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UK hotel performance weakened in the first half of 2025, with London hotels reporting a steep 3% decline in RevPAR compared with regional properties, according to data from commercial property platform CoStar.
RevPAR dropped 3% year-on-year in June, extending four months of weak trading despite the onset of the holiday season and favourable weather. Hoteliers struggled to lift average daily rates amid subdued demand and macroeconomic uncertainty.
The domestic market remains under pressure as rising living costs and a more flexible labour market appear to be prompting travellers to opt for day trips rather than overnight stays.
According to VisitBritain data, overnight visits fell 2% year-on-year to April, with April alone down 13%. In contrast, day trips rose 10% in April, though overall figures for the year-to-date remain lower due to earlier poor weather.
Weekend RevPAR declined about 2%, driven by rate reductions, while occupancy held steady with demand and supply both increasing by around 2%. Midweek performance remained flat, suggesting restrained business travel spending. From April, companies have faced higher National Insurance contributions and slower economic growth.
Geopolitical pressures and a weakening US dollar have also weighed on international demand. US travel to the UK declined 3% in May and 6% in June, according to the US International Trade Administration. The dollar’s depreciation has limited UK hoteliers’ ability to raise rates for US and dollar-pegged markets.
Meanwhile, London hotels reported a 3% drop in RevPAR for the first half of the year, affected by exchange rate shifts and imbalances between supply and demand across the capital. Hotels in the regions performed relatively better, but still recorded negative RevPAR, with June down nearly 4%. The absence of high-profile events, such as concerts by Taylor Swift, was cited as a factor.
Outlook for the rest of the year remains cautious. Rising operational costs, including national living wage increases, higher business rates and insurance contributions, are expected to erode profitability further.
Survey data from VisitBritain’s Domestic Sentiment Tracker in June suggests consumers are becoming more cautious, with fewer planning overnight trips due to cost-of-living pressures and uncertain weather.
Corporate travel is expected to offer some support later in the year, though bookings are expected to remain value-focused. Hoteliers may face continued challenges in lifting rates as they adjust to local market conditions and shifting demand.
UK hotel performance weakened in the first half of 2025, with London hotels reporting a steep 3% decline in RevPAR compared with regional properties, according to data from commercial property platform CoStar.
RevPAR dropped 3% year-on-year in June, extending four months of weak trading despite the onset of the holiday season and favourable weather. Hoteliers struggled to lift average daily rates amid subdued demand and macroeconomic uncertainty.
The domestic market remains under pressure as rising living costs and a more flexible labour market appear to be prompting travellers to opt for day trips rather than overnight stays.
According to VisitBritain data, overnight visits fell 2% year-on-year to April, with April alone down 13%. In contrast, day trips rose 10% in April, though overall figures for the year-to-date remain lower due to earlier poor weather.
Weekend RevPAR declined about 2%, driven by rate reductions, while occupancy held steady with demand and supply both increasing by around 2%. Midweek performance remained flat, suggesting restrained business travel spending. From April, companies have faced higher National Insurance contributions and slower economic growth.
Geopolitical pressures and a weakening US dollar have also weighed on international demand. US travel to the UK declined 3% in May and 6% in June, according to the US International Trade Administration. The dollar’s depreciation has limited UK hoteliers’ ability to raise rates for US and dollar-pegged markets.
Meanwhile, London hotels reported a 3% drop in RevPAR for the first half of the year, affected by exchange rate shifts and imbalances between supply and demand across the capital. Hotels in the regions performed relatively better, but still recorded negative RevPAR, with June down nearly 4%. The absence of high-profile events, such as concerts by Taylor Swift, was cited as a factor.
Outlook for the rest of the year remains cautious. Rising operational costs, including national living wage increases, higher business rates and insurance contributions, are expected to erode profitability further.
Survey data from VisitBritain’s Domestic Sentiment Tracker in June suggests consumers are becoming more cautious, with fewer planning overnight trips due to cost-of-living pressures and uncertain weather.
Corporate travel is expected to offer some support later in the year, though bookings are expected to remain value-focused. Hoteliers may face continued challenges in lifting rates as they adjust to local market conditions and shifting demand.
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The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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