In these times of squeezed consumer spending plus renewed uncertainty around geopolitical factors and impact on global travel, it is encouraging to see the UK’s tourism hotspots continuing to deliver robust performance.
York is no exception with its unique mix of demand drivers resulting in continued growth in tourism and hotel performance, and a number of pipeline hotel projects confirmed, demonstrating strong operator and investor demand. Ambitious regeneration plans including the £650m York Central, one of the UK’s largest regeneration projects will ensure continued demand growth in coming years.
Tourism
The overnight stay profile for York is slightly unusual; whilst it has international profile and attracts numerous overseas visitors, many of these are tour groups staying elsewhere and visiting the city on a day trip. Whilst City of York attracted 5.6m visitor nights in 2023, only 15% were from overseas, far lower than destinations such as Edinburgh.
Domestic leisure tourism across the UK declined in 2023 and 2024 as the cost of living crisis has constrained budgets, and as a result overall visitor nights to York in 2023 were slightly below 2022.
Hotel Performance
Despite this decline in overnight stays, hotel occupancy has continued to increase according to CoStar; city-wide occupancy was 84.2% in 2024, up from 83.2% in 2023 and higher than the pre-Covid peak of 83.8% in 2019. May 2025 year to date occupancy has continued to grow and was 3.4% higher than the same period of 2024.
The key driver of this apparent anomaly is likely to be the business mix; because of the mix of demand drivers and strengths in key commercial sectors, demand for hotel, as opposed to other types of accommodation is continuing to grow.
The downside of an increasing proportion of commercial demand and relatively low international overnight visitors is seen in the ADR; whist it grew in 2023 and 2024 (by 2.7% and 1.9% respectively), it remained below the 2021 peak that was driven by post-Covid pent-up domestic leisure demand.
2024 ADR was 25.9% higher than in 2019; decent growth, but below that of many other markets currently enjoying the benefits of attracting high proportions of international visitors.
Performance Drivers
The attractiveness of York to hotel operators and investors is in the broad base of demand drivers, which has resulted in consistent, steady RevPAR growth over the last ten years, despite the ongoing macro-economic and geopolitical headwinds.
The city is globally renowned for its historic architecture, streetscape and city walls, as well as being home to major attractions such as York Minster, the Jorvik Viking Centre and National Railway Museum.
But its central UK location and excellent rail connections has also made it a very popular corporate base in sectors such as digital, creative, tech and biosciences, all of which drive considerable hotel demand.
As previously noted, there are large-scale regeneration projects planned and underway in the city that will add more commercial space for these and other sectors, that will surely see further growth in commercial demand for hotels.
Conclusions and Outlook
Demand for hotels in York is strong and growing, from a broad base of drivers. As result, we are aware of ongoing interest from hotel operators and investors; there are currently three hotels and apart-hotels under construction, and a number of others that could progress in the short to medium term.
This scale of development, relative to the size of York’s existing hotel market is not being seen in many UK markets.
However, occupancy at mid-80s% suggests that there is significant frustrated demand (periods when demand outstrips supply) and as previously noted, hotel demand seems likely to continue to grow strongly.
In our opinion, the new hotel stock will embed quickly into the market and there will be more opportunities for additional hotels as the market continues to develop. If anything, the increased quantum and choice of hotels in the city will draw in more higher spending international visitors, to the benefit of the hotel sector and the city centre economy in general.
Get in touch for further details:
Andrew Renouf – 07584 186520
andrew@arhospitalityconsulting.co.uk
Photo by Karl Moran on Unsplash