UK hotel transaction activity slowed in 2025 after a record-breaking year, with domestic investors stepping in as overseas capital became more cautious, according to a new report from Christie and Co.

Hotel deal volumes fell to around £4.3bn in 2025, down from more than £6.6bn in 2024, which had been the strongest year for the sector since 2018. The figures exclude development sites and are based on preliminary data.

Christie and Co said the slowdown reflected a sharp change in deal composition. While 2024 was driven by large-scale mergers and acquisitions, nearly 80% of transactions in 2025 were single-asset deals, marking a complete reversal year on year.

Domestic buyers increased their activity during the year, while cross-border investment, particularly from the US, eased amid geopolitical uncertainty. 

Private capital and high-net-worth individuals were more active, while institutional investors remained in the market but adopted a more cautious approach.

Operational conditions added further pressure. London revenue per available room (RevPAR) fell by 0.4% year to November, reflecting increased price sensitivity and competition, while regional markets recorded a 1.2% increase. 

Despite higher labour costs, National Insurance increases and a 6.7% rise in the National Minimum Wage, gross operating profit per available room (GOPPAR) declined by just 0.6% in both London and the wider UK.

The report also stated that liquidity remained in the market, with more assets coming to market as properties reached the end of their investment cycles and portfolios sold in 2024 were broken up. 

Christie and Co advised on more than 100 UK hotel deals during 2025, with portfolio-led activity expected to pick up in early 2026.

Additionally, the report highlighted mixed conditions across continental Europe, with deal volumes holding up in France and Spain, a sharp rebound in Germany and luxury-led activity in Austria.

Looking ahead, the adviser expects continued market polarisation, particularly in London, alongside a return of mid-market stock as government contracts unwind. 

Challenger banks and private funds are expected to play a larger role in financing as interest rates ease, while insolvencies and refinancing pressures could create opportunities for opportunistic buyers.

Carine Bonnejean, managing director of hotels and international at Christie and Co, said: “While large-scale portfolio activity slowed significantly, single-asset deals and creative structures kept the market moving. With improved financing conditions and strong pipelines, we expect renewed momentum in the months ahead.”

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