Research from Savills shows that UK hotel investment is estimated to total £1.04 billion in Q3 2025, a 28% year-on-year increase.
This was driven by single asset transactions, which accounted for 92% of activity and rose almost 60% above the 10-year Q3 average, even as overall investment volumes remained 5% below long-term trends.
London led the UK hotel investment market in Q3, with volumes reaching £697 million, up 42% year-on-year. According to Savills, this reflects both the capital’s large share of UK hotel stock and a rebound in investor appetite, despite ongoing operational headwinds.
This positive sentiment is further shown by yield compression, with London prime yields tightening by 25 basis points across franchise assets compared to H1 2024.
Domestic owner-operators have dominated UK hotel acquisitions in 2025 to date, accounting for 45% of volumes, totalling £1.2 billion. This is up 4% year-on-year and marks a 77% increase versus the 10-year average.
Savills attributes this surge to growing confidence in the UK market and a strategic push to expand platforms, with standout deals such as Barons Eden illustrating the trend.
The property firm also reports that international asset managers have re-entered the UK hotel market, targeting value-add opportunities. Asset managers acquired £734 million of hotels over the first nine months of 2025, up 18% year-on-year, with international players accounting for 60% of this total and posting a year-on-year increase of over 1,000%.
UK pension funds have also become more active, with YTD volumes at £299 million, up 31% year-on-year, driven by diversification strategies and confidence in long-term sector fundamentals.
Regional UK markets continue to show strength, with sharp increases in activity contributing positively to the overall picture.
Scotland recorded YTD activity of £316 million, up 85% year-on-year; the South West reached £180 million, up 360% and the West Midlands hit £256 million, a 310% rise. Savills notes that regional volumes YTD totalled £1.3 billion, more than double the same period in 2024, reflecting growing investor interest beyond traditional core markets over the last nine months.
David Kellet, Head of Hotel Capital Markets EMEA at Savills, says: “While the first half of the year was defined by operational and investor uncertainty in the UK hotel market, sentiment has stabilised through Q3 and we have seen over £1 billion of deals closed – a marked increase from 2024.
LThe strength and resilience of the single asset market stands out, with single assets making up over 90% of deal volumes in the quarter.
“We expect the single asset market to remain robust whilst also anticipating more larger portfolios to transact in 2026. We look forward to what’s ahead for the UK hotel market.”
