RBH Hospitality Management’s Executive Committee highlights key trends set to shape the sector over the next 12 months. As the hospitality landscape continues to adapt and innovate, 2025 is poised to continue on a positive trajectory for hoteliers. From a renewed surge in investor confidence and expansion into untapped markets, to a growing focus on delivering authentic guest experiences and the strategic use of existing spaces to create additional rooms, 2025 looks set to drive profitability and create lasting value.

Expand by diversifying expertise into untapped markets - David Hart, Chief Executive Officer

As anticipated, the third-party hotel management industry has seen notable consolidation in 2024 driven by increased competition and the desire of some founder owners to derive value from the businesses they have built. Looking ahead to 2025, this trend is expected to persist as this fragmented market continues to professionalise, and the influence of larger US management companies starts to become more evident as they look to expand globally.

In addition, the significant expansion of wider operational real estate - such as student accommodation, branded residences and care homes - presents an opportunity for professional third-party managers with a hotel background to diversify their expertise and align with other categories that have an underlying hospitality element. With a tightening market in hotels, it feels like 2025 is a pivotal year for expansion into these untapped sectors.

Shifting guest expectations to present opportunities for continual improvement - Louisa Green, Managing Director

The hospitality industry will face a mix of challenges and opportunities in 2025 shaped by ongoing economic pressures, shifting guest expectations and advancements in technology. Rising labour costs will continue to impact the sector compelling businesses to innovate in payroll management and operational efficiency, which will drive further investments in the use of AI.

Regarding guest expectations, value, flexibility and exceptional service will be paramount, with flexible booking terms, cancellation policies and personalised loyalty rewards playing a key role. Additionally, guests will increasingly favour unique, authentic experiences that go beyond simply providing a room or meal, and the desire for workspaces within hotels along with improved wellbeing options such as healthier dining choices and well-equipped gyms will continue. Eco-friendly options will become a must-have with less tolerance for superficial or ‘greenwashed’ claims as eco-conscious guests proactively look for energy-efficient practices, sustainable sourcing and waste reduction initiatives.

Decreasing interest rates will drive investor confidence in the sector - Andrew Robb, Chief Financial Officer

Whilst transaction volumes in 2024 increased compared to 2023, growth in single-asset deals has remained modest once larger portfolio transactions are excluded – something I expect to change in 2025 following the conclusion of the UK and US elections, and anticipated decreases in interest rates which will drive greater investor confidence.

Despite a successful 2024 for RBH, with six new hotels and three more committed for 2025, the development landscape will remain tough due to stubbornly high construction costs. This has led some major global brands to focus on limited-service conversion brands like Spark by Hilton, Fairfield by Marriott and Garner by IHG, all poised for significant growth in 2025 and beyond.

Investor sentiment remains strong in the hospitality sector with a continued focus on having operational partners who are aligned, provide a complete solution and maintain a visible senior leadership. Increasingly sophisticated investor expectations around reporting and data transparency have prompted RBH to invest in enhanced business performance analytics, system development and automation within hotels, with our central team ensuring that time is invested in the strategic areas which add value.

Hotel new build forecasts look positive despite high building costs - Gregor MacNaughton, Chief Technical Officer

The UK construction industry is undergoing significant transformation, shaped by evolving technologies, changing regulations and global economic shifts, and with climate change an increasingly pressing issue, sustainable building practices will be in the spotlight. This increased focus on sustainability will see hotel brands looking to improve their properties to meet the changing needs of guests and adapt their brand standards to influence change across the sector.

The high cost of building materials is one of the most significant factors affecting construction costs, and this will continue throughout 2025. As such, a key trend will include converting existing properties into hotels and maximising existing space to build bedroom extensions.

That said, the forecast for UK new build hotels in 2025 is positive, with a projected growth of 6% following a strong rebound in 2024 after a significant slump in 2023. Several factors contribute to this growth including increased consumer spending, recovery of overseas tourism and investor confidence. However, UK construction regulations are becoming stricter, especially around safety, environmental impact and energy efficiency and the industry will need to comply with several new regulations aimed at reducing carbon emissions, improving building safety and enhancing the overall quality of construction in 2025.

The use of AI and automation will advance significantly in 2025 - Vibhu Gaind, Chief Information Officer

In 2025, we will see a further push towards Artificial Intelligence being adopted across the hospitality sector, transitioning from indirect use through vendors to direct application via private AI tools such as private ChatGPT and CoPilot. Integration into datasets and tools like Office 365 will drive efficiency and productivity.

Customer service automation will also see a leap forward, enabling personalised direct-to-guest interactions, complementing OTA services. Enhanced guest room connectivity with WiFi 6 will make high density areas more stable, supporting seamless online tool usage across properties.

Growing guest, revenue and financial data will allow operators to make smarter decision-making, ESG initiatives and cybersecurity will require increased investment and the industry will need more focus on compliance.