Why Edinburgh’s hotel market has been named the hottest in the UK

Property experts said the city offered an “unparalleled investment opportunity” due to its thriving tourism industry, world-famous events such as its summer festivals and a steady influx of international visitors. As a result, Edinburgh has secured the first position in the 2025 Colliers UK Hotel Market Index.

The property consultancy found that Edinburgh had “exceptional” occupancy rates (averaging 85 per cent), strong average daily rate (ADR) growth (up 10 per cent from 2023), and robust revenue per available room, or RevPAR, performance - a key industry measure - (up 13 per cent on the previous year), making the city a “potentially attractive location for hotel investors and developers to consider”.

Marc Finney, head of hotels and resorts consulting at Colliers, said: “Edinburgh’s hotel market continues to demonstrate remarkable resilience and investment appeal. The city’s ability to drive premium rates, coupled with its year-round demand from both leisure and corporate travellers, makes it a great destination. With a constrained development pipeline currently, this would be an ideal location for investors to consider.”

While Edinburgh leads the pack, Glasgow is also making significant gains, climbing four places in the rankings. Colliers said the city’s hospitality sector had benefited from a combination of “solid” occupancy rates and increasing ADR, with RevPAR increasing almost 9 per cent during 2024.

It added that Glasgow had become an “increasingly attractive market” for hotel investors looking for high-growth potential outside of Edinburgh, aided by a “vibrant events calendar, strong corporate demand and relatively favourable build costs”.

Inverness has also emerged as one of the UK’s rising hotel markets, showing double-digit (10 per cent) RevPAR growth over the past year. As the gateway to the Scottish Highlands, the city is experiencing a “surge in demand”, Colliers noted, driven by “nature-based and experiential tourism”. With a limited hotel development pipeline, occupancy remains strong, and investors are beginning to take note of its potential for boutique and luxury hospitality offerings, the firm added.

Cory Latge, hotels analyst at Colliers, added: “With Edinburgh leading the UK and Glasgow and Inverness climbing the ranks, Scotland is proving to be an investment powerhouse in the hotel industry. Whether in the capital’s high-performing luxury market, Glasgow’s growing corporate and leisure demand, or Inverness’s rising star appeal, the country offers opportunities for hotel investors.”

A report earlier this year showed that Scotland had enjoyed a surge in hotel sales in 2024 as investors tapped into the sector’s “solid fundamentals”.

The figures revealed that hotel transaction volumes (involving sales of £1 million and above) topped £431m in 2024, up 38 per cent on 2023 and considerably higher than the ten-year average of £282m. Overall, Scotland accounted for about 7.5 per cent of all UK hotel deals last year, the highest total outside of London, according to the latest data from property consultancy Savills.

Edinburgh continued to be Scotland’s hotspot, with hotel deals in the capital accounting for £251m of the 2024 total.

Colliers UK Hotels Index Top 10

Edinburgh

Oxford and Inverness (joint second place)

Glasgow

York

Bath

London

Belfast

Birmingham

Cambridge