Understanding UK hotel M&A transactions

When parties are considering selling, buying or investing in a hotel in the UK, understanding the distinct set of legal, structural and commercial considerations will be key to that transaction’s success.

Last year saw a slowdown in UK hotel transactions and a shift in deal composition, with fewer large portfolio deals and more single asset transactions. The uncertain geopolitical climate and UK regulatory changes softened overseas investor appetite, contributing to the slowdown. Despite those headwinds, Savills report that UK investment into the sector in 2025 is estimated to have reached £5 billion. This year we expect the UK hotel sector to continue to attract interest from domestic and international investors, driven by resilient demand, brand diversification and opportunities for operational repositioning.

The industry will continue to face some challenges from increasing employment costs, global decreases in tourism levels resulting in lower occupancy levels and exploring alternative ways of operating, e.g. through increased use of AI and tech within the industry – so how do you navigate those challenges in M&A transactions?

While hotel transactions share many characteristics with other M&A deals, they also present a distinct set of legal, structural and commercial considerations. From a corporate law perspective, understanding these features is critical to protecting value and ensuring smooth execution.

Below we explore the key corporate elements that typically shape UK hotel M&A transactions.

Transaction structures: Shares, assets and hybrids

Hotel acquisitions in the UK are commonly structured as either share purchases or asset purchases, with the choice influenced by tax, risk allocation and operational considerations.

Joint ventures and minority investments are also common in hotel deals, particularly where investors seek local expertise or wish to retain existing management.

Reviewing the current operating structure—for example, whether there are separate operational and property companies or whether the target entities rely heavily on wider group support—will influence acquisition structure planning and should be understood early in the process.

Due diligence: Identifying sector‑specific risks

Due diligence in a hotel transaction extends beyond corporate information to encompass the operational realities of a hospitality business.

Key focus areas include:

• Group structure and ownership: Understanding ownership—of both the property and any corporate vehicle being acquired—is critical at the outset, as it informs post-completion structuring, tax considerations and asset valuation.
• Material contracts: management agreements, franchise agreements, leases and major supplier contracts can materially affect value and may include change of control provisions requiring third‑party consent.
• Employment arrangements and compliance with TUPE regulations: are critical to understanding which employees will transfer with the business and any material terms of their employment. This is particularly important in asset deals or where operational or management responsibility will be transferring as it could mean staff that the buyer was not aware were in scope could transfer automatically and should be factored into deal economics and structuring.
• Regulatory issues: understanding whether the business has the correct operational licences e.g. liquor licences, wedding licences required to continue to operate the business post-completion. Without these the business could be prevented from operating on an “as-is” basis which could impact revenue
• Data protection compliance: some of the key assets for hotels are the marketing and booking databases, understanding whether that data can be used by the incoming purchaser and whether the hotel has been operated in a compliant manner prior to completion will be important to ascertain as, if the new owner/operator cannot contact or access guests records or sending marketing updates to a vital source of business for the hotel.

Management and brand arrangements

Unlike many other real estate‑backed assets, hotels are often operated under long‑term management or franchise agreements with international brands. These arrangements can significantly influence both deal structure and timing.

Corporate transactions must account for operator consent rights, transfer restrictions and, in some cases, termination or renegotiation opportunities. Buyers and sellers may have differing incentives when engaging with operators. Identifying and addressing these issues early maintains deal momentum—for example, by agreeing termination costs with outgoing operators upfront, or understanding how new branding or operator arrangements interact with incoming finance. Third parties beyond buyer and seller are often involved and may affect transaction timelines.

Allocation of risk: Warranties, indemnities and disclosure

As with any M&A transaction, risk allocation between buyer and seller is a central area of negotiation. Warranty and indemnity insurance is often used in hotel transactions to enable sellers to exit cleanly while giving buyers the protection they need. Which party bears the insurance cost varies depending on relative bargaining power, though it is commonly shared.

W&I policies typically exclude certain risks such as pension underfunding, secondary tax liabilities, transfer pricing and known risks identified in due diligence. Known risks can be discussed individually with insurers, who may offer coverage if additional diligence or information is provided (potentially for an additional premium). Early engagement with brokers helps identify material exclusions and allows parties to negotiate alternative recourse where needed, such as indemnities or known-risk insurance.

Gallagher’s Global M&A Insurance 2025 Review and 2026 Outlook report notes that Real Estate deals tend to attract average premiums and lowest retention with insurers often being prepared to offer nil retentions.

Consideration mechanics and deal economics

Hotel transactions typically use traditional consideration structures e.g. completion accounts or locked box mechanisms but a key consideration in protecting value, through those mechanisms, will be setting appropriate policies to help to calculate cash, debt and working capital. For example, considering:

1. Whether a stock-take and cash count should be undertaken and, if so, when. The Buyer will typically want one undertaken to ensure they’re paying for exactly what they have acquired.
2. How bookings that span completion and food and beverage revenue will be apportioned between seller and buyer for example the Seller will want the benefit of revenue and cash generated up to completion but if completion occurs before check-out or after check-in on any given day there is a discussion to be had as to where the cut-off should be and for whose benefit stays spanning completion should be for – commonly these are pro-rated.
3. Accruals including of costs for services provided by the seller’s group where there are dependencies on wider group resources. Buyers will want to avoid any overpayment or excessive charges being flowed through and sellers will want to ensure appropriate value is paid for such services. This may also help to inform discussions regarding cost of transitional services.

Post-completion integration

Successful hotel M&A transactions depend on post-completion integration. This includes ensuring business continuity through transitional services and developing a detailed integration plan informed by due diligence. Buyers, sellers and investors alike want the business to operate seamlessly after completion.

Conclusion and our experience

Whilst the industry continues to face a number of challenges e.g. employment legislative changes and uncertainty caused by the ongoing geopolitical situation, the outlook for UK hotel transactions in 2026 is one of cautious optimism.

Early engagement with the structural, contractual and risk allocation issues that distinguish hotel deals is essential to a successful transaction. Given the current outlook, creativity in structuring or pricing is likely to become a more common feature in hotel deals.

Burges Salmon’s market leading hotels and leisure team has significant experience advising investors, developers, owners, operators and lenders in key parts of the hotel and leisure industries.

With a team of Built Environment lawyers qualified across England, Wales, Scotland and Northern Ireland, we support clients on real estate matters across jurisdictions and project types. Our Corporate Real Estate team works closely with colleagues in construction, planning, tax, litigation, environmental and finance to provide integrated support throughout the lifecycle of real estate assets.

We have experience across many sectors including logistics, hospitality, office, residential (including build-to-rent and student accommodation), and large-scale regeneration schemes. If you would like to explore any of the topics discussed above, please contact Rupert Weston (Partner, Corporate and M&A) or Amy Moriarty (Director, Corporate and M&A).