UK construction activity December 2025: Hotel & leisure

Hotel & leisure overview

• 12 per cent increase in project starts year-on-year
• 19 per cent decrease in main contract awards from 2024
• 29 per cent decrease in detailed planning approvals compared to 2024

Project starts experienced growth year-on-year after a persistent period of decline. Projects starting on site grew 12 per cent in 2025, driven by a sharp increase in major projects (£100m or more). Underlying projects (under £100m), on the other hand, decreased against 2024. The pipeline also weakened, with main contract awards and detailed planning approvals both down year-on-year.

Hotel & Leisure approvals rose 62 per cent in the three months to December. Project-starts and main contract awards didn’t fare as well, declining 62 per cent and 60 per cent respectively against the three months to December.

2026 outlook

• 5 per cent forecasted growth for project starts in 2026
• Increase in tourism to boost sector activity
• The £450m 380 Kensington High Street, London Hotel development is set to start in 2026

Types of projects started

Sub-sector performance was strong, with most categories experiencing growth.

• Indoor leisure facilities accounted for 30 per cent, having jumped 109 per cent on a year ago.
• Totalling £790m, sport facilities grew 59 per cent year-on-year.
• Hotels & guest houses fell 46 per cent against the previous year, accounting for a 20 per cent share

Regional

• Despite the overall growth in the sector, only half of the regions saw growth in project starts
• Regional performance in detailed planning approvals was weak
• The South West, the West Midlands, and Wales grew in both starts and approvals

The North West was the leader in hotel & leisure project starts, having grown 100 per cent year-on-year to total £880m. Wales also jumped more than four times to total £428m. In contrast, accounting for an 18 per cent share at £748m, London slipped back 27 per cent against the previous year.

London dominated detailed planning approvals, despite a 56 per cent decline on the previous year. The region totalled £1.226bn and accounted for a 22 per cent share. Totalling £842m, Scotland also fell 10 per cent against 2024. Totalling £697m, the South East also fell 11 per cent. In contrast, the West Midlands jumped 66 per cent to total £593m.