Regional Hotels Outperform London During First Quarter

Why It Matters

The results highlight a structural shift toward regional demand, offering higher profitability outside London and prompting investors to reconsider asset allocation. Staycations and event‑driven traffic are reshaping the UK hospitality landscape.

Key Takeaways

• Glasgow RevPAR rose 14% in Q1 2026
• Cardiff hotels posted 10% RevPAR increase
• London RevPAR fell amid oversupply and demand softness
• 60% of UK markets grew RevPAR, up from under 50%
• Staycations and events boost regional hotel performance

Pulse Analysis

The first‑quarter 2026 data from CoStar shows a clear divergence between London and the rest of the United Kingdom. While the capital’s RevPAR slipped as new hotels flooded the market and demand softened, regional properties delivered an average 2 % uplift. Glasgow led the pack with a 14 % jump, followed by Cardiff’s 10 % rise and Edinburgh’s 5 % gain, buoyed by the Six Nations rugby tournament and a surge in international arrivals. Overall, 60 % of UK markets recorded RevPAR growth, up from less than half a year earlier.

The upside in the provinces is rooted in event‑driven and corporate traffic. Manchester capitalised on football fixtures and the BRIT Awards, while Birmingham attracted two major gaming conferences in March. Edinburgh’s performance reflected both the rugby championship and a 6 % increase in passenger traffic at its airport. At the same time, a lingering conflict in the Middle East is nudging British consumers toward staycations, as overseas travel costs climb. These factors collectively offset the headwinds from a weaker macro‑economic backdrop and a modest 0.6 % UK GDP forecast.

For investors and hotel operators, the shift signals a rebalancing of capital allocation toward secondary cities. Developers may prioritize refurbishing existing assets over new builds in oversupplied London districts, while franchisees could explore partnerships in high‑growth markets such as Glasgow and Cardiff. The continued strength of corporate bookings and large‑scale events suggests that RevPAR momentum can be sustained, provided supply growth is managed. Analysts will watch whether the staycation trend endures beyond the current geopolitical uncertainty, potentially reshaping the UK hospitality landscape for the next several years.