Notwithstanding the impact of war in the Middle East, it has been an encouraging 1st quarter for the UK Hotel market, with RevPAR up year-on-year by 1.9% in London and by 4.8% across regional UK. The Q1 performance was particularly encouraging versus Q1-2025, when RevPAR growth was flat versus the previous year and profits were significantly down. Despite continued cost pressures, revenue growth and ongoing cost efficiencies supported profits, with Q1 GOPPAR up year-on-year, rising by 0.5% in London and an impressive 8% across regional UK.
Driving GOPPAR performance, however, is critical as it serves to support the hike to business rates that many operators now face following the 2026 revaluation which took effect from 1st April. Business Rates fall below GOPPAR on the P&L and are therefore reflected in a hotel’s EBITDA performance, which is beyond the scope of the benchmark data available.
In London, reduced demand from the Middle East was largely replaced by actively pivoting more towards domestic, USA and European markets. Yet, the high dependence on Middle East markets and uncertainty around international travel caused by the conflict, is likely to become more prevalent in the data in the months ahead, with the disruption to air connectivity to/from the Middle East continuing.
Nevertheless, London hotels achieved respectable Q1 revenue growth through a 3.2% uplift in ADR year-on-year, mitigating the softening of demand from international markets, which led to a 0.9 percentage point reduction in occupancy.
Across regional UK, Q1 growth was led by strong ADR growth and respectable growth in occupancy. The mature hotel markets of Oxford, Edinburgh, Glasgow and Cardiff each achieved RevPAR growth exceeding 5% y-o-y.
Meanwhile, Golf & Spa hotels, as a segment, outperformed the regional market, with impressive Q1 RevPAR growth of 8.0%, whilst, London’s upper-mid and upscale hotels, recorded RevPAR growth of 2.3% and was the only London segment to achieve meaningful occupancy growth, up 1.3 percentage points year-on-year.
In terms of UK Hotel investment, Q1-2026 transaction volumes have totalled £1.1 billion, with London dominating investment activity. The three largest London hotels to exchange hands included the sale of the St Giles Hotel, the London Hotel Marriott Grosvenor Square and Park Plaza London Waterloo. On average London’s single asset hotels transacted at an average price per key of £440,000, whilst HNW family offices accounted for more than 60% of this investment.
Headwinds for the sector persist, and since the start of the Iran war there has been greater scrutiny of costs, as the surge in oil prices has led to heightened concerns over cost inflation and with the direction of interest rates now uncertain. As a consequence, underwriting is getting tougher on costs, which is shaping pricing and deal structures, particularly outside of London. In Q1, two notable regional transactions included the sale of non-core hotels involving the £400m Landsec sale in 2024. These transactions reinforce that the break-up of portfolios and their repositioning remain a major source of regional deal-flow, at a time when there is limited stock available and the market price sensitive.
Outside of the Q1 window, Cameron House Loch Lomond transacted for £100m, this deal highlights that capital remains strongly attracted to best‑in‑class, high‑barrier destination assets outside of London. Meanwhile, investors remains in strong pursuit for well-performing regional leisure assets. Finally, the regional market is likely to see further activity at the budget end of the market, with Whitbread announcing that it is considering a sizeable sale‑and‑leaseback programme, which if executed, has the potential to create significant investable regional product for long‑income capital.
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