If last year was any indication, U.K. dealmaking is back in business. U.K. hotel investment transactions are estimated to have reached £5.75 billion in 2024, according to Savills, more than double the volume recorded in 2023 and the highest level of activity in the sector since 2018.
The rebound was largely driven by large-scale portfolio transactions, which accounted for 55% of the total investment, amounting to £3.14 billion. High-profile deals included Blackstone’s acquisition of Village Hotel and KKR and Baupost’s purchase of 33 Marriott properties.
Portfolio investment volumes saw a staggering 582% year-on-year increase, far outpacing the subdued activity recorded in 2023. Even compared to the 10-year annual average, portfolio volumes in 2024 were up 61%, further highlighting the sector’s resilience.
Regional hotel transactions played a key role, totaling £3.34 billion, or 58% of the total investment volume. This represented a 217% year-on-year increase and stands 24% above the 10-year annual average.
Meanwhile, London also experienced significant growth, with transaction volumes rising 105% year-on-year to £2.40 billion, building on a steady 17% increase seen in 2023.
“In 2024, the U.K. hotel market demonstrated resilience, with investment activity resurging. Private equity confidence has been central to this recovery, with significant investments made by Starwood Capital, Blackstone and KKR, as well as a number of others,” said Tim Stoyle, head of U.K. Hotels at Savills.
“The sector’s strength is supported by solid fundamentals, including its role as a robust inflationary hedge, its resilience as an asset class and its continued international appeal,” Stoyle added.
The latest figures signal growing confidence among investors in the U.K. hotel market, driven by its strong fundamentals and the ongoing recovery in global travel and hospitality.
The hospitality industry remains cautiously optimistic about the long-term future of the U.K. hotel sector. According to a study by Deloitte, 72% of hospitality executives said they’re optimistic about the long-term future of the U.K. hotel market.
Most hotel industry executives expect managing cash flow to be the top priority over the next 12 months, the Deloitte study revealed. The new year is expected to see a surge in M&A activity. Some 70% of the respondents said they expect to see an increased level of competition for hotel acquisitions in 2025. The upper upscale emerged as the most lucrative segment for investment, followed by luxury and economy.
