The outlook for UK hotel market demand in 2025 appears to suggest a generally positive picture. While the below average UK GDP growth of 1.6% in 2025 could dampen UK domestic business and leisure demand, UK interest rates are predicted to reduce resulting in a weakening pound. This could boost inbound tourism with the relative affordability of the UK for international travellers.

There are obvious timing risks to this growth scenario, and overall demand may still be affected by global economic uncertainty and the potential for increased geopolitical disruption. However, if we discount these downside risks, we anticipate a return in inbound travel to 99% of pre-covid levels, driven by growth from the U.S., Europe, and Asia.

Taking action

The UK hotel industry faces significant challenges from above inflation increases in employer NIC costs, the minimum wage, and property rates due in April 2025. Hotel investors and operators need to consider their productivity and investment strategies, to minimise the impact of these cost pressures going forward.

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