The United Kingdom proves how investing in hotels continues to be a profitable choice and how truly unbeatable real estate is when it comes to safe and low-risk investments.  

According to Knight Frank, a total of £6.3 billion was invested in the British hospitality industry in 2024, which represents a three-fold increase year-over-year, and a 31% above the 10-year average, marking a return to 2019 levels.

Portfolio Transactions and Foreign Investment Dominate, especially in London

In 2024, portfolio transactions accounted for 57% (£3.6 billion) of the total investment amount, revealing a preference toward large-scale acquisitions. Major deals in the industry included:

• 33 Village Leisure Hotels
• 10 Radisson Edwardian Hotels
• 21 AccorInvest hotels
• 66 Travelodge hotels (LXi REIT portfolio)
• 33 Marriott hotels (ADIA U.K. portfolio) 

In total, private equity investors acquired over 20,000 hotel rooms. It is also worthwhile to note that 75% (£4.7bn) came from overseas, with the United States taking the lead, investing £3.8 billion, and revealing the United Kingdom to be a hub for global investment on the hospitality sector.

While other British destinations, like Liverpool and Manchester continue to grow in terms of value, London remains the undisputed investment destination. The UK capital secured £3.1 billion on its own, accounting for 50% of the total capital invested in the country.  

While portfolio transactions dominated both in London and the country, single asset deals also represented a significant 25% of the total investment in the British capital. Some of the most profitable single asset deals in 2024 were as follows:

• Six Senses London (£180 million)
• The Standard (£185 million)
• Hyatt Place London City East (£84 million)
• Motel One London Tower Hill (£56 million)

In fact, London accounted for 63% of total single asset deals in the United Kingdom, which makes sense when you consider that the average value per single asset hotel room increased around 8% to £417,000 per key, highlighting the capital’s desirability for real estate investments in the hospitality sector.  

Hotel Investments in the UK: A Pathway for Fixed Profitability

Several of the hotel acquisitions in the United Kingdom also involved fixed income deals – more than 25% - highlighting how there is an increasing lookout for futureproof for secure investments.

With some of these fixed income deals featuring hotel developments, it should come no surprise that transactions in this field exceeded £500 million, accounting for 8% of total U.K. hotel investment, with a few key transactions confirming the trend of unused office space being converted for hospitality purposes.  

Some of the most relevant conversions include:

• Edinburgh’s former Debenhams (£50 million retrofit into a Zedwell hotel)  
• Whitbread’s redevelopment of Verity House into a Premier Inn  
• Travelodge’s purchase of Genesis House for a 95-room hotel near St. Paul’s Cathedral

After three years of stagnation, 2024 marked a turning point for the UK’s hospitality sector, finally returning to 2019 investment levels. Building on the previous year, 2025 is poised to be the year for safe investments in the UK’s hospitality sector. With inflation forecast at 2.6% in 2025, declining interest rates, improving lending conditions, and greater international investment, hotels, whether they are part of a portfolio or are a single asset, are a solid path to profitability in 2025.