The UK hotel investment market has begun 2025 on a quieter note compared to the portfolio-heavy start of last year, but investor appetite for individual hotel assets is showing renewed strength, according to new research from international real estate advisor Savills.
Total transaction volumes for the first half of the year reached approximately £1.59 billion, with £1.35 billion of that comprising single asset transactions – an 8.4% increase year-on-year, and 1.7% above the 10-year H1 average of £1.33 billion. The figures highlight a decisive shift in investor preference towards targeting individual hotels over portfolios.
Headline deals driving H1 momentum included Nuveen Real Estate’s sale of the W Hotel in Edinburgh to Schroders Capital for over £100 million – the largest single asset hotel transaction ever recorded in the Edinburgh market. Savills advised on the deal.
Another notable sale was the Ruby Stella in London, acquired by LaSalle Investment Management from RE Capital for £48 million, again underlining the continued flow of core capital into high-quality urban hotel assets.
Despite the slower overall start to the year compared to 2024, Savills says the outlook for the remainder of 2025 is encouraging. If all currently marketed portfolios and single assets – totalling approximately £6 billion – transact this year, the market could surpass the 10-year average annual volume of £4.85 billion.
Portfolio activity, while limited in H1, did include Alchemy Group’s acquisition of a stake in luxury hotel and spa group Barons Eden, and Tristan Capital Partners’ €400 million purchase of the easyHotel platform, which includes multiple UK assets. Both deals were advised by Savills.
Investors are also widening their scope beyond London. The South West recorded £147 million in deals, a 95% increase compared to full-year 2024, while the West Midlands reached £153 million, up 60% over the same period – signalling sustained appetite for regional hotel assets and value-add opportunities outside the capital.
Richard Dawes, Director, Hotel Capital Markets at Savills, commented: “While fewer portfolio deals in the first half have weighed on overall volumes, investor confidence in single assets is clearly strengthening. The volume and quality of assets currently on the market – including over £6 billion in live opportunities – point to a more active and promising second half. The UK hotel sector remains well positioned to deliver a robust full-year performance.”
With interest in branded, lifestyle, and luxury hotels growing and debt markets showing early signs of stabilisation, the second half of 2025 could see more diversified and dynamic deal flow – driven by opportunistic buyers, cross-border investors, and a return of institutional capital chasing long-term income and yield resilience in the hospitality sector.
