London’s Hotels Maintain Strong Profitability Despite Softer RevPAR in 2025

• Profits remained broadly stable at £135.5 (-0.1%) despite a 0.6% decline in total revenue

• Effective cost management and easing energy prices offset softer demand and rising labour pressures

• London continues to rank third in occupancy across European markets

London – Central London’s major branded full-service hotels maintained strong profitability in 2025, supported by effective cost management and easing energy prices, even as total revenue declined slightly, according to Cushman & Wakefield’s London Hotel Performance Spotlight: Year End December 2025 report. 

Based on a sample of city-centre full-service hotels (HotStats), profitability remained broadly stable in 2025, with Gross Operating Profit (GOP) per Available Room at £135.5 (-0.1% y-o-y) and a GOP margin of 46.8% (+0.2 pp. y-o-y), despite a 0.6% decline in total revenue. Rooms revenue (RevPAR) softened by 0.9%, reflecting a small decline in occupancy and Average Daily Rate (ADR), while Food and Beverage revenue posted modest growth of 0.6%. Occupancy within the sample reached 84% in 2025, while the wider London market recorded the third‑highest occupancy level in Europe (STR), supported by a healthy mix of leisure and corporate demand.  

On costs, hotels benefited from lower Utility expenses (-8.9% y-o-y), particularly driven by electricity, which helped offset ongoing wage pressures linked to minimum wage increases and employer national insurance contributions. Cost of Sales reduced by 3.7%, and overall operating expenses fell by 1%. These dynamics contributed to resilient profitability and a high GOP Flex of 92.2%.

Despite a mild softening in demand and ongoing labour pressures, London’s full-service branded hotels have demonstrated impressive resilience. The stability in profitability underscores the market’s ability to adapt through disciplined cost control and strong underlying demand fundamentals. Even in a year of economic headwinds, the sector continued to deliver solid returns for owners and investors.

Carl Ridgley, Head of Hospitality Valuations and Advisory, EMEA at Cushman & Wakefield

London remains one of Europe’s most robust hotel markets, with the full‑service segment delivering profitability that outperformed other major European urban markets in 2025. While rising cost pressures—particularly labour and business rates—remain a key risk for the sector in 2026, the strong market fundamentals continue to support investor appetite, a trend reflected in our upcoming investor survey where London ranks among the five most sought‑after markets in Europe.

Lise Keller, Senior Consultant, Strategic Advisory and Hospitality Research, EMEA at Cushman & Wakefield

According to public records, 15 hotels opened and four closed in central London during 2025, adding approximately 2,300 rooms and equating to 0.8% supply growth on a weighted-for-opening-dates basis. New rooms were concentrated in Soho, with 1,060 rooms, and Canary Wharf, with 604 rooms, largely in the Economy and Upper Midscale segments. Notable openings included Zedwell Capsule Hotel Piccadilly Circus, MOXY Piccadilly Circus, Vertus Edit Canary Wharf, Mason & Fifth Westbourne Park, and The Chancery Rosewood Mayfair.

Looking ahead, up to 30 additional hotels are expected to open in 2026. Among the pipeline are landmark properties Six Senses London and St. Regis London, both anticipated to enhance London’s luxury offering.

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