• Investor confidence remains high, with projections of continued demand growth and deal activity in 2025.
  • Transaction volumes in 2024 reached £6.6 billion, an 182% increase from 2023.
  • Deals in 2024 were primarily driven by large-scale portfolio transactions and single-asset transactions in London and Edinburgh.
  • London accounted for 50% of deal volume in 2024.

LONDON – Transaction volumes in the UK hotel real estate market reached c. £1.8 billion in the last quarter of 2024, a remarkable 176% increase against the same period in 2023. The rise in Q4 was driven largely by the reported £900 million sale of ADIA’s Marriott hotel portfolio to KKR’s Amante Capital and Baupost, single-asset transactions in London as well as Edinburgh, and smaller sales across the UK regions.

On a cumulative basis, investment volumes in 2024 reached an impressive milestone, surging to their highest levels since 2019. Propelled by robust investment momentum, 2024 saw approximately £6.6 billion in transactions – an 182% increase from 2023 and a 6% rise compared to the previous peak in 2019.

The final quarter of 2024 alone accounted for a total of 87 properties, representing more than 12,800 rooms, changing hands. This brought the annual total to 327 properties and nearly 40,000 rooms transacted over the course of the year.

Portfolio transactions dominated the landscape, driving much of this growth in deal volume. These large-scale portfolio deals accounted for 57% of the total investment volume, equating to £3.74 billion. In the Regions, hotel volumes soared to £3.29 billion, capturing 50.3% of the year’s activity and marking an exceptional 224% year-on-year increase. London recorded £3.26 billion in transactions – a robust 148% rise compared to 2023. This growth was particularly notable given the slight 1% decline in 2023 versus 2022.

This surge in transactional activity reflects sustained confidence among hotel operators and investors in the sector's revenue-generating potential with continued RevPAR growth forecast over the next 12 months. However, while top-line growth remains strong, challenges persist on the horizon. Operators are navigating pressures on profitability, as operational costs – driven primarily by Budget-led minimum wage and National Insurance increases – are expected to weigh on bottom-line flow-through in 2025.

Yields have remained relatively stable throughout 2024, with minor compression seen in landmark deals within high-barrier markets. With enhanced political stability, growing liquidity in debt markets, and interest rates moving inwards, Cushman & Wakefield anticipates a gradual tightening of prime yields during 2025.

Luxury hotels in key urban centres continue to experience strong demand, although value-conscious consumers are exerting pressure on rates during off-peak periods, constraining growth compared to the robust levels seen in 2023. Meanwhile, the group and corporate travel segments have shown a remarkable rebound, delivering the largest year-on-year gains. This resurgence has significantly boosted mid-week occupancy, lending crucial support to regional markets.

Looking ahead, data from Oxford Economics paints an optimistic picture, projecting a nearly 7.8% increase in international hotel stays and a modest 0.6% rise in domestic stays by the end of 2025. These figures translate to an average annual growth rate of 2.2% over the next five years, underscoring a sustained growth trajectory for the sector.

The 2025 outlook remains promising, with deal-making momentum from 2024 expected to carry through into the new year. Contributing factors include an anticipated influx of high-quality assets hitting the market, declining interest rates acting as a catalyst, and enhanced clarity in property pricing—further reinforcing the market’s robust investment trajectory.

We saw a surge of activity in the UK during 2024, resulting in a five-year high in terms of investment volumes. Importantly, however, the key drivers of activity were a handful of large portfolio deals coupled with larger London tickets whilst notable single asset deals in the regions remain somewhat patchy. It’s worth noting that the main buyers in 2024 were private equity groups with huge experience of the sector, whose investments demonstrate the conviction that such smart players have for UK hotel assets. We expect that confidence to transfer to the wider market in 2025, fuelling activity from a wider group of investors. Ed Fitch, Head of Hospitality UK & Ireland at Cushman & Wakefield

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity, and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.