Hotel construction rebounds as projects set to surge ahead in 2025

The new year marks the peak season for holiday bookings and brings a timely reminder of the promising outlook for new construction work on hotels and leisure accommodation.

So far, the signs are that hoteliers are set for a good year in 2025, particularly at the affordable end of the market. A YouGov survey taken in December suggested that 64% of UK adults planning early 2025 holidays prioritised cost and affordability.

Travel companies have reported strong demand from consumers in January; a recent report from easyJet, the ‘Great British Holiday Audit’, showed that 35% of holidaymakers are planning to spend more on a holiday in 2025.

All of this bodes well for investment in new hotel and refurbishment projects. It echoes the recent Glenigan Construction Industry Forecast 2025-26 which says that a surge in tourism driven by rising disposable incomes will be a key driver for a continuing growth in hotel & leisure project starts.

Following a 19% increase in underlying starts in the overall hotel & leisure sector last year, it is predicting a 6% growth in starts this year, followed by a further 9% growth in 2026.

Meanwhile, the value of underlying starts on hotel and guest projects alone is forecast to increase from £1,000 million last year to just over £1,500 million by 2026.

New rooms in the Capital

London stands out as a key centre for new hotel development activity. The Glenigan Forecast highlights a recent surge in underlying hotel & leisure planning approvals in the Capital, rising from just over £1 billion in 2023 to over £1.6 billion last year.

These approvals are translating into more construction work. Today, around 9,300 hotel rooms in London are either under construction or in the final planning stages for delivery by 2026, according to Hotel-Pedia, an industry source.

Glenigan data details numerous hotel projects of varying sizes that are underway in the Capital. One is Motel1/Friars Yard (pictured), an eight-storey hotel project where work started before Christmas on a £61.3 million scheme and is set to run for 24 months (Project ID: 18161862).

The outlook for hotel development in the wider South East region is also brightening. The Glenigan Forecast notes that the value of underlying hotel & leisure planning approvals in the region was on course to rise to almost £800 million last year, up from a little over £600 million in 2023.

Detailed plans have been submitted on one significant hotel scheme in the region; a £13.16 million conversion at Groombridge Hill in Tunbridge Wells in Kent to create a hotel, restaurant and spa for The Pig Hotel Group. Work on the conversion, across a floor area of over 4,000 sq m, is set to run for 16 months (Project ID: 24313450).

Scotland is also seeing more hotel-related construction. Planning approvals for hotel & leisure projects in the nation were set to approach £600 million last year, up from £400 million in 2023.

In Glasgow, work is set to start this spring on a £2 million refurbishment at the Radisson Blu Hotel in the city’s Argyle Street and run for nine months (Project ID: 24343064).

Elsewhere, the pattern of planning approvals featured in the Forecast also points to more hotel building activity in the pipeline in the East of England and the West Midlands.

Investment by hotel chains

Meanwhile, the budget hotel chains are also investing heavily in new construction.

In a statement before Christmas, Travelodge said it expects to open five new UK leasehold hotels in 2025, and it is continuing to invest in a major refurbishment programme which has so far seen half of its estate refitted.

Glenigan data includes numerous examples of refurb projects, typically involving contracts under £500,000, which are underway at the group.

Travelodge has also recently acquired a 24,000 sq ft central London office building in St Paul’s for conversion into a 95-room hotel.

On a smaller scale, detailed plans have been submitted for a £5.7 million Travelodge in Leighton Buzzard in Bedfordshire where work is due to start this autumn on a 65-room hotel and run for 11 months (Project ID: 19167907).

Meanwhile, in response to falling bar and restaurant sales, Premier Inn is planning to convert around 112 of its venues into accommodation with a target to build an extra 3,500 hotel rooms.

One Premier Inn project where detailed plans have been granted is a £13 million, five-storey 116-bed hotel in Bognor Regis on the site of a former fire station. Work is due to start this spring and run for 13 months (Project ID: 23137670).