UK hotel investment is estimated to have increased by 28% year-on-year in Q3 2025, according to new data from Savills.

In the third quarter, deals totalling £1.04bn completed driven by single asset transactions, which accounted for 92% of activity.

London led the hotel investment market in Q3, with volumes reaching £697m – up 42% year-on-year. London prime yields tightened by 25 basis points across franchise assets compared with H1 2024.

Domestic owner-operators have dominated UK hotel acquisitions in 2025 to date, accounting for 45% of volumes. This is up 4% year-on-year and marks a 77% increase compared with the 10-year average.

International asset managers have also re-entered the UK hotel market and are targeting value-add opportunities. Asset managers acquired £734m of hotels over the first nine months of 2025, up 18% year-on-year, with international players accounting for 60% of this total – a year-on-year increase of more than 1,000%. UK pension funds have become more active, with year-to-date volumes reaching £299m – up 31% year-on-year.

David Kellet, head of hotel capital markets EMEA at Savills, said: “While the first half of the year was defined by operational and investor uncertainty in the UK hotel market, sentiment has stabilised through Q3 and we have seen over £1bn of deals closed – a marked increase from 2024. The strength and resilience of the single asset market stands out, with single assets making up over 90% of deal volumes in the quarter. We expect the single asset market to remain robust whilst also anticipating more larger portfolios to transact in 2026. We look forward to what’s ahead for the UK hotel market.”