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The UK hotel pipeline returned to growth last year as the number of rooms under construction reached 18,000 in December 2025, according to the latest data from Costar.
This rebound from 15,000 rooms at the end of 2024 represents 2% of total inventory, suggesting limited supply-side risks for the sector.
Final planning stages for new rooms accelerated by approximately 30% since the end of 2023. This increase indicates growing confidence in the construction sector, with development activity concentrated in Belfast, Manchester, and Edinburgh.
Conversion and regeneration projects in major cities are the primary drivers of this growth. Office-to-hotel and retail-to-hotel repurposing is particularly prevalent in London and Edinburgh, where 1.6 million square feet of office space was acquired for hotel use in 2025.
Trading performance is expected to show moderate improvement in 2026, with revenue per available room (RevPAR) forecast to grow by 1%. Regional hotels are predicted to outperform London properties, which may face challenges from a lighter events calendar in the third quarter.
Scottish cities are positioned as the strongest performers for the year ahead. Forward bookings for Edinburgh and Glasgow show occupancy improvements, with Glasgow set to benefit from hosting the Commonwealth Games this summer.
Costar said profitability remains under pressure from rising operational overheads. National living wages for workers aged over 21 have increased to £12.21, while a business rates revaluation is expected to see rateable values for hotels rise by an average of 76%.
Investment volumes are expected to improve throughout 2026 following a surge in late 2025. Deal activity was bolstered by several London assets trading for more than £200m, supported by lower borrowing costs and improved market liquidity.
Portfolio disposals are expected to drive sales volumes this year. Current opportunities include the Moxy UK portfolio, valued at £500m, and the Supercity Aparthotels portfolio at £220m. Private equity firms are also expected to offload non-core assets.
The UK hotel pipeline returned to growth last year as the number of rooms under construction reached 18,000 in December 2025, according to the latest data from Costar.
This rebound from 15,000 rooms at the end of 2024 represents 2% of total inventory, suggesting limited supply-side risks for the sector.
Final planning stages for new rooms accelerated by approximately 30% since the end of 2023. This increase indicates growing confidence in the construction sector, with development activity concentrated in Belfast, Manchester, and Edinburgh.
Conversion and regeneration projects in major cities are the primary drivers of this growth. Office-to-hotel and retail-to-hotel repurposing is particularly prevalent in London and Edinburgh, where 1.6 million square feet of office space was acquired for hotel use in 2025.
Trading performance is expected to show moderate improvement in 2026, with revenue per available room (RevPAR) forecast to grow by 1%. Regional hotels are predicted to outperform London properties, which may face challenges from a lighter events calendar in the third quarter.
Scottish cities are positioned as the strongest performers for the year ahead. Forward bookings for Edinburgh and Glasgow show occupancy improvements, with Glasgow set to benefit from hosting the Commonwealth Games this summer.
Costar said profitability remains under pressure from rising operational overheads. National living wages for workers aged over 21 have increased to £12.21, while a business rates revaluation is expected to see rateable values for hotels rise by an average of 76%.
Investment volumes are expected to improve throughout 2026 following a surge in late 2025. Deal activity was bolstered by several London assets trading for more than £200m, supported by lower borrowing costs and improved market liquidity.
Portfolio disposals are expected to drive sales volumes this year. Current opportunities include the Moxy UK portfolio, valued at £500m, and the Supercity Aparthotels portfolio at £220m. Private equity firms are also expected to offload non-core assets.
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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 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.
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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