UK hotel investment surges to £1.1 billion despite rising business costs
The UK hotel sector has seen a strong start to the year, with investment topping £1 billion in the first quarter alone. This surge comes despite rising business rates and broader economic uncertainty. Many operators now face higher costs, forcing changes in how they run their properties. Investment in UK hotels jumped by 63% compared to the same period last year, reaching £1.1 billion. High-profile deals, such as acquisitions of Marriott Grosvenor Square and Radisson Blu Leicester Square, helped drive this growth. London continues to dominate in large-scale and luxury hotel investments, though precise regional breakdowns remain unavailable.
From April, the average business rate bill for a UK hotel rose by 30%, adding around £28,900 to annual costs. By 2028/29, these rates are expected to climb by 115%, equating to an extra £111,300 per property. The increases stem from property revaluations, which have left operators bracing for tighter budgets or potential price adjustments.
Some hotels are responding by adopting more tech-driven and efficient operations. These changes aim to offset higher expenses, though the impact will vary across the industry. While the sector has shown resilience, uneven cost pressures could widen gaps between larger chains and independent operators. The UK hotel market remains robust, with total investment for 2025 projected at €5.69 billion. Yet rising business rates pose challenges, pushing operators to adapt through technology or pricing. The long-term effects will depend on how hotels manage these financial pressures in the years ahead.
