Single asset deals drive UK volume

UNITED KINGDOM – U.K. hotel investment in Q3 2025 is estimated to reach £1.04 billion, a 28% year-on-year increase driven by single asset transactions, according to Savills.

Single asset deals accounted for 92% of activity in 3Q25 and rose almost 60% above the 10-year 3Q average, even as overall investment volumes remained 5% below long-term trends.

London deal led the U.K. with volumes reaching £697 million, up 42% year-on-year. According to Savills, this reflects both the capital’s large share of U.K. hotel stock and a rebound in investor appetite, despite ongoing operational headwinds. This positive sentiment is further shown by yield compression, with London prime yields tightening by 25 basis points across franchise assets compared to H1 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 while also anticipating more larger portfolios to transact in 2026.

David Kellet

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Domestic owner-operators have dominated U.K. hotel acquisitions in 2025 to date, accounting for 45% of volume, totaling £1.2 billion. This is up 4% year-on-year and marks a 77% increase versus the 10-year average. Savills attributes this surge to growing confidence in the U.K. market and a strategic push to expand platforms, with standout deals such as Barons Eden illustrating the trend.

Savills reported that international asset managers have re-entered the U.K. hotel market, targeting value-add opportunities. Asset managers acquired £734 million of hotels over the first nine months of 2025, up 18% year-on-year, with international players accounting for 60% of this total and posting a year-on-year increase of over 1,000%. U.K. pension funds have also become more active with YTD volumes at £299 million, up 31% year-on-year, driven by diversification strategies and confidence in long-term sector fundamentals.

Regional U.K. markets continue to show strength with sharp increases in activity contributing positively to the overall picture. Scotland recorded YTD activity of £316 million, up 85% year-on-year; the South West reached £180 million, up 360% and the West Midlands hit £256 million, a 310% rise. Savills noted that regional volumes YTD hit £1.3 billion, more than double the same period in 2024, reflecting growing investor interest beyond traditional core markets over the last nine months.

“While the first half of the year was defined by operational and investor uncertainty in the U.K. hotel market, sentiment has stabilized through Q3 and we have seen over £1 billion of deals closed – a  marked increase from 2024,” said David Kellet, head of Hotel Capital Markets EMEA at Savills. “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 while also anticipating more larger portfolios to transact in 2026.”