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The London hotel market experienced a subdued Q1 performance, particularly in terms of ADR, as such RevPAR declined by an average of 1.3%. There was, however, a far more challenging trading market for the upper-midscale and select service hotels, with RevPAR having declined between 4.6% and 7.7% respectively.

Across regional UK, growth rates almost flatlined in Q1-2025, but with some exceptions. Increases in supply in mature hotel markets, along with subdued levels of demand all contributed to the static performance. Golf & Spa hotels, however, continued to outperform the regional market, with ADR growth of 4.1%, whilst Select Service hotels achieved positive ADR growth of 1.2%.

Payroll costs increased year-on-year by 4.9% PAR across all regional hotels, and with revenues mostly held level, the share of payroll costs to total revenue increased. In London, payroll costs increased y-o-y by 4.6% PAR, but with a sharper rise in payroll costs originating from managerial and other non-operating departments.

Stagnated revenue growth along with rising costs, has led to a decline in profitability across all London hotel markets, averaging a decline of 8%, along with the profit margin reducing. Across regional UK, Q1 GOPPAR declined on average by 5.4%, except for Golf & Spa hotels continuing to enjoy highly respectable GOPPAR growth, albeit with the pace of growth year-on-year now slowing.

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