UK hotel market signals stabilisation phrase as resilient demands meets shifting traveller behaviour

Specialist business property adviser Christie & Co recently launched its UK Hotel Market Review 2026.

In this article, Christie & Co reflects on key insights from the report, including demand and trading performance, evolving traveller behaviour and tourism flows, profitability and cost pressures, transaction activity, financing conditions and distress trends across the hotel sector.

The report highlights that the UK hotel market remains stable despite operational challenges. While demand continues to hold up, hoteliers are navigating a more selective traveller, rising cost pressures and an increasingly competitive market.

Investment appetite

Despite economic uncertainty, investor interest in the sector remains strong. More than 160 hotel deals were completed during the first half of 2026, with £1.95 billion in transaction volume, while approximately 82% of transactions were single assets and 18% were portfolio sales.

Private buyers and owner-operators continue to drive activity, particularly in regional markets, while institutional investors remain focused on high-value assets and portfolios. Approximately 67% of investment came from domestic capital in the first half of the year, compared with 33% international capital.

There is also growing interest in alternative accommodation sectors, including hostels and serviced apartments.

Tourism demand & traveller behaviour

Domestic tourism continues to underpin hotel demand in the UK, although travellers are increasingly favouring shorter, value-led trips and booking closer to their travel dates, with around 80.5% of stays being one night and renewed strength seen in months such as October and December. The staycation market remains resilient, but competition for guests is intensifying as demand is redistributed rather than significantly growing.

Inbound tourism is also recovering, with VisitBritain forecasting 45.5 million international visitors and £35.7 billion of inbound spending in 2026. Travel behaviour is becoming more experience-focussed, flexible and price-sensitive, creating opportunities for operators to capture greater total guest spend.

Trading & profitability

Cost pressures are a defining feature of the operating environment, with labour costs, National Insurance contributions, business rates and financing costs acting as major financial pressures, and as a result, profitability growth is increasingly being driven by total guest spend rather than room revenue alone. Food and beverage, experiences and other services are becoming more important contributors to overall performance.

The report also highlights how breakfast is a significant opportunity for hoteliers to improve both profitability and guest experience. Research conducted by Venners found that hotels could be losing around £50,000 annually through food waste, overproduction and operational inefficiencies during breakfast service.

By adopting demand-led production, reducing waste and improving stock management, operators can protect margins while enhancing guest satisfaction

Business rates plan

On Thursday 23 July, Prime Minister Andy Burnham announced that pubs, clubs and live music venues are to receive a 20% cut to their business rates bills from April 2027. The move forms part of a series of measures to cut costs for working people and communities, including electricity bill VAT relief and a £2 bus fare cap.

While the move has been welcomed as a positive step, hotels, alongside restaurants and cafes, are not included in current plans. Without further support, this could leave many hotel operators continuing to absorb higher costs at a time when labour, utilities and financing pressures are already weighing on margins. It may also sharpen the competitive divide within hospitality, particularly for hotels with substantial food and beverage or events operations, which may face similar trading pressures as pubs but not benefit from the same relief.

Read the full review

While challenges remain, the UK hotel sector continues to show resilience in 2026, supported by steady demand, ongoing investment and new opportunities to enhance the guest experience and grow profit.

To read Christie & Co’s UK Hotel Market Review 2026, click here.