Aberdeen hotels suffer double-digit drop - PwC

According to PwC’s latest UK Hotels Forecast analysis, occupancy levels across the city’s hotel sector fell by 12.9 per cent to 67.2 per cent in the year to July 2015, with RevPar dropping by 21.4 per cent to £59.26. In comparison, the UK average for 2015 is 84.4 per cent and £77.45.

While ADR (average daily rate) also dipped by 9.8 per cent to £88.14, Aberdeen continues to command the highest rates in the UK outside London (£138.76), with Brighton (£84.54) and Edinburgh (£83.48) nipping at its heels.

During the last decade, Aberdeen’s hotel sector has continued to see strong investment with refurbishments, extensions and new developments - including Malmaison, Park Inn, Hilton Garden Inn and Jury’s - opening to support the burgeoning oil industry.

However, as a result of the ongoing oil price drop, this activity has slowed significantly, with only the Chester Hotel in Queen’s Road (formerly Simpsons) launching under new ownership.

Kevin Reynard, office senior partner, PwC in Aberdeen, said: “The impact of lower oil prices is slowly filtering through to the wider North-East economy, and as a result, we’re seeing a drop in demand for hotel rooms from the oil industry, in particular. In the last year alone we’ve seen the offshore oil industry contract by as much as 65,000 jobs – from oil and gas employees and the wider supply chain to others indirectly impacted across sectors such as engineering and hospitality.

“For a sector that has geared itself up to support a huge transient workforce as well as industry visitors, this is a major dent that, despite the rebalancing of room rates, won’t easily be filled by tourism alone.

“With oversupply in the oil market looking likely to continue in the medium-term, it’s crucial that the oil and gas industry swiftly adjusts to this ‘lower for longer’ scenario, working closely with the regulator and Government to protect the long term future of Aberdeen as a global hub.

“It is also vital that we see a strategy for growth across the private sector, from food and drink to technology, supported by entrepreneurial and infrastructure investment from the public sector and Scottish Government. This will help to create more jobs and ensure new life is breathed into the city – something that will be warmly welcomed by the hotel sector as it looks to the future.”

In contrast, both Glasgow and Edinburgh enjoyed an uplift – albeit muted – across RevPar, ADR and occupancy levels over the same period.

At £66.04, the capital’s RevPar rates are second only to London (£112.28) and also reflect a 5.3 per cent jump from last July.

And in the wake of the 2014 Commonwealth Games, Glasgow’s occupancy levels rose to 80.5 per cent, just marginally below London at 80.9 per cent and one of the UK’s top city performers alongside Southampton (80.9 per cent) and Plymouth (80.8 per cent). Edinburgh’s occupancy levels saw a 1.8 per cent boost to 79.1 per cent.