Edinburgh and Glasgow hotel rates outperforming UK - PwC

The cost of spending the night in an Edinburgh hotel during 2017 grew three times faster than the UK average, with Glasgow rates also outpacing the UK, according to PwC’s latest survey of hotel performance.

And while occupancy rates in both cities rose dusing 2017, the average daily rate (ADR) in Edinburgh now tops £100, cementing its place as the second most expensive city in which to spend the night, behind London.

The survey found that the ADR of Edinburgh hotels room rose by 12.4 per cent in 2017, while Glasgow rates grew by 5.2 per cent. That compares with average UK-wide ADR growth of 3.6 per cent in 2017. However, in Aberdeen there was a fall in both the city’s hotel occupancy rate and the revenue per available room.

The data show that, in the year to December 2017, the average revenue per available room (RevPAR) in Edinburgh increased to £86.41 from £76.88 in the prior year, while 2017 occupancy rates hit 83.7 per cent, up from 82.1 per cent in 2016 the ADR paid by guests soared to £103.29, up from £93.60 in the year to December 2016.

In Glasgow, the picture was equally positive, with occupancy rates climbing to 82.1 per cent, up from 79.6 per cent, as theADR paid by guests increased to £72.10, from £70.66.

However, in Aberdeen, the occupancy rate fell to 62.1 per cent from 62.5 per cent as the city continues to adapt to the ongoing slowdown in the oil and gas markets. RevPAR in Aberdeen fell to £35.92 from £38.28 as the ADR dropped to £57.89 from £61.24.

Looking forward, Glasgow is expected to add more than 1,000 new rooms in 2018 and a further 1,000 in 2019, with particular demand in the area around the SSE Hydro, where a Radisson Red has recently opened, and close to the International Financial Services District (IFSD).

While the branded budget hotel sector has driven much of the increased supply throughout the UK hotel sector and now comprises around half of the total UK pipeline, the PwC report suggests that Edinburgh could see fewer budget rooms opening.

This may be because of new planning controls being introduced to attract more luxury hotel operators to the Scottish capital as a means of attracting higher spending overnight visitors.

The total value of hotel deals in Scotland last year was £195m, driven by the sale of luxury Edinburgh hotels The Scotsman, to hospitality group G1; and The Bonham, to a US investment firm.

This trend continued into 2018 with the £85m sale of The Caledonian to Emirati investment firm Twenty 14.

Claire Reid, PwC’s head of assurance in Scotland, said: “While the overall UK picture shows a hotel sector reflective of lacklustre economic growth, Scotland’s largest two cities are showing that the country remains in high demand for both tourists and business travellers.

“Edinburgh in particular enjoyed a huge surge in 2017, with revenue per available room increasing significantly ahead of the national average. With the focus set to be on accommodating more luxury operators in the city, that is likely to increase further.

“Glasgow’s growth as a tourist destination also shines through in the data, and the city is set for a busy summer as it hosts the 2018 European Athletics Championships.”