Christie Finance reports on hospitality resilience amid cautious lender optimism in the Hotel Market Review 2025
Specialist business property adviser, Christie & Co, has released its 'Hotel Market Review 2025' which explores the current hotel market landscape, including trends in transaction activity, the trading environment, distressed sales, the finance and insurance environment, and predictions for the second half of the year.
Christie Finance
The lending appetite in the UK hotel market remains relatively positive, albeit lenders continue to exercise a degree of caution towards the sector with many traditional lenders being very selective, adopting strict criteria and with certain locations being preferable.
The sector has faced unprecedented challenges in recent years with ongoing inflationary pressures and the recent National Insurance increases, both continuing to mount pressure on operators. That said, as we have often witnessed, the hospitality industry proves to be incredibly resilient, and good operators continue to deliver impressive results. As such, funding from the large banks where borrowers can demonstrate a proven track record and have relatively modest borrowing requirements attracts relatively low interest rate margins.
However, for many borrowers, both established operators and new entrants, ticking every box on high street banks’ credit applications is rarely possible and the increasing number of alternative lenders - including the established challenger banks, new banks, niche lenders, funds and family offices - are proving to be a viable option. Often, the ability to act quickly, and the reliability of delivering finance, offset the likely premium that alternative lenders charge.
Our data suggests that lenders are more willing to support hotel finance applications than they were 12 months ago. We have secured funding from 14 different lenders so far in 2025 (compared to only eight for the same period in 2024). The increase comes from a mix of alternative lenders who are increasingly comfortable with the asset class and borrowers needing solutions that their incumbent bank cannot provide.
The overall cost of borrowing continues to fall which is always welcome news for borrowers. Not only has the Bank of England base rate reduced from recent highs of 5.25% to 4.25% (as of June 1st 2025), interest rate margins from most lenders have also reduced and we have seen average interest rate margins reduce from 2.9% in 2023/24 to 2.65% in 2024/25.
To read the full report, click here: https://www.christie.com/sectors/hotels/hotel-market-review-2025/
To discuss funding for your business, get in touch:
Neil Collins - Associate Director
M: +44 7548 705 370
E: neil.collins@christiefinance.com