"Whilst the complications of the pandemic and a decline in investment may have continued to restrict the growth of the UK hotel sector in 2023, it’s clear that the industry remains rife with opportunity"
- Alasdair McPherson - Rangewell
The latest analysis by specialist lending experts, Rangewell, suggests that the hotel sector is poised for a sustained boom period with demand for domestic hotel accommodation continuing to climb.
It’s been a tricky few years for the UK hospitality industry, as businesses across the sector have struggled to overcome the downturn caused by the COVID-19 pandemic.
Analysis of the latest industry data by Rangewell shows that despite the complications caused by the pandemic, the sector saw two years of positive post-pandemic growth.
The current estimated market size of the UK hotel sector (2024) sits at £24.3 bn - down marginally by 1.7% when compared to 2023, with a similar rate of decline anticipated in 2025.
Additional data from Cushman and Wakefield suggests that this reduction in market size is down to a notable decline in investment in the sector.
In 2021, following the pandemic, investment in UK hotel real estate bounced back by 126% when compared to 2020. However, this level of investment has been in steady decline since, first falling by 21% in 2022 and then by a further 29% in 2023.
Despite this downward trend, there are some early signs that suggest an investment boom could be on the cards as the figures from Cushman and Wakefield show that during the first half of 2024, £3.9bn was invested into UK hotel real estate based on transaction volumes.
To put this into perspective, just £1.3bn was invested during the first six months of 2023 and so the investment seen already this year equates to a 200% increase in 2024.
What’s more, Rangewell anticipates that this trend could be set to strengthen, as a significant number of lenders re-enter the hospitality market.
Additional analysis by Rangewell also shows that an uptick in demand is helping to drive this increased level of investment.
In 2023 alone, UK hotels saw some 18.8m visitors, a 22% annual increase and the third year of positive demand growth. What’s more, these visitors stayed for a total of 90.8m nights - an 18% annual increase - spending a total of £17.8bn in the process - 14% more than they did the previous year.
So it’s no surprise that with a consistent increase in the number of visitors staying for longer, and spending more, investors believe now is the time to act when it comes to investing in the UK hospitality landscape.
Alasdair McPherson, Head of Partnerships at Rangewell, commented: “Whilst the complications of the pandemic and a decline in investment may have continued to restrict the growth of the UK hotel sector in 2023, it’s clear that the industry remains rife with opportunity.
"What’s more, we’re now seeing consistently higher demand for UK hotels and this has caused investors to take note during the first half of this year and seize the opportunities open to them.
"As a result, it certainly seems as though we are poised for a period of positive growth within the sector and for those already invested, there are a range of ways to increase the revenue generated from their current portfolio.
"Whether it’s the renovation or rebranding your existing portfolio, or its expansion, there are finance options available, from the more traditional routes such as commercial mortgages and bridging loans, to products offering more flexibility such as Merchant Cash Advances or Tax Loans.”
