Double digit falls in occupancy and revenue at Aberdeen hotels -BDO

Aberdeen’s hotel sector experienced double digit drops in both occupancy and revenue as the low oil price continued to take its toll according to the latest report by accountants BDO.

The firm’s monthly hotel survey found that year-on-year occupancy in Aberdeen dropped 11.5 per cent to 68.9 per cent whilst rooms yield (the industry term for revenue) fell 12.1 per cent to £62.99.

This contrasted with double digit increases in revenue in Edinburgh, Glasgow and Inverness and positive rises in occupancy.

Edinburgh had the highest occupancy rise in April increasing 7.9 per cent to 80.4 per cent with an increase of 10.2 per cent in revenue to £57.93. Inverness saw occupancy rise 7.5 per cent to 78.3 per cent with revenue up 20.7 per cent to £49.83. Occupancy rose 0.9 per cent in Glasgow to 80.6 per cent and revenue rose 14.2 per cent to £51.46.

The downturn in Aberdeen impacted on the total Scottish figures which rose just 1.1 per cent in occupancy to 75.4 per cent and had a 5.3 per cent rise in revenue to £51.53. In regional UK there was an increase of 1.4 per cent in occupancy to 74.6 per cent; up 1.2 per cent to 74.3 per cent in England; and up 3.4 per cent to 77.0 per cent in Wales. Revenue rose 8.8 per cent to £46.05 in regional UK; was up 8.9 per cent to £45.00 in England, and up 13.6 per cent to £41.12 in Wales.

Alastair Rae, a partner in the Property, Leisure and Hospitality sector at BDO, said: “The continued uncertainty in the oil and gas sector is still having a serious impact on the hotel sector in Aberdeen. Double digit drops in both occupancy and revenue, at a time when the rest of the sector in Scotland experienced a double digit increase in revenue indicates that the fall is specific to the oil industry.”

“It should be noted that occupancy and revenue levels in Aberdeen are falling from the very high levels achieved last year but it is clear that this is becoming part of a trend in the granite city which needs to react immediately by monitoring costs, cutting expenses where possible, and keeping prices competitive.”

Mr Rae continued: “Meanwhile Edinburgh, Glasgow and Inverness saw revenue levels soar in April kick started by the early Easter date this year. Inverness was specifically boosted by the SHREC 2015 conference and the Scottish Cup final which boosted the city’s hospitality sector.“

“The revenue figures in particular indicate a positive start to the year for the hotel sector with increases of between 10.2 per cent and 20.7 per cent inflating the revenue numbers at a very early stage in the tourist year.”

Mr Rae concluded: “The first four months have seen one of the most positive starts to 2015 for many years as there are now clear signs that the hospitality sector is recovering to pre-recession levels. With the exception of Aberdeen I believe that this year will see Scottish hotels experience very high levels of occupancy and revenue and a return to good levels of profitability.”

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