UK Hotel Sector Faces Another Revenue Dip in 2025, But Specialist Finance Could Offer a Route to Recovery

Our latest data analysis has looked at the total market size of the UK hotel sector based on revenue and how this current market size compares to historic figures. 

We found that the UK hotels sector saw promising growth following the sharp retraction caused by the Coivid-19 pandemic. 

In 2021, the market size of the sector plummeted by -52% in a single year, before two years of positive growth as the hospitality industry bounced back in 2022 (+45.1%) and 2023 (+37.1%). 

However, 2024 marked a reversal in this positive growth trend, with total market size based on revenue dipping -2.4%.

This downward trend is forecast to continue into 2025, suggesting that the sector is grappling with deeper structural and economic pressures.

In fact, the figures show that the market remains below its 2019/20 peak, despite a clear revival in occupancy levels and domestic tourism.

While inflationary pressures, rising operational costs, and tighter margins continue to weigh heavily on the sector, the right financial support could help hotel operators and investors not only weather the current downturn, but reposition themselves for future growth.

Our team are currently supporting hoteliers with tailored funding solutions ranging from commercial mortgages and development finance to short-term bridging and cashflow lending.

In the recent months we have seen a significant uptick in applications for refurbishment and repositioning finance, as hotel owners seek to upgrade outdated stock and appeal to evolving traveller expectations around wellness, sustainability and flexible working spaces. 

At the same time, many independent and boutique operators are turning to alternative finance solutions to manage tax liabilities and smooth seasonal cashflow.

However, development and acquisition activity has remained resilient, particularly among experienced investors seeking to capitalise on lower valuations and favourable lending terms.

With hundreds of lenders across the UK now re-engaging with the hotel sector, and with investor appetite starting to rebuild, we believe that access to the right finance can help restore momentum, even as headline revenues falter.

Alasdair McPherson, Commercial Property Expert at Rangewell, commented:

“While revenue performance may have stalled, this is by no means the end of the story for the UK hotel sector.

In fact, we’re seeing more lenders return to the market with competitive products aimed at hospitality, particularly when borrowers can demonstrate a strong management plan, realistic forecasts and a clear strategy for long-term improvement.”

Whether it’s refinancing to release equity, funding a refurbishment, or acquiring a site with turnaround potential, specialist finance remains a vital tool in unlocking opportunities during a period of uncertainty.”

For more information about hotel finance and current funding options, visit our comprehensive Hotel Finance Hub.

Data Tables and Sources

• UK hotel market size by revenue data sourced from IBIS World. 

• View full data tables and sources online here.