UK Tourism: Managing Risks at Home and Across Europe

2025 is proving to be a decisive year for the UK’s tourism and hospitality sector. Hotels are enjoying high occupancy, British travellers are fuelling growth abroad, and the recovery narrative of recent years has shifted firmly into one of performance and resilience.

But for UK-based tourism businesses, there are two perspectives to manage simultaneously:

1. The Local Lens – UK hotels serving inbound and domestic demand.
2. The European Lens – UK-headquartered businesses with hotel operations abroad.

Understanding both is essential for CFOs and finance leaders preparing their businesses for the next phase of growth.

Part 1: The Local Lens – UK Hotels

Performance in 2025

• Occupancy: England hotels hit 86% in July 2025, with London slightly higher. Year-to-date averages remain strong.
• Rates: London’s ADRs reached new highs of c. £235 in July, though mid-market and regional properties are seeing flatter growth.
• Events: International events (sport, culture, conferences) continue to support inbound demand, especially in London.

Challenges Ahead

• Labour shortages: Wage growth is being driven by persistent hiring gaps.
• Margin squeeze: Energy, food, and supply inflation remain elevated; alongside the end of VAT-free shopping, spend per visitor is under pressure.
• Regulatory change: From April 2025, drip-pricing bans and stricter review standards will alter how hotels price and market.

Outlook

Inbound volumes remain steady, but CFOs should plan for flat-to-cautious spend growth. London luxury assets will likely outperform, while regional properties must adapt to tighter margins and cost visibility.

Part 2: The European Lens – UK Firms Operating Abroad

Performance in 2025

• Outbound strength: UK travellers remain a key driver of demand across Southern Europe. British spending abroad continues to rise, particularly in Spain, Italy, and Greece.
• Seasonality shifts: More travellers are booking spring and autumn trips, avoiding peak summer heatwaves and climate risks.

Challenges Ahead

• Climate volatility: Wildfires in Greece, extreme heat in Spain and Italy, and storm disruptions are already prompting cancellations and re-routings. These shocks will intensify.
• Regulation:
  • The EU Digital Markets Act now designates Booking.com a gatekeeper, changing platform dynamics.
  • The Corporate Sustainability Reporting Directive (CSRD) expands ESG obligations for hotel groups with European footprints.
• FX exposure: UK parent companies must actively hedge EUR/CHF earnings to protect GBP reporting stability.

Outlook

European hotel assets will remain attractive but face greater volatility. Climate-driven seasonality and ESG compliance will dominate board agendas, with sharper peaks in demand outside the traditional summer window.

What CFOs Should Prioritise in 2025 – 26

1. Climate-integrated FP&A
   • Embed wildfire and extreme-weather disruption into forecasting models.
   • Align liquidity reserves with downside scenarios.
   • Review contracts and insurance to cover climate-triggered cancellations.
2. Distribution Risk Management
   • Cap reliance on OTAs and build direct-booking ecosystems.
   • Optimise visibility within AI-driven trip planners and voice assistants.
3. Dual Regulatory Readiness
   • Prepare for UK Sustainability Disclosure Standards (aligned with ISSB) and EU CSRD in parallel.
   • Ensure consumer law compliance on pricing transparency and reviews.
4. Operational Resilience
   • Flex staffing to match shifting seasonal patterns.
   • Run rolling zero-based cost reviews on energy, labour, and distribution.
   • Stress-test liquidity for platform and climate shocks.

How Malander Supports

At Malander, we help tourism and hospitality businesses translate risk into strategy. Whether it’s scenario planning for climate disruption, distribution channel profitability analysis, or embedding ESG reporting into financial systems, we partner with CFOs to build operating models that are resilient, compliant, and ready for growth across the UK and Europe.

Conclusion

For UK tourism companies, 2025 is the year where resilience takes centre stage. Domestically, hotels face labour shortages, rising costs, and new consumer rules. Abroad, climate volatility, regulatory tightening, and FX risks add another layer of complexity.

The message is clear: the businesses that thrive will be those that treat risk as core to their financial strategy, not as an afterthought. By building robust, forward-looking finance systems today, UK tourism leaders can protect tomorrow’s profitability – whatever disruption lies ahead.