PwC: 2025 UK hotel market outlook

Below-average UK GDP growth could boost inbound tourism with the UK's relative affordability for international travelers

The outlook for the UK hotel market in 2025 is cautiously optimistic. While domestic demand may come under pressure from weak GDP growth and waning confidence, inbound tourism could strengthen as falling interest rates reduce the value of the pound. Resilient travel demand from the US, Europe and Asia is also encouraging. However, rising costs - including higher employer NICs, the minimum wage and property prices - pose significant challenges.

Key takeaways

• Reducing costs: Implement programs to identify savings in distribution, utilities, labor, and F&B operations;
• Operational efficiency: Re-evaluating employment models, automating processes, and investing in employee well-being to reduce turnover and maintain lean teams;
• Sustainability: Invest in energy-saving technologies, conduct audits, and reduce waste to lower costs;
• Capital optimization: Streamline financing and establish sustainable funding structures to mitigate higher interest rates.

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