Last updated: 12.09.2025
Looking for a low-cost real estate investment route? Buying a hotel room may be just the ticket.
While many property investors consider the possibility of purchasing a hotel outright, far fewer think about investing in individual hotel rooms instead. Yet, perhaps they should.
Fortunately for those who have invested in hotel rooms, prices for overnight stays are now higher than ever in the UK, offering impressive returns on their investment. In fact, investing in hotel rooms can sometimes offer even greater returns than traditional Airbnb rentals.
Here, we look at the pros and cons of hotel room investment to help you decide whether this could be a worthwhile next step, as well as outlining how exactly you can actually go about investing in hotel rooms.
Hotel room investment guide
What we like about hotel room investment
Hotel room investments are an easy way to get started in property without the usual headaches. Over time, we’ve seen investors enjoy a combination of steady returns, minimal management, and even the perks of using their room for personal stays. It’s a smart, stress-free way to grow your portfolio, with clear benefits including:
Low entry point
Because you only purchase a room or suite, and not an entire property, hotel room investment is naturally a lot more affordable than other forms of real estate investment. This lower entry point makes it a lot more accessible to those on lower budgets or investors who want more diversified portfolios.
Stable income stream
Hotel room investments can provide a stable and predictable income stream, especially if the hotel is located in a popular tourist destination or business hub. With professional management taking care of bookings, cleaning, and day-to-day operations, you can enjoy the earnings without the usual stresses of being a landlord.
High yields
Because hotel rooms are rented out on a short-term basis, they typically achieve higher average rents than a traditional buy-to-let. Many receive yields of 8%-plus, which is more than the buy-to-let average yield of between 5% and 8% in the UK.
No stamp duty
Hotel room investments are considered commercial property investments, meaning that they’re exempt from Stamp Duty Land Tax (SDLT) if the property is worth less than £150,000. This can again bolster the affordability and profitability of such ventures. That said, if the purchase price exceeds £150,000, SDLT becomes applicable on the portion above that threshold.
Passive investment
Hotel rooms are considered a passive investment because they don’t require your constant attention. Essentially, your money works for you while a professional team takes care of the day-to-day operations. Unlike traditional property investments, hotel rooms often come with full management services, including maintenance, guest services, and bookings. This means you can enjoy the benefits of property ownership without the usual hands-on responsibilities.
Personal use allowance
When investors buy a hotel room, they may gain the option of staying there during trips away. Though it’s relatively rare, some hotels allow owners to make use of their room for up to two weeks in any given year. In scenarios where this applies, this unique perk could allow you to experience the comfort and convenience of your investment firsthand, reminding you that it’s not just a financial asset but a home away from home.
Hotel room investment profitability
Buying a hotel room can be a smart way to enter the real estate market while keeping costs manageable. Unlike buying an entire property, purchasing a single room is far more affordable, which opens the door to investors with smaller budgets or those seeking to diversify. High rental yields are a major draw, often exceeding 8% thanks to the short-term nature of hotel stays.
On top of that, purchases under £150,000 are exempt from stamp duty, which further improves affordability. Professional management also makes it a passive investment, removing the need for landlords to deal with repairs, tenants, or marketing.
Beyond these benefits, hotel rooms come with additional advantages. UK tourism continues to expand globally, which helps drive long-term demand for hotel accommodation. Unlike traditional rentals with fixed contracts, hotels can adjust rates frequently, which makes them more resilient against inflation. Investors may also benefit from being part of a branded hotel portfolio, where marketing, guest loyalty programs, and booking platforms reduce vacancy risk. For yield-focused, hands-off investors, hotel rooms remain an attractive opportunity.
Property spotlight: Devonshire Park Hotel
Hotel room investment is becoming an increasingly attractive way to generate passive income. The Devonshire Park Hotel in Eastbourne, East Sussex, is a prime example of how this strategy works in practice. Investors secured 9% NET returns per annum for five years, with prices starting from just £69,950.
This fully managed, family-run hotel has over 20 years of proven success, consistently maintaining high occupancy and excellent guest feedback on Google and Tripadvisor. Complete and operational, the property offers 35 beautifully designed suites in multiple configurations, located just steps from Eastbourne’s award-winning beachfront and within the cultural hub of the Devonshire Quarter.
As a hands-off investment, professional management takes care of day-to-day operations, while investors enjoy a clearly defined exit strategy. In a thriving UK tourism market, opportunities like this provide the rare combination of affordability, security, and reliable long-term income.
If you had invested in a fully managed Hotel suite at the Devonshire Park Hotel, you would have enjoyed a secure 9% NET rental return per annum, for 5 years.
Hotel room investment: areas of consideration
While hotel room investment continues to attract attention for its accessibility and high yields, it’s important to approach the sector with a balanced view. Like any asset class, there are risks to weigh up alongside the rewards.
Limited mortgage options
Hotel room purchases remain predominantly cash-only, as very few lenders offer tailored mortgage products. This can limit accessibility for some investors and may also narrow the buyer pool when it comes to resale. That said, some projects now offer structured buy-back or assured exit strategies, which can help mitigate this challenge.
Cyclical sensitivity
The hospitality sector is still closely tied to economic cycles, shifts in tourism demand, and even global events. While the post-pandemic recovery has been strong, external shocks, from inflationary pressures to geopolitical uncertainty, can temporarily affect occupancy and income.
Limited capital growth
Unlike residential property, hotel room investment is primarily yield-driven. Value appreciation is minimal, so most returns will come from consistent rental performance rather than long-term capital uplift.
Management fees
Fully managed services remain a major benefit, allowing for a hands-off experience. However, these services come at a cost, typically charged as a percentage of revenue, which reduces net income.
High competition
With strong demand attracting new entrants, the hospitality market is increasingly competitive. Success depends heavily on the strength of the operator, the location, and the property’s reputation to maintain occupancy and pricing power.
Unlock passive income through hotel room investment
Hotel room investments can deliver high yields, passive income, and exposure to the UK’s booming tourism sector. But success doesn’t come from choosing just any property; it requires careful due diligence, strong operator performance, and a clear exit strategy. That’s why having the right partner is essential.
With over 20 years of experience, Alesco gives you exclusive access to fully managed hotel opportunities like Devonshire Park Hotel, alongside the insight and guidance needed to navigate this unique market. We handle the research, vetting, and acquisition process, so you can focus on enjoying secure returns with confidence.
Contact us to discuss your hotel room investment options with us today and start building a secure, high-yield portfolio.
Written by: Ben Whitaker
Experienced professional working in the real estate investments sector. Assisting and advising clients on the acquisition of property across a range of asset classes, with view to achieving robust return on investment.
