The United Kingdom hotel sector has now experienced multiple years where the focus on negative yielding has created a challenging environment affecting hotel performance across the sector; this is only reinforced by the performance data published for 2024 and 2025.
Now, as we start a new year, it’s time to put an end to what has become a bad habit.
It's time to go back to what revenue really is, and try to get back to positive yielding and start to price correctly from the start of the process. This means increasing the price as occupancy increases rather than panicking close to arrival, discovering low pick-up and responding with steep last-minute discounts. This reactive approach ultimately helps no one.
Over the past two years, we have seen a lot of uncertainty come into the U.K. hotel market and the pattern of events is not the same as it used to be. Events such as The RHS Chelsea Flower Show or London Fashion Week as well as Wimbledon used to be really strong and hotels used to hold their rates really high for those weeks, because they knew that the business was coming.
Today, guests behave differently. They prioritize flexibility, seek out lower non-refundable options and are far less willing to commit early if rates appear inflated. Guests are still travelling for these annual events but they have learned that if they wait, prices often soften closer to arrival.
This causes issues because it’s harder to get a clear view of the business and a clear idea of what is booked until very close to the day itself. There are also factors such as inflation, which mean that people are not willing to pay as much. We have also seen a big drop as a result of the U.S. traveling less, which has affected the entire U.K. hotel market. Then when you roll in all the new openings of hotels and all the additional rooms increasing the supply in the sector, you can easily see how the market has been affected and how that might lead to it acting in an irrational manner.
This habit of waiting to the last minute to book is affecting everyone in U.K. hospitality but it's something that we can all work to change. Guests have learned to work with the pattern of last-minute rate cuts, as well as an increase in deals through Black Friday and its ilk. But it is possible to reeducate the guest to a model which works for everyone and to incentivize them so that both hotel and guest can benefit.
A more positive approach means rewarding early commitment. The further out a guest books, the lower the rate they should find. As arrival dates approach, rates should rise, encouraging guests to book earlier next time. Offering more flexible conditions further out can also help, giving guests reassurance while allowing hotels to build stronger, longer-term relationships.
So in 2026, if we want to reverse the slide of the past two years, it requires all hotels to stick to the point and try to adopt the same strategy: Don’t panic and drop rates, but try to build a base founded on what they have, rather than ending up trapped in the same downward spiral. It should be simple, right?
Ylenia Ficalora is senior performance manager at HotelPartner Revenue Management. She is based in the United Kingdom.
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