Edinburgh has retained its position as the UK’s most attractive hotel development and investment market for the second consecutive year, according to Colliers’ annual Hotel Development Index 2026. The ranking assesses 35 UK locations across nine indicators including land prices, build costs, occupancy, average daily rate (ADR) and investor appetite.
The city recorded occupancy of 84.6% in 2025 and an ADR of £165, up 3.19% year on year. Its development pipeline stands at 9.5% of existing room supply, and recent transactions underline the level of investor interest: the W Hotel sold to Schroders for just over £100m, while boutique Bruntsfield House was acquired by Dubai-based Dutco Group.
Richard Candey, Head of Hotel Development & Consulting at Colliers, said, “Edinburgh’s position at the top of our index for two consecutive years is not a coincidence. It reflects the combined weight of market scale, investor appetite and the depth of brand and operator demand. These are fundamentals that don’t shift with a single good trading year — they’ve been built over time.”
Siddhika Shah, Director in Colliers’ Hotel Advisory Services, added, “Edinburgh scores highly not just on hotel trading metrics, but across the full range of investment fundamentals – from market appetite and valuation exit yields to the scale and diversity of demand that underpins new development. The consistency of that picture, year on year, is what makes Edinburgh genuinely distinctive.”
London’s rise from seventh to second is the index’s most notable movement this year. The capital posted the highest ADR of any UK market at £194, up 3.13% year on year, with occupancy at 81.2%. Recent openings include Rosewood’s global flagship at Chancery Rosewood, IHG’s first Six Senses in the UK, and The July’s new brand launch in the city. On the investment side, Arora acquired the Ministry of Justice building for £245m, while the Singaporean Royal Group paid £60m for 63 Piccadilly.
Candey added, “These are markets that have demonstrated their resilience across multiple economic cycles and continue to attract global capital despite turbulent geopolitical environments. Edinburgh and London are the markets that international hotel brands and institutional investors look to first — and the data consistently reflects that.”
