Hotels report shows ‘very healthy’ accommodation market

Hotels in Scotland’s major cities are seeing occupancy growth despite mixed performance overall, the monthly LJ Forecaster Scottish Intercity Report has found.

According to the latest report from tourism market research specialists LJ Research, Edinburg, hoteliers sold 80.8 per cent of their rooms during the month, which was 0.3 percentage points higher than this month last year.

In addition to increasing room occupancy, Edinburgh’s hoteliers also grew room rates as the Average Room Rate (ARR) increased from £84.75 in November 2015 to £100.76, an increase of a hefty 18.9 per cent.

Overall, these figures showed strong growth of 19.4 per cent for Revenue Per Available Room (RevPAR) – the key hotel performance metric – as RevPAR stood at £81.44.

The trend of future bookings also shows positive signs for Edinburgh hoteliers as forward bookings for each of the next 6 months are all above last year’s levels.

Glasgow and Aberdeen hotels also welcomed more guests compared to last year. However, the overall picture was mixed.

In Glasgow, November’s occupancy rate at 87.5 per cent was 1.1 percentage points higher than last year. But more rooms were sold in return for lower average room rates: the ARR was £74.46 for a Glasgow city centre room which was 1.6 per cent less than in November 2015. Combining the occupancy and ARR performance, RevPAR was almost on par with last year, falling by 0.5 per cent.

In addition to the occupancy growth, there was an increase in business on the books in Glasgow as confirmed and tentative bookings were above last year for four out of the next six months.

In Aberdeen – where hoteliers heavily rely on business guests – a recent rebound of the oil price to above $50 a barrel was likely noted with relief. The effects have not yet fully affected the hospitality industry, however: occupancy grew to 70.0% (which is 1.5 percentage points higher than November 2015). But November’s average room rates were only £65.38 compared to £76.55 last year – a drop of 14.6 per cent. Consequentially, RevPAR decreased by 13.0 per cent.

In Aberdeen, business on the books was largely unchanged compared to last year which does not suggest that there will be a significant rebound anytime soon.

Sean Morgan, managing director at LJ Research, said: “November was the seventh consecutive month of £100+ average room rates for city centre hotels in Edinburgh. The fact that these prices did not negatively impact on room occupancy are signs of a very healthy accommodation market indeed.

“The growth observed in Edinburgh’s hotel industry is perhaps even more astonishing when considering that 800 new hotel rooms have opened in the city so far in 2016 and also factoring in the growth of the sharing economy. For the latter aspect, our ongoing Edinburgh Visitor Survey continues to record growing usage of Airbnb: since July this year some 8% of Edinburgh visitors stayed in lettings marketed by Airbnb. This compares to only 5% in the same period last year and indicates that the sharing economy is attracting more visitors to the city. Without Airbnb, hotels’ room rates and occupancy would potentially be higher still.”