The UK has been named Europe’s most liquid hotel investment market, according to new analysis from property adviser Savills.

Savills said the UK recorded £2.1bn in hotel investment transactions during the first half of 2026, representing a 74% increase compared with the same period last year. Savills said the level of investment demonstrated the resilience of the UK hotel sector despite moderating revenue growth and rising operating costs.

The sector is facing pressure from increased employer National Insurance contributions and business rates, alongside uncertainty over the potential introduction of a levy on overnight stays.

However, Savills said the UK’s deep demand base, transparent legal system and relative ease of doing business could become increasingly important as investors take a more selective approach to hotel assets.

London continued to drive investment activity, recording £1.4bn of hotel transactions during the first half of the year. Investors behind the largest London hotel transactions between July 2025 and 2026 included buyers from Spain, Italy, Israel and Singapore, alongside domestic investors, highlighting the capital’s continued appeal to international visitors.

OneIM, Punta Na and Generali all made their first UK hotel acquisitions during the period, while existing investors including CDL, Criterion Capital, Fattal Hotels and the Arora Group continued to expand their hotel holdings, particularly in London.

However, regional performance has been more mixed, with Savills finding that 23 of the 32 UK markets it analysed recorded year-on-year growth in revenue per available room (RevPAR), while only 10 had moved above 2019 levels in real terms.

Owner-operators and private equity accounted for 40% and 37% of London hotel transaction volumes respectively between 2024 and H1 2026, according to Savills. The adviser said the investment market was also being supported by resilient visitor demand and limited hotel development.

David Kellett, head of hotel capital markets EMEA at Savills, said: “We expect the UK to retain its position as Europe’s leading hotel investment market, but future outperformance will be increasingly concentrated among well-located and actively managed assets. Investors with strong operating capabilities and the ability to use technology purposefully will be best positioned as revenue growth moderates and cost pressures persist.”

Thomas Emanuel, head of hospitality thought leadership EMEA at Savills, said: “The UK’s liquidity continues to set it apart from other European hotel investment markets. London provides an unrivalled anchor, attracting both established investors and new entrants from across the globe, while the scale of regional activity demonstrates the breadth of opportunity across the country.

“As investors become more selective, the depth of the UK’s buyer pool and its proven exit market will become even more valuable. Capital remains available, but it will increasingly favour high-quality assets, locations with durable demand and opportunities where active ownership can deliver stronger performance.”