Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
Edinburgh has retained its position as the top UK market for hotel investment, while London rose five places to rank second in the annual index.
The Colliers Hotel Development Index 2026 measures 35 locations against nine indicators, including land prices, build costs, occupancy rates, and investor appetite.
Edinburgh’s top ranking is supported by an 84.6% occupancy rate and a 3.19% increase in average daily rate (ADR) to £165.
Similarly, London recorded the highest ADR in the UK at £194, with occupancy levels holding at 81.2%.
Colliers noted that the capital’s rise in the rankings is driven by the depth of demand from corporate, domestic, and international travelers, alongside the entry of several high-profile global brands.
Investor activity remains concentrated in these two markets, with several high-value transactions recorded in 2025.
In London, notable deals included the £245m acquisition of the Ministry of Justice building and the £60m purchase of 63 Piccadilly.
Meanwhile, Edinburgh saw the sale of the W Hotel for over £100m. According to the report, these transactions indicate a “sustained commitment of global capital to the UK’s most resilient hotel markets, despite broader geopolitical volatility and elevated land costs in prime urban centers”.
The index also highlighted an active development pipeline in Edinburgh, representing 9.5% of existing room supply.
In London, the market continues to diversify with the introduction of the Chancery Rosewood flagship and the debut of the Six Senses brand.
Both cities are characterised by favourable economics for new development relative to trading performance, alongside attractive valuation exit yields.
Colliers stated that this consistency across investment fundamentals differentiates the top two markets from regional peers in the 2026 rankings.
The top 10 cities according to the index include Edinburgh, London, Oxford, York, Glasgow, Bath, Inverness, Birmingham, Liverpool and Manchester.
Richard Candey, head of hotel development and consulting at Colliers, said: “Edinburgh and London continue to attract a share of hotel investment activity in the UK. Their position in our index is a reflection of market scale, investor appetite, and the depth of brand and operator demand. These are markets that have demonstrated resilience across economic cycles and continue to attract global capital. This is as true today as it was a decade ago.”
Siddhika Shah, director in Colliers’ hotel advisory services, added: “Edinburgh and London score across the range of investment fundamentals, from market appetite and valuation exit yields to the scale and diversity of demand that underpins development. The consistency of that picture, year on year, is what makes these two markets distinctive.”
