Edinburgh and London were the most sought-after destinations for hotel development and investment across the UK, according to a recent study.
Colliers’ annual Hotel Development Index 2026, a ranking of 35 UK locations measured against nine indicators including land prices, build costs, occupancy, ADR and investor appetite, revealed the Scottish capital has once again come top, underpinned by strong occupancy rates of 84.6% and an ADR of £165.
The report showed Edinburgh had an active pipeline of 9.5% of existing room supply, backed by a thriving tourism market and a strong financial and business district.
Meanwhile, London leapt five places to become the second most attractive destination for hotel investors, having recorded the highest ADR of any UK city in 2025 at £194, up 3.13% year-on-year, while occupancy held at 81.2%.
Over the past year, London welcomed several new international hotel brands, including IHG’s first UK-based Six Senses in Bayswater, as well as the Dutch-based the July in Victoria.
London managed to attract both domestic and international guests during the period, as well as corporate travellers.
Investor appetite was also visible in the volume of transactions in London, where Arora Group acquired the Ministry of Justice building for £245m and the Singaporean Royal Group 63 Piccadilly for £60m, while Edinburgh saw the sale of the W Hotel to Schroders for just over £100m.
Richard Candey, head of hotel development and consulting at Colliers, said: “Edinburgh and London continue to attract a disproportionate share of hotel investment activity in the UK. Their position at the top of our index is not simply a reflection of strong performance, it is the combined weight of market scale, investor appetite and the depth of brand and operator demand that sets them apart.”
“These are markets that have demonstrated their resilience across multiple economic cycles and continue to attract global capital despite turbulent geopolitical environments. This is as true today as it was a decade ago.”
Siddhika Shah, director in Colliers’ hotel advisory services, added: “Edinburgh and London score 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 these two markets genuinely distinctive.”
Here are the top 10 UK cities for hotel investment from the Colliers’ 2026 index:
- Edinburgh
- London
- Oxford
- York
- Glasgow
- Bath
- Inverness
- Birmingham
- Liverpool
- Manchester