Hospitality Investment and Travel Trends for 2025
The UK hospitality industry has started 2025 with optimism, buoyed by record-breaking investment and robust travel demand, despite continuing to face significant challenges.
For many businesses, these mostly financial challenges have created a perfect storm, leading to difficult decisions about investment, workforce management, and day-to-day operations. The sector’s labour-intensive nature means absorbing rising costs is particularly difficult without cutting into profitability or increasing prices, which risks further dampening consumer demand.
However, the sector continues to see large pockets of resilience and opportunity, such as record-breaking investment activity and growing demand for travel. For businesses willing to adapt and innovate, there remain pathways to navigate these conditions successfully.
A Snapshot of the Current Landscape
The challenges of 2024 have left a significant impact on the hospitality industry. Rising inflation, higher business rates, and increased wage costs, compounded by National Insurance changes introduced in the 2024 Budget, have squeezed margins across the sector. Labour shortages, ongoing supply chain disruptions, and elevated energy costs have only added to the pressures on operations.
These factors contributed to a rise in insolvencies, with hospitality accounting for 10% of all UK administrations in 2024, according to Shakespeare Martineau. Of the 1,718 businesses filing for administration, 172 were from the hospitality sector—a 5% increase from the previous year. Andy Taylor, partner at Shakespeare Martineau, highlighted the importance of early financial planning and proactive management, stressing that addressing challenges head-on can significantly improve resilience.
On the brighter side, UK hotel investment reached a record £6.3 billion in 2024, as reported by Knight Frank. This represents a 198% increase compared to the previous year, driven largely by portfolio transactions, which accounted for 57% of total investments. Key deals included Starwood Capital’s £800 million acquisition of Radisson Edwardian Hotels and Blackstone’s £700 million purchase of Village Leisure Hotels. While London attracted 50% of all investment, regional markets and adaptive reuse projects, such as converting office or retail spaces into hotels, also gained momentum. Criterion Capital’s £50 million acquisition of Edinburgh’s former Debenhams store underscores the growing interest in such projects. Henry Jackson, head of Hotel Agency at Knight Frank, anticipates continued interest in single-asset transactions alongside robust portfolio activity in 2025.
Amid these challenges and opportunities, Hospitality People Group has worked closely with European hotel investors throughout 2024 to build new investment, asset management, and operational leadership teams. Leveraging an extensive network of industry professionals at senior levels across hospitality, we have stayed ahead of industry trends by actively participating in networking events and high profile hospitality conferences. Crucially, we take the time to deeply understand our partners’ businesses, ensuring tailored support that aligns with their specific goals and operations.
The contrast between rising insolvencies and record investment illustrates the dual challenges and opportunities in the industry. Businesses that are proactive, adaptable, and supported by the right leadership teams can navigate this complexity to drive growth and innovation.
Evolving Travel Patterns and Consumer Preference
Travel demand remains strong in 2025, with changing consumer behaviour shaping the industry. According to a survey by RSM UK, 41% of Brits plan overseas holidays longer than five days this year, up from 35% in 2024. Weekend breaks and domestic staycations are also on the rise, with around a third of respondents planning UK weekend getaways, reflecting an appetite for accessible and cost-effective travel.
Hilton’s 2025 Trends Report introduced the rise of “travel maximisers”—guests who seek to combine wellness, adventure, and cultural immersion for meaningful experiences. These travellers are not just looking for relaxation; they want to prioritise their health, connect with local traditions, and engage in outdoor activities. For instance, wellness tourism continues to grow, with over a quarter of global travellers planning to book wellness-focused stays in 2025. Outdoor adventures such as hiking, cycling, and water sports are also in demand.
Cultural immersion is increasingly important, with slow travel—a focus on spending more time in one destination to experience its culture—gaining popularity. Activities like cooking classes, historical tours, and local festivals are particularly appealing to travellers seeking authenticity.
Sustainability is also shaping travel decisions. Eco-conscious consumers favour hotels with strong environmental practices, such as waste reduction, energy efficiency, and community support. Accommodations that highlight their sustainability credentials—through locally sourced food, green building certifications, or social impact initiatives—are better positioned to attract this growing audience.
While digital integration remains essential, many guests are also embracing “soft travel,” prioritising simplicity and disconnection from technology. Balancing digital conveniences like mobile check-ins with opportunities for mindfulness and relaxation can appeal to this segment.
For businesses, aligning with these trends—through tailored wellness packages, immersive cultural offerings, and eco-friendly initiatives—presents an opportunity to attract a wider audience.
Strategic Considerations for 2025
Navigating 2025 will require a strategic balance of addressing challenges and leveraging opportunities. Businesses may find it helpful to focus on:
- Proactive Financial Management: Rising costs and refinancing pressures mean keeping a close eye on finances is critical. Regular reviews of cash flow and early engagement with advisors can help identify risks and opportunities. FM Recruitment, part of the HPG group, specialises in financial recruitment for the hospitality sector and can provide valuable expertise in strengthening financial teams.
- Targeted CapEx Investments: High borrowing costs make a phased approach to capital expenditure more practical. Investments in energy efficiency and sustainability can deliver long-term cost savings while meeting the growing demand for eco-conscious operations.
- Responding to Traveller Preferences: Enhancing wellness offerings, creating value-driven packages, and tailoring cultural experiences can help attract guests. Flexible pricing options and personalised services are also likely to resonate with travellers seeking unique and meaningful stays.
Amid these changes, people strategy remains vital. A well-supported team is essential for delivering exceptional guest experiences and maintaining operational efficiency. HPG, which specialises in people management, offers tailored support to ensure businesses have the right talent in place. From workforce planning to leadership development, investing in people can enhance performance and build resilience.
Looking Ahead: A Positive Outlook
Despite challenges, 2025 offers significant opportunities for growth and innovation in the UK hospitality sector. Record investment levels, strong travel demand, and evolving consumer preferences create a dynamic environment for businesses willing to adapt. By focusing on sustainability, guest experience, and financial health, hospitality businesses can put themselves in a strong position for success.
HPG focus on assembling leadership teams that are capable of making strategic decisions to reduce risk, improve resilience, and address the challenges organisations face in today’s complex environment by fostering workplace cultures that promote continuous improvement and innovation. This approach helps ensures our clients not only navigate the current landscape, but also position themselves for long-term success. With the right strategies and a proactive mindset, 2025 has the potential to be a year of resilience, progress, and growth for the UK hospitality industry.
If you would like to discuss your people strategy further and explore how we can help you achieve your goals in 2025, then please get in touch.
Dan Akhtar, Managing Director – HPG Advisory Services
+44 208 600 1166 / +44 7808 157796 / [email protected]
Guy Lean, Managing Director – Madison Mayfair
+44 20 8 600 1180 / +44 7813 009787 / [email protected]
Chris Denison Smith, Managing Director – FM Recruitment
+44 20 8 600 1160 / +44 7775 711923 / [email protected]
Andrea Shaw, Director – FM Recruitment
+44 20 8 600 1160 / +44 7714 236469 / [email protected]