From boardrooms to bedrooms – the key drivers behind the UK’s office to hotel conversion boom

The UK is seeing an increase in office to hotel conversions, with more than 330,000 sq ft of City of London office space acquired for hospitality use according to Savills. As hybrid working reshapes demand and hotel stays return to pre-pandemic levels, this trend is reshaping the urban real estate landscape.

This reallocation of space is also reflective of a broader recalibration across UK real estate markets. Investors are increasingly focused on asset classes that can demonstrate operational resilience, diversified income streams and long-term relevance in changing cities. Offices and hotels sit at different points on that spectrum, but the growing overlap between work, leisure and travel is narrowing the gap. As city centres evolve into mixed-use destinations rather than purely commercial hubs, the ability to adapt existing buildings quickly and efficiently has become an attractive proposition critical differentiator for owners and occupiers alike.

With the vast majority of employers now offering some form of flexible working arrangement, and a growing emphasis on sustainable office space that meets the technological needs of modern occupiers, demand for premium office environments is rising across UK cities. This shift towards higher-performing workplaces has accelerated the migration of occupiers away from outdated, lower-performing buildings and towards newly built or recently refurbished offices. In Q1 2025, 86% of take up of office space in London was in new Grade A buildings. As a result, a growing pool of surplus sub-prime office stock (particularly in city centres) has emerged.

Meanwhile, the UK’s hotel sector has shown significant recovery and strength over the past year. Occupancy of UK hotel rooms stands at 76.1%, ranking second in Europe only to Ireland, and there has been a notable rebound in domestic tourism, especially for city-based trips. This resurgence has prompted operators and brands to seek new opportunities in prime urban locations. The combination of underutilised office space, increasing investor appetite, and the support of local authorities for hotel conversions has fuelled this trend.

Local authorities across the UK are evolving their stance on office to hotel conversions. While some councils have historically sought to protect office stock, many now recognise the economic and social benefits of repurposing underused office space into hospitality destinations. This is particularly true as lower-performing, less sustainable offices are phased out in favour of higher-quality environments. In a bid to boost city centre footfall, local authorities are increasingly supportive of such conversions. By easing the planning process, they are helping to attract more visitors to urban centres, which in turn drives demand for hotels. Beyond providing beds, hotels offer amenities such as cafés, meeting spaces and gyms that benefit both guests and local communities.

Any planning application for a hotel must be determined in accordance with the local development plan. In Central London, this includes the London Plan, which aims to deliver an additional 40,000 hotel beds by 2036. However, the planning landscape is nuanced, with developers having to navigate heritage considerations, sustainability requirements and community engagement expectations. The success of planning applications increasingly depends on early and meaningful community collaboration. By proactively addressing issues such as accessibility, environmental impact and integration into the fabric of the surrounding community, developers can improve their likelihood of securing planning permission and delivering schemes which provide long term value.

Looking ahead, the next 12 months are expected to see continued momentum in office-to-hotel conversions, driven by ongoing shifts in working patterns, sustained investor interest, and supportive local authority policies. To leverage these opportunities, hotel investors and developers should prioritise assets with strong fundamentals: prime location, architectural flexibility and potential for ESG enhancement, while engaging early with planning authorities to address any regulatory challenges. Through collaboration, surplus office stock can be transformed into vibrant hospitality destinations, revitalising city centres and supporting the evolving needs of visitors and local communities.

Felicity Lindsay and Rachel Kerr are partners at Gowling WLG