Outside the UK capital, Britain’s regional hotel market has seen portfolio sales replaced by single asset transactions as the dominant volume driver and over halfway through 2025 the story is stabilisation, selectivity and improved price transparency.
Cushman & Wakefield’s Marketbeat for H1 points to a total of £1.6 billion of hotel deals in the period, with roughly 110 hotels and 10,945 keys changing hands, as prime yields stabilised and are expected to sharpen further if interest rates continue their expected downward trend. Investor focus is on assets and cities with durable demand and credible growth stories.
“To date, year-on-year demand has broadly aligned with supply, reflecting a relatively balanced market. However, this equilibrium is anticipated to shift as supply growth begins to outpace demand for the remainder of the year,” according to Cushman & Wakefield Head of Hospitality UK&I Ed Fitch.
Savills has also noted fewer portfolio transactions and a noticeable uptick in regional activity as more pricing transparency has emerged and buyers have turned towards long-income and value-add opportunities. That has proven particularly attractive outside London, with typically lower entry pricing when compared with revpar growth, underpinned by a broader mix of leisure and corporate demand.
Single asset sales dominate volumes
In the first half of the year, of the £1.6 billion in deals £1.35 billion was attributed to single asset sales, an 8.4 per cent increase on the same period in 2024 and 1.7 per cent above the 10-year H1 average. The renewed focus on individual hotel assets suggests a more strategic, hands-on approach to investment, underpinned by growing confidence in the long-term fundamentals of the UK hotel sector.
High profile transactions have highlighted this shift. The sale of the W Hotel in Edinburgh by Nuveen Real Estate to Schroders Capital for over £100 million marked not only the largest single asset hotel transaction ever recorded in the city but also a broader appetite for core, urban assets with a strong brand.
Savills has also pointed to an increasing range of capital interested in the market, noting that while US and European private equity funds remain active, there has been a greater involvement from family offices and institutional investors from the Middle East and Indian high-net-worth individuals.
Savills said that the volume and variety of transactions has been helping to establish clearer benchmarks, making it easier for buyers to underwrite deals in a more transparent market, especially for single assets where they can create value through active management, rebranding, or repositioning.
Manchester, Edinburgh and Newcastle
In the year to date, Manchester, Edinburgh and Newcastle have caught the eye. CoStar’s regional pipeline snapshot at the start of the year highlighted Manchester with around 2,000 rooms under construction of the more than 10,000 rooms expected to open nationally in 2025.
Soho House-incubated brand Mollie’s has located at the Old Granada Studios building for its first city centre outpost, a 128-room ‘budget-luxe’ hotel due to open in late 2025. The brand’s pitch is affordable rooms, high-energy F&B and chic design.
In Scotland, The Hoxton finally opened in Edinburgh’s West End in June after a long gestation, transforming 11 Georgian-style townhouses near Haymarket into 214 rooms with the brand’s signature social spaces. Meanwhile IHG also chose Edinburgh for the UK debut of Garner, its midscale conversion brand, which opened at Haymarket on 25 June.
“Garner hotels are built for comfort, value and simplicity, Edinburgh is the perfect fit,” IHG Hotels & Resorts Managing Director UK & Ireland Joanna Kurowska said of the expansion of the format.
Newcastle ups luxury offer
Meanwhile, Newcastle is experiencing a shift towards contemporary luxury. The £36.5 million Dakota opened its sixth hotel on the Quayside in March, adding a design-led luxury offer, while later this year, Hotel Gotham is expanding beyond its Manchester flagship and will open in the former Pilgrim Street fire station, with a first phase focused around 57 bedrooms and due to open in September before expanding into the old police station next door in 2026.
“There’s nothing like this in the northeast. Gotham is where heritage meets hedonism. Newcastle is a city full of energy and personality and we feel this new space really reflects that. We’ve worked hard to honour the history of the buildings while creating something fresh and memorable,” Hotel Gotham General Manager Chris Thompson said.
Growth beyond gateway cities
Corporate activity has also shaped 2025’s regional map. Dalata opened four UK hotels through late 2024 and into 2025 across London and key regional cities such as Manchester, Liverpool and Brighton and is pushing ahead with a Clayton in Edinburgh. The company will be under new ownership for the next phase of its expansion.
Assets in university cities, visitor-economy hotspots and infrastructure-adjacent sites continue to attract investors, while Savills also pointed to the southwest, where investment hit £147 million in the first half of the year, a huge 95 per cent increase compared with the whole of 2024. Key deals included the Pentire Hotel, Newquay; Invicta Hotel, Plymouth; and a three-hotel portfolio in Cornwall acquired by a family office.
The West Midlands recorded £153 million in deals, up 60 per cent over the same period last year, as investors increasingly pursued opportunities outside traditional gateway cities.
“While fewer portfolio deals in the first half have weighed on year-on-year volumes, the robust pipeline of assets on the market suggests we will see a more active second half. With just over £6 billion of known live opportunities, the UK hotel sector remains well positioned to deliver a strong full year performance,” Savills Director, Hotel Capital Markets Richard Dawes added.