Investment activity in the UK hotel market is expected to pick up in 2025 on the back of growing investor interest in the sector and the widening yield gap to debt costs, according to a report by Savills.
Despite the stellar performance of hotels post-pandemic, Savills is expecting top-line performance growth to continue and accelerate in some parts of the market. In further positive news, it thinks some of the challenges that have faced the budget sector will begin to dissipate next year.
With this continued level of performance and a softening macroeconomic environment, the window will soon close for value add/opportunistic investors who are bullish on the hotel industry's prospects.
You can read the full report, here.
What they said
Adi Gokal, director, Savills Capital Advisors – Debt Advisory, said: "During the course of this year, we have seen exceptionally strong liquidity in the debt market. Whilst there are isolated cases of lenders having restricted capital, in general, lending appetite has increased.
"Having been focussed on existing positions in 2023, bank lenders have come back in force, joining the large number of non-bank lenders that have been enjoying enhanced returns in the elevated interest rate environment.
"That being said, this wall of liquidity has been met with disappointing deal volumes, leading to intense competition for any viable investment and development deals that have come to market.”