KEY TAKEAWAYS FOR Q4 2024
- Investment Activity: UK hotel investment hit a five-year high of £6.6 billion in 2024, driven by large portfolio sales and high-value deals in London and Edinburgh.
- Prime Yields: Yields were stable in 2024, with slight compression in high-barrier markets. Political stability and growing debt market liquidity are expected to tighten yields in 2025.
- Supply & Demand: Room construction declined, shifting focus to conversions. Luxury hotels in key cities remain in demand, while group and corporate segments have rebounded.
- Performance: Hotel performance was resilient, with projected RevPAR increases of 3.5% in London and 4.6% across the UK for 2025. Regional hotels outperformed London in 2024.
- Future Projections: Room supply is expected to grow by 3.2% in the next 12 months, with international and domestic hotel nights projected to grow by 7.8% and 0.6%, respectively, over the next five years.
The UK hospitality sector experienced significant growth in Q4 2024, with notable investments and transactions across various regions. The market saw a substantial increase in hotel room transactions and average prices per room. A total of 87 hotels and 12,833 rooms were transacted, with an average price per room of £139,328. Notably, 67% of the volume was invested in upper upscale hotels, indicating a trend towards high-end hospitality experiences.
Regionally, the United Kingdom saw 327 hotels and 39,117 rooms transacted, marking a volume increase of 182%. London accounted for 67 hotels and 11,298 rooms, with a volume increase of 158%. Regional areas outperformed London, with 259 hotels and 27,819 rooms transacted, reflecting a volume increase of 212%. Edinburgh, Manchester, and Glasgow also showed significant growth, with volume increases of 65%, 146%, and 733%, respectively.
Comparing 2024 to 2023, the market demonstrated robust performance with significant year-over-year growth in hotel transactions and room volumes. The focus on upper upscale hotels and the strong performance of regional markets highlights the evolving trends in the UK hospitality sector.
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