Hot summer boosts coastal and rural hotel performance

The UK’s exceptionally warm start to summer helped create favourable trading conditions for many leisure-focused hotel markets between late May and mid-August, according to data from real estate analytics firm, CoStar

The heatwaves have helped push coastal and rural markets to outperform urban destinations throughout the past three months.

Cristina Balekjian, senior director of UK hospitality analytics at CoStar said: “Average rate-driven growth led revenue performance in both cases, indicating that hoteliers have regained pricing power this year and contrasting with trends seen in the previous year, despite ongoing macroeconomic challenges.”

Hotels in leisure-driven destinations witnessed around a 4% uplift, as occupancy grew by 1% and average daily rate (ADR) by approximately 4%. Meanwhile, urban destinations, which have a more varied demand base, experienced 2% revenue per available room (revpar) increase, with occupancies remaining relatively stable.

While higher temperatures may have contributed to demand and revenue performance in markets like Dorset and Somerset, and the Channel Islands, Cornwall and Devon, event-driven business has also supported certain top-ranking markets.

For example, revpar performance for hotels in the Hampshire and Isle of Wight market was bolstered by the Farnborough International Air Show, a biennial event happening between 17 and 21 July this year, resulting in a revpar uplift of over 30% on event days. Meanwhile, Southampton also benefited from several events at the end of May, including two Take That concert nights, which substantially bolstered ADR. 

Markets in Scotland also performed well despite being less directly exposed to the highest temperatures recorded in England, with urban markets such as Glasgow outperforming, as it hosted the Commonwealth Games in July and August.

Provincial regions of Scotland delivered close to 10% revpar growth over the period, while Edinburgh continued to command some of the country’s highest room rates, with ADR exceeding £200.

Balekjian said: “Much of Scotland’s improvement was driven by pricing power rather than significant occupancy gains, suggesting continued demand resilience in established leisure destinations.”

In contrast, performance across major urban destinations was more mixed. London remained resilient, as balanced supply and demand growth enabled hoteliers to increase pricing, resulting in a 2% revpar uplift, suggesting strengthening trading for hotels in the capital, following a weak year in 2025.

Birmingham and Manchester experienced significant volatility, reflecting the greater influence of events and corporate demand, with event offsets from high-profile concerts like Oasis and Black Sabbath’s Back to the Beginning, negatively impacting average rates the most.

Balekjian concluded: “Given the various demand generators in urban markets, hotels may not be as exposed to the effects of better weather, especially during the summer months, when many cities host festivals, concerts, and sporting championships that boost hotel demand. While those that benefitted from a busy calendar of activities have witnessed stronger revenue improvements, markets such as Aberdeen and Cardiff also underperformed over the past three months. Hotels in both cities have been negatively impacted by the lack of major events that had bolstered hotel trading in the previous year.

“Overall, hotels across the UK have witnessed a significant step change in market dynamics compared to the previous year, with the summer’s exceptional weather boosting destinations associated with outdoor leisure, coastal tourism and domestic holiday demand. Despite more moderate performance in urban markets, major cities continue to perform well, with event offsets posing greater downside risk, especially in locations with a lighter activity calendar, such as Liverpool. Nonetheless, the remainder of the year looks promising, as hotel trading performance remains on a largely positive trajectory.”

Isle of Wight image credit: Pexels/Lorna Pauli