British Hotel Sector Poised for Investment Boom Amidst Rising Demand

The UK hotel sector is showing promising signs of recovery and growth, according to the latest analysis by specialist lending experts Rangewell. The sector, which has faced significant challenges in the wake of the COVID-19 pandemic, appears to be on the brink of a substantial investment boom, driven by a surge in domestic demand for hotel accommodation.

The hospitality industry has had a rocky road over the past few years, struggling to navigate the impacts of the pandemic. However, Rangewell’s recent data reveals that despite these challenges, the sector has experienced two years of positive growth since the pandemic’s peak.

As of 2024, the UK hotel market is valued at approximately £24.3 billion. Although this represents a slight decrease of 1.7% compared to 2023, the decline is expected to be similar in 2025. This reduction is partly attributed to a drop in investment in the sector, as highlighted by additional research from Cushman and Wakefield.

Following a significant rebound in 2021, where investment in UK hotel real estate increased by 126% compared to 2020, the sector has seen a steady decline. Investment fell by 21% in 2022 and by another 29% in 2023. Despite this trend, there are emerging signs of renewed optimism. Cushman and Wakefield’s data indicates that in the first half of 2024, £3.9 billion was invested in UK hotel real estate, a remarkable 200% increase from the £1.3 billion invested during the same period in 2023.

Rangewell’s analysis suggests that this resurgence in investment could be just the beginning. With many lenders returning to the hospitality market, the sector is poised for continued growth. The uptick in demand for hotel stays is driving this renewed interest from investors.

In 2023, UK hotels attracted approximately 18.8 million visitors, marking a 22% annual increase and continuing a positive trend over the past three years. These visitors spent a total of 90.8 million nights in hotels, an 18% increase from the previous year, and contributed £17.8 billion to the economy—14% more than the previous year.

Alasdair McPherson, Head of Partnerships at Rangewell, comments on the current state of the sector:

“While the pandemic’s aftermath and declining investment have posed challenges, the UK hotel industry is brimming with opportunities. The consistent rise in demand has captured the attention of investors, leading to a significant uptick in investment in the first half of this year.”

McPherson continues,

“This trend indicates a promising period of growth for the sector. For those already involved in the industry, there are various ways to enhance revenue from their portfolios. Options include renovating or rebranding existing properties or expanding operations. Financial solutions range from traditional commercial mortgages and bridging loans to more flexible options like Merchant Cash Advances and Tax Loans.”

As the UK hotel sector gears up for what could be a robust period of growth, investors and industry stakeholders are keenly watching for further developments and opportunities in this revitalising market.