2026-03-02-莱坊-UK_Hotels_Trading_Performance_Review_2026_17页_7mb

UK Hotel Market Performance Review 2025 and Outlook for 2026

Core Content

The UK hotel market in 2025 showed a year of two halves, with a notable recovery in the second half. Despite facing significant challenges such as low revenue growth, sustained cost pressures, and rising business rates, the sector demonstrated steadfast resilience, particularly in London and regional UK. The key focus for 2026 is on protecting Net Operating Income as business rates are expected to rise, potentially eroding margins across all segments.

Main Points

• Market Resilience: The UK hotel sector showed resilience in 2025, with full-year RevPAR on par or ahead of 2024 levels and GOPPAR almost stable, especially in London and regional UK.
• Cost Pressures: Operating costs have significantly increased, including employment costs and regulatory obligations, which have placed pressure on profitability.
• Business Rates: The return of business rates to pre-2019 levels, combined with inflation, is expected to challenge the sector further in 2026.
• Revenue Drivers: Increased ADR and demand for wellness and leisure experiences are expected to support revenue growth in 2026.
• Supply Growth: UK hotel supply grew by 1.0% in 2025, with London accounting for 52% of the new supply. London's supply is forecast to grow by 3.7% in 2026, with a significant portion being luxury, upper-upscale, and upscale hotels.
• Regulatory Changes: The Employment Rights Bill and Martyn's Law are expected to increase operational and regulatory costs, with the latter set to take effect in 2027.
• F&B Revenue Trends: F&B revenues have shown growth across London, with a range of 1.7% to 2.8% in different segments. In regional UK, F&B growth was more constrained but varied across segments.
• Leisure Demand: Leisure and wellness demand has continued to rise, supporting revenue and profitability, especially in select-service and golf & spa hotels.

Key Performance Indicators (KPIs)

London

• Occupancy: 82.5% in 2025, up 1.2 percentage points from 2024.
• ADR: £253 in 2025, with a 2.5% decline in the first half and a 2% recovery in the second half.
• RevPAR: £209.1 in 2025, showing a full-year growth of 1.5%.
• TRevPAR: 20% higher than 2019 in nominal terms, but 15% lower in real terms.
• GOPPAR: 3.5% above 2019 levels on average, but in real terms, profits remain significantly compressed, down by 24%.

Regional UK

• Occupancy: 75.7% in 2025, with limited growth opportunities.
• ADR: £105 in 2025, with a 0.8% decline in the first half and a 2.2% recovery in the second half.
• RevPAR: £79 in 2025, showing a full-year growth of 1.9%.
• TRevPAR: 30% higher than 2019 in nominal terms, but 9% lower in real terms.
• GOPPAR: 16% below 2019 levels in real terms, with significant cost pressures affecting margins.

Future Drivers and Challenges

Tailwinds

• Inbound Tourism: VisitBritain forecasts a 4% increase in inbound arrivals for 2026.
• Improved Economic Conditions: Expected to ease cost pressures, with interest rates likely to decrease and inflation to fall to around 2.1%.
• Wellness and Leisure Demand: Continued growth in these areas supports revenue and margin stability.
• AI Adoption: Enhancing operational efficiency and customer experience.
• Debt Availability: Competitive terms support investment and capex.

Headwinds

• Business Rates: Expected to rise sharply in 2026, potentially eroding margins.
• Regulatory Costs: Employment Rights Bill and Martyn's Law increase operational costs.
• Wage Increases: National Minimum Wage is rising above inflation, increasing operating expenses.
• Short-Term Rentals: Increased inventory and channel managers affect hotel margins.
• Supply Constraints: Regional UK supply growth is limited, with forecasts of 0.7% between 2025 and 2028.

Summary of Performance

• London: The market showed resilience, with upper-upscale and select-service hotels performing particularly well. Despite the challenges, full-year RevPAR was on par with 2024, and F&B revenues recorded growth.
• Regional UK: The market demonstrated strong nominal recovery but faced real-term margin compression. The upper-midscale and upscale segments outperformed the market, with RevPAR growth of 2.4% and 2.2% respectively.
• Overall: The UK hotel market is navigating a complex landscape, with resilience in the face of rising costs and regulatory changes. The future outlook is cautiously optimistic, with the potential for continued revenue growth supported by increased ADR and demand for wellness and leisure experiences. However, the challenge of maintaining profitability remains significant due to the expected rise in business rates and other cost pressures.