UK hotel transaction activity softens as domestic investors take the lead, Christie & Co report reveals

The report reveals that, following a record-breaking 2024 - the strongest year since 2018 where hotel transaction volumes exceeded £6.6 billion - 2025 experienced a marked slowdown, with deal volume falling to around £4.3 billion (based on preliminary figures, excluding development sites). This contraction was driven primarily by a shift in deal composition: while 2024 was dominated by large-scale M&A activity, 2025 saw single-asset transactions account for nearly 80% of deals, a complete reversal of the previous year.

In the UK, domestic investors stepped up significantly, while cross-border capital, particularly from the US, softened amid geopolitical uncertainty. Private capital and high-net-worth individuals became more active, whereas institutional investors remained present but cautious.

Operational performance added further complexity to the market in 2025. The report reveals that London RevPAR declined by 0.4% year-to-November, reflecting heightened price sensitivity and intensified competition, while regional markets posted a modest 1.2% RevPAR increase. Despite rising labour costs, National Insurance increases and a 6.7% uplift in the National Minimum Wage, coupled with persistent inflation, the hotel sector has demonstrated resilience in profitability, with GOPPAR declining by just 0.6% in both London and the wider UK.

Despite these challenges, the report highlights liquidity in the market and reason for optimism. More quality stock is becoming available, driven by assets reaching the end of their investment life cycles and break-up sales from large portfolios transacted in 2024.  Christie & Co has seen a steady rise in deal activity throughout 2025 with over 100 hotel deals orchestrated across the year, and portfolio-led activity expected in early 2026.

Looking to the year ahead, the report outlines Christie & Co’s market predictions:

• Cautious short-term trading and further market polarisation, particularly in London
• Mid-market inventory returning to supply as government contracts phase out, creating selective pressure and capex challenges
• Challenger banks and private funds expected to play a bigger role in financing as interest rates soften further
• Market dominated by single-asset transactions alongside rationalisation of non-core assets and delayed M&A deals
• Rising insolvencies and refinancing challenges creating value-accretive opportunities for opportunistic buyers

The report also reveals market trends across continental Europe. France recorded approximately €3 billion in deals in 2025, driven by strong demand in Paris and leisure hotspots despite political uncertainty. Spain maintained its dynamic momentum, surpassing €3.5 billion for the fourth consecutive year, supported by robust tourism and a healthy development pipeline. Germany rebounded sharply with volumes up over 78% year-on-year, led by activity in Berlin and Munich, while the Austrian market was driven by landmark luxury transactions in Vienna.

Carine Bonnejean, Managing Director - Hotels & International at Christie & Co, commented, “2025 was a year of recalibration for the UK hotel market. While large-scale portfolio activity slowed significantly, single-asset deals and creative structures kept the market moving. Operational resilience and cost control will be critical in 2026, but with improved financing conditions and strong pipelines, we expect renewed momentum in the months ahead.”

Click here to read the full report: https://www.christie.com/news-resources/business-outlook-2026/hotels/ 

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