HOSPITALITY


LONDON hoteliers were “steeling themselves” for the highest number of luxury room openings in more than a decade at the start of 2025, according to the Financial Times. Even without the openings, Deloitte


director and head of hospitality and leisure advisory Leila Jiwnani noted: “The UK hospitality sector is still experiencing growth, but there are signs of a softening. Average daily rates have continued to rise, though not at the same pace as the previous year. At some point, there has to be a ceiling. “Depending on the hotel class, rates


might drop slightly in 2025 or there could be growth, but it will soften and impact revenue per available room (RevPAR) which would make managing some operational costs more challenging if there isn’t strict control.” Increases in the national minimum


wage and employers’ national insurance contributions from April “will increase pressure on hotels”, she said, adding: “Where hotels have a differentiated product and that positioning is clear, they should be able to maintain their position. Where they don’t, there is a chance of the headwinds causing challenges.” Elsewhere in Europe, Jiwnani said:


FIGURE 65:


HOTEL INDUSTRY PRIORITIES, 2025 % of hotel owners/investors


Managing cashflow


Managing inflationary pressures


Growth through acquisition Hiring/retaining staff


Sustainability initiatives


Infrastructure, digital skills, cybersecurity


Investment in digital transformation/AI


0


29% 20


45% 42% 40 % 60 80


71% 71%


88% 86% % pt


change YoY


+14 -5


-2


-16 +13


+14 +7


100 Source: Deloitte European Hotel Industry and Investment Survey 2024


‘There has to be a ceiling’ on rates


Rising costs are still a concern for hoteliers, especially as demand may be softening


“Rates have continued to be strong. Whether that will be sustained, given the political tensions and where some countries are economically, is another matter. The outlook for the UK and Ireland seems positive, for Germany and France perhaps less so.” She described the outlook for investment


as “a mixed bag”, noting Deloitte’s European Hotel Industry Investment Survey 2024 suggested France, Germany and the Netherlands “are experiencing a downturn”. The UK and Ireland still seem to be on an upturn, Spain and Portugal continue to be on the up. Italy also seems to be turning more positive for investment. However, our survey data suggests investment could slow in Greece, which has had a very strong leisure market.” The survey rated London as Europe’s


most attractive city for investment, followed by Paris and Madrid, with Amsterdam, which topped the list last year, dropping to fourth. Jiwnani noted: “A number of ‘second


CASHFLOW and rising costs top hotel operators’ concerns (Figure 65)


tier’ cities are becoming increasingly popular. Porto was a new entry in the survey rankings, demonstrating a number of investors are looking beyond Europe’s capitals, whether because of a lack of supply or pricing that does not reflect what they’re willing to pay.” She said: “There is a lot of interest at the


top end of the market, and at the bottom end in the budget and limited-service segment. The bottom end of the market is where you can add more value from an investor’s perspective. There is a much leaner cost structure so it’s easier to get a return. We’re not seeing much interest in anything mid-market.” She suggested that is due to increased competition, pressure on costs and “consumers wanting more differentiated experiences”. Hospitality groups continue to launch


new brands, with no sign of the sector reaching brand saturation point. Jiwnani said: “We’re seeing a lot of new brands launched and new segments of


Travel Weekly Insight Report 2025 45


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