UK construction activity March 2025: Hotel & leisure

Hotel & leisure overview

• 61 per cent increase in project starts year-on-year
• 52 per cent decrease in main contract awards from last year
• 20 per cent increase in detailed planning approvals compared to a year ago

Despite the economic and geopolitical uncertainty, performance in the hotel & leisure sector remained strong in the first quarter of 2025, with project starts up year-on-year and quarter-on-quarter. The growth was driven by an increase in major projects (£100m or more).  Main contract awards, on the other hand, declined against both periods.

2024 saw a surge of hotel investment, with starts three times higher than during the previous year. Hotel investment remains strong and is expected to support a forecast six per cent rise in hotel & leisure project starts this year 2025.

Types of projects started

The hotel & leisure sector had a strong performance, with most sub-sectors experiencing an increase.

• Hotels & guest houses accounted for the largest share (38 per cent), having jumped 68 per cent on a year ago to total £614m
• Accounting for nine per cent, sport facilities grew 11 per cent year-on-year
• Indoor leisure facilities, on the other hand, fell 20 per cent against the previous year, accounting for a ten per cent share

Regional

• Despite overall growth in project starts, most regions experienced a decline
• Most regions experienced growth in detailed planning approvals
• London performed exceptionally well, with growth in both starts and consents

London was the leader in hotel & leisure project starts, thanks to 161 per cent growth year-on-year to total £611m. This growth was boosted by the £450m 380 Kensington High Street London Hotel Development. The North East also jumped five times to total £374m, mainly driven by The Sage International Conference Centre development worth £350m.

The capital also dominated detailed planning approvals, with 19 per cent growth on the previous year. The region totalled £636m and accounted for 37 per cent. Activity in the region was boosted by the £400m Haymarket House Development in Westminster.