment volumes in 2025, representing a 68% year-on-year increase.
Savills attributed the rise in single-asset activity to investors implementing wholesale to retail strategies linked to portfolio acquisitions completed in 2024. Liquidity remained strong for smaller deal sizes, supporting transaction flow in this segment. As a result, single asset deals became the primary driver of investment volumes during the year.
London outperformed regional markets in 2025. Investment volumes in the capital reached £3.0 billion, reflecting a 25% year-on-year increase and standing 41% above the 10-year average. Savills noted that both domestic and international investors were active in London throughout the year. In contrast, regional investment volumes declined to £2.0 billion from £3.3 billion in 2024, largely due to the reduced number of portfolio transactions.
“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,” said David Kellett, head of hotel capital markets – EMEA, Savills.
Overall, Savills’ findings indicate that while total investment volumes softened compared with the prior year, activity remained above historical averages. The shift toward single=asset transactions and the concentration of investment in London defined the market in 2025 and shaped expectations for transaction activity in 2026.