Hosted by Georgina. Written by Matt Lenzie. Published by Hotel Property Finance.
Market commentary as at the second quarter of 2026.
A UK hotel is not funded like an ordinary building. It is funded like a trading business that happens to own property. Lenders look at the cash the hotel generates and the strength of the operation, then lend against the value those things create. That single idea explains almost everything else about how the money works in 2026.
The pricing anchor is the Bank of England base rate, which has held at 3.75 percent since the December 2025 cut. Hotel term debt is quoted as a margin over base rate, so a held base rate underpins 2026 affordability. Senior term debt is broadly 6.5 to 8.5 percent all-in, around 2.75 to 4.75 percent over base, on terms of 10 to 25 years, with loan to value around 55 to 70 percent on a going-concern basis. Those are the numbers most deals are built around this year.
The trading backdrop is solid. STR, the hospitality benchmarking arm of CoStar, put UK hotel occupancy at around 76 percent through 2025, a recovery that gives lenders confidence the cash is dependable. Lenders read a hotel on its trading metrics: RevPAR, which is revenue per available room and works out roughly as average daily rate multiplied by occupancy, sits alongside ADR and occupancy as the headline numbers. The profit measure lenders underwrite against is EBITDA, adjusted for a management charge and a reserve for furniture, fittings and equipment.
Investor appetite is building behind that recovery. JLL points to strengthening debt markets and record dry powder driving hotel investment in 2026, and Savills, CBRE and Knight Frank each describe an improving lending appetite for the asset. The honest summary for the year: a stable rate backdrop, recovering occupancy, and rising investor and lender appetite, set against a market where the best terms still go to strong, well run hotels with a clear story.
The shape of 2026 is refinancing led and selective. The market has seen landmark London refinancings in the hundreds of millions, specialist lenders funding new branded budget and lifestyle hotels in London, Manchester and Edinburgh, and genuine distress at the other end, including a West End hotel guided above 275 million pounds. Three broad camps of lenders fund all of this: specialist hospitality lenders, challenger banks and high-street banks. We never name an individual lender, only the camps.
The full 2026 outlook in podcast form, hosted by Georgina. We cover pricing, the lender camps, the trading metrics lenders live by, and the funding options for buying, building, refinancing and repositioning a hotel.
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Hotel Property Finance is a specialist finance resource for the UK hotel sector. We are a broker, not a lender. We are not FCA authorised. Commercial finance on hotel property is generally unregulated. Where regulated activity is required, we introduce to FCA-authorised firms. Everything on this site is general market commentary, not regulated financial advice, and every figure is third-party research-house data attributed to its source. Take professional advice for your own situation.
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