Buoyant hotel performance in Edinburgh but Glasgow and Aberdeen decline

According to the monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, 93.3 per cent of all hotel rooms available in Edinburgh in June were occupied.

In Glasgow, room occupancy for the month of June stood at 85.9 per cent; in Aberdeen, average room occupancy only achieved 70.8 per cent.

In Edinburgh, higher room occupancy was accompanied by a strong rise in average room rates (ARR), with the average price of a room in the capital’s city centre hittinh a staggering £125.69 - a 10.8 per cent increase compared to June 2015.

The figure also signalled the highest June room rate recorded since the inception of the Edinburgh LJ Forecaster hotel study in 2005.

Factoring in the occupancy and room rate performance, Edinburgh’s Revenue per Available Room (RevPAR) – a key performance metric for the sector – was up 13.8 per cent on last year at £117.28.

Glasgow’s room occupancy of 85.9 per cent was down 7.4 per cent on June 2015.

At £80.03, the average room rate in Glasgow was down too by 0.7 per cent compared to this month last year.

As a result, RevPAR fell by 8.3 per cent compared to last year.

Like last month, Aberdeen’s hoteliers noted a small increase in room occupancy – this month saw a 2.4 per cent increase compared to June 2015. However, hotel performance in June overall was still significantly below the levels recorded before the hefty fall in oil prices with ARR at £67.42, down by 21.9 per cent compared to last year, and RevPAR at £47.71, down 20.0 per cent.

Looking at findings from the first six months of 2016, Edinburgh’s hotel market appears buoyant and growing. More than offsetting the 1.6 per cent reduction in average occupancy between January and June, hoteliers recorded a healthy rise in average room rates of 7.2 per cent.

Meanwhile, in Glasgow overall growth in the first 6 months of 2016 was negative as falling occupancy of 2.8 per cent outstripped a modest increase of 1.8 per cent in average room rate. That said, it is noteworthy to report that Scotland’s largest city achieved higher occupancy than the capital during the period (78.0 per cent compared to 77.0 per cent).

During the first half of 2016 Aberdeen’s hoteliers continued to suffer the consequences of the struggling oil industry as average occupancy was down by 9.6 per cent compared to 2015 and average room rates were some 25 per cent lower than a year ago.

Sean Morgan, Managing Director at LJ Research said: “June saw another month of contrasting fortunes for hoteliers in Scotland’s largest cities. The frontrunner this month was Edinburgh which recorded remarkable double digit room rate growth. Savvy revenue management by hotels and the impact of a diverse range of events helped to affect the strong performance. For the second consecutive month in Glasgow year-on-year reductions in both indicators – occupancy and, to a lesser extent, room rate – was recorded. RevPAR as a result fell again by over 5 per cent compared to 2015. Whilst the last few months’ performance highlights challenges in the market, hotels in Glasgow continue to achieve notably higher RevPAR compared to two years ago – pre the Commonwealth Games.”