Aberdeen remains out on the cold as rest of Scotland rides good times for European hotel industry

That’s the findings of the latest PwC European hotels forecast which saw a strong 2015 for many destinations – in part fuelled by lower oil prices encouraging people to travel, particularly on city trips.

The remainder of 2016 and into 2017 should see continued growth – especially for Edinburgh, which is projected to overtake Dublin as being the city with the second highest occupancy rates in Europe in 2017 at a rate of 83 per cent occupancy. London will continue to be the city with the highest occupancy rates.

In terms of industry standards and current figures, Edinburgh saw revenue per available room (RevPAR) growth of 3.2 per cent for 2015 (£71.65) while for Glasgow it was £58.49, down 0.5 per cent, and £56.03 for Aberdeen – down 25.4 per cent.

In terms of ADR, the other key indicator of success, it was £87.90 for Edinburgh, £71.63 for Glasgow and £84.90 for Aberdeen. In many top performing cities like London, Dublin, Edinburgh or Amsterdam which operate at high occupancy levels, it’s ADR driving the most growth.

For Edinburgh, RevPAR is expected to rise to £72 for 2016 (up 2.4 per cent) and £74 in 2017 (up 2.8 per cent) while ADR is forecast to rise to £88 (up 2.0 per cent) this year and £89 (up 1.9 per cent) in 2017.

Commenting on the results, Bruce Cartwright, head of business recovery services at PwC in Scotland, said: “It’s encouraging to see Edinburgh and Glasgow continue to perform well, boosted in part, by interest in a growing film and TV industry which has seen the likes of Outlander and other shows filmed here.

“But it’s not just industry professionals driving this boost with fans of shows and movies shot in Scotland coming here and using the central area as their hub for exploring further afield in the country.

“This fan-based tourism could continue to be an excellent benefit to the country as we see continued growing interest in filming in Scotland and potentially a more developed Scottish film studio.

“In Edinburgh, hotels saw yet another record breaking performance in 2015, following on from a high profile 2014, even though the growth pace (especially ADR) slowed.

“The market has seen over 1,000 rooms added over the past three years and more are planned in Glasgow and Edinburgh for 2016 which suggests further continued and encouraging growth.

“The future continues to look positive as organisations concentrate on developing a cohesive Glasgow – Edinburgh tourism industry. Equally, the ‘China Ready’ initiative for Edinburgh and Scotland’s Year of Architecture, Innovation and Design should serve the cities well.”

“Growth in the travel and hospitality sector is expected to continue to outpace the wider economy, all helped by the weak euro. So far European travellers have only seen modest air fair price reductions as a result of the fall in oil prices – 2016 could herald even more competitive pricing – but that will be of scant comfort to the sector in Aberdeen.”

Kevin Reynard, senior partner for PwC in Aberdeen, said: “The low oil price may be a boon for some travellers but it is having the opposite effect in Aberdeen. Indeed one of the problems facing the hotel industry in the north-east is that companies have pared back on travel to the city. We have considerably less business visitors than before.

“As early figures suggest 2016 has seen hotel occupancy fall to nearly 50 per cent it may be that it will take longer than 2016 for recovery to take place.”