{"id":584428,"date":"2025-11-21T09:35:13","date_gmt":"2025-11-21T09:35:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/584428\/"},"modified":"2025-11-21T09:35:13","modified_gmt":"2025-11-21T09:35:13","slug":"london-and-edinburgh-lead-hotel-investment-despite-profit-worries","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/584428\/","title":{"rendered":"London and Edinburgh lead hotel investment despite profit worries"},"content":{"rendered":"

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Operators prioritise margins and diversification as profitability pressures influence hotel strategy. \/ Credit: Roberto La Rosa via Shutterstock<\/p>\n

Executives and investors in the hospitality sector continue to view London as Europe\u2019s most attractive city for hotel investment, while Edinburgh holds its ground as the leading regional UK destination, according to Deloitte\u2019s 2025 European Hotel Industry and Investment survey.<\/p>\n

But despite strong optimism, concerns around profitability are mounting, with many industry leaders shifting focus to improving returns.<\/p>\n

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Strong long\u2011term sentiment, but profit doubts grow<\/p>\n

Eighty-four percent of surveyed hospitality leaders say they are optimistic about the long-term future of the European and UK hotel market, with 79\u202fpercent expecting meaningful growth in hotel investment over the next five years.<\/p>\n

Yet when it comes to profitability, confidence is more fragile: only 47\u202fpercent of respondents believe hotels in these markets will become more profitable in the next half-decade.<\/p>\n

Managing or boosting profitability has now become the top short-term business priority, with 84\u202fpercent citing it as a key concern\u2014well ahead of managing cash flow (68\u202fpercent) and inflationary pressure (64\u202fpercent).<\/p>\n

Competition for deals is heating up, driving diversification<\/p>\n

Three-quarters (74\u202fpercent) of survey participants expect competition for hotel acquisitions to intensify in 2026.<\/p>\n

To protect margins and enhance returns, many operators are diversifying. According to the report, 42\u202fpercent of firms say that margin pressure and return-on-investment concerns are spurring their diversification strategies.<\/p>\n

Meanwhile, 35\u202fpercent point to shifting consumer demand for more personalised and experiential stays. As part of this, 27\u202fpercent of companies have already launched new hotel concepts, and 24\u202fpercent have added brands across different price tiers.<\/p>\n

Among asset classes, luxury hotels remain the most attractive for future investment (39\u202fpercent), followed by upper-upscale and economy segments (each 16\u202fpercent). This suggests investors are sharpening their focus on either premium or value-driven models, rather than the squeezed \u201cmiddle market.\u201d<\/p>\n

London and Edinburgh retain appeal amid shifting geographical rankings<\/p>\n

London has been ranked the top European city for hotel investment for the third year in a row, according to Deloitte\u2019s survey.<\/p>\n

On the regional side, Edinburgh continues to lead as the most attractive UK city for hotel investment\u2014for the fifth successive year\u2014chosen by 54\u202fpercent of respondents.<\/p>\n

Elsewhere in Europe, Madrid remains in second place after London, while Athens has climbed into third, rising seven places compared to the previous year.<\/p>\n

Meanwhile, major markets such as Rome and Milan have slipped in investor rankings, while Warsaw and Munich have each moved up.<\/p>\n

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