Aberdeen hotel sector suffers second month of over 40 per cent revenue drop

Aberdeen’s hotel sector experienced its second successive monthly drop of over 40 per cent in year-on-year revenue in November, according to the latest report by accountants and business advisers BDO.

The firm’s monthly hotel survey found that during November year-on-year rooms yield (the industry measure of revenue) in Aberdeen fell 42.3 per cent and occupancy was down 11.9 per cent.

In Inverness revenue rose 5.1 per cent while occupancy fell 1.6 per cent; in Edinburgh revenue was up 0.1 per cent but occupancy was down 1.4 per cent; while in Glasgow revenue and occupancy fell 2.6 per cent and 1.3 per cent respectively.

Across Scotland revenue fell 9.5 per cent and occupancy was down 3.0 per cent; in regional UK revenue rose 3.7 per cent while occupancy dropped by 0.8 per cent; in England revenue was up 5.6 per cent and occupancy down 0.6 per cent; while in Wales revenue and occupancy fell 5.1 per cent and 4.1 per cent respectively.

Alastair Rae, a partner in the property, leisure and hospitality sector at BDO, said: “It is clear that Aberdeen hoteliers continue to be battered by the weak oil price and the consequent difficulties this is producing in the wider North East economy. Unfortunately there is little sign that will abate and the strain which the hospitality sector is currently experiencing is going to continue until something positive occurs in the oil and gas sector which appears unlikely in the coming months.

“The large falls in both revenue and occupancy in Aberdeen are also reducing the Scotland wide figures for both as the other cities had a more positive month. Despite falls in occupancy there was a 5.1 per cent rise in revenue in Inverness, an almost static figure of up 0.1 per cent for Edinburgh; and a fall of 2.6 per cent in Glasgow. But, Aberdeen excepted, none of these figures are exceptional and are just part of the seasonal ebb and flow of the hotel market.”

Mr Rae continued: “There are signs that the hotel sector is experiencing a stable, if unexceptional, year. Occupancy is relatively fixed and revenues are fluctuating slightly but not in a remarkable way.”

“While the wider economy may be shifting toward a gloomier outlook the hospitality industry continues to plough a fairly steady furrow. Interestingly the greatest growth is in the under £50 category indicating that consumers remain cautious in their spending habits. There is a feeling that they are not quite convinced of the strength of the economy at the moment.”

Mr Rae added: “I believe that there will be more of the ‘steady as she goes’ outlook in the hotel market with the obvious exception being Aberdeen. A bit of stability in the sector is to be welcomed as it is easier to financially plan and project when occupancy and revenue remain stable.”

This hotel trends survey has been published since the early 1970s and features a broad range of hotels in the 3 – 4 star categories.