Research from international real estate advisor Savills indicates that the UK hotel investment market had a slower start to 2025, with transaction volumes reaching approximately £1.59 billion in the first half.
These muted levels were expected following an exceptionally high volume of portfolio transactions in early 2024, however market activity remains encouraging, with signs pointing to a stronger second half.
Single asset transactions totalled £1.35 billion in H1 2025, marking an 8.4% year-on-year increase and standing 1.7% above the 10-year H1 average of £1.33 billion. Savills attributes this growth to a shift in investor focus and increased confidence in individual hotel assets.
The largest single asset transaction during the period was Nuveen Real Estate’s sale of the W Hotel in Edinburgh, to Schroders Capital for over £100 million. Savills advised on the sale, which is the largest single asset hotel deal ever recorded in the Edinburgh market.
Additionally, the sale of the Ruby Stella by RE Capital to LaSalle for £48 million was another significant transaction that demonstrates the availability of Core capital.
Savills research indicates that if all currently marketed assets, totalling approximately £6 billion in known portfolios and larger single assets, are transacted this year, the market is poised to exceed the 10-year annual average of £4.85 billion.
The largest portfolio deal in H1 2025 was the Alchemy Group acquiring a stake in luxury UK hotel and spa group, Barons Eden, advised by Savills. Another notable portfolio transaction in the period was Tristan Capital Partners’ purchase of easyHotel’s €400 million portfolio, a multi-country platform with several UK assets, also advised by Savills.
Regional markets have also shown notable momentum. The South West recorded £147 million in transactions, a 95% increase compared to full year 2024, while the West Midlands saw £153 million, up 60% over the same period, highlighting a renewed interest in hotel investment outside of London and the South East.
Richard Dawes, Director, Hotel Capital Markets at Savills, states: “While fewer portfolio deals in the first half have weighed on year-on-year volumes, the robust pipeline of assets on the market suggests we will see a more active second half. With just over £6 billion of known live opportunities, the UK hotel sector remains well positioned to deliver a strong full year performance.”
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