Occupancy and revenue continues to fall at Aberdeen hotels –BDO

Hotel occupancy and revenue continued to fall in Aberdeen during March according to the latest report by accountants, BDO.

The firm’s monthly Scottish hotel survey found that year-on-year occupancy in Aberdeen dropped 3.2 per cent to 72.4 per cent whilst revenue (the industry term for rooms yield) fell 5.2 per cent to £66.88.

This compares to increased occupancy and revenue in Edinburgh, Glasgow and Inverness.

Glasgow had the highest occupancy in March increasing 8.6 per cent to 83.5 per cent with an increase of 11.5 per cent in revenue to £51.51.

In Edinburgh occupancy rose 6.8 per cent to 77.1 per cent with revenue up 7.7 per cent to £55.10. Inverness saw occupancy rise 3.1 per cent to 75.2 per cent and revenue rise 20.8 per cent to £43.29.

All parts of the UK experienced broadly similar occupancy rates with Scotland on 75.8 per cent; regional UK on 74.6 per cent; England on 74.3 per cent; and Wales at 75.6 per cent.

Meanwhile revenue in Scotland remains higher than any other parts of the UK outside London at £51.32; with regional UK on £45.94; England on £44.86; and Wales at £41.78.

Alastair Rae, a partner in the Property, Leisure and Hospitality sector at BDO, said: “It is clear that the reduced oil price is continuing to have an impact on the hospitality sector in Aberdeen. A decline in both occupancy and revenue in March reveals a slowing of demand from the business market and a comparable reduction in price occurs to slow the decline.”

“How long this lasts in Aberdeen depends strongly on the view of the oil and gas sector about the likelihood of an increase in oil price and the continued viability of the sector in the city. I would expect year-on-year occupancy and revenue to continue to fall for some months to come so hoteliers need to act to ensure they are prepared for lower volumes and values over the next quarter or so. It may be worth noting that the revenue figures this year are comparable to numbers from March 2013 and still higher than those in March 2012. It is an indication of just how much these numbers have risen over the last couple of years.”

Mr Rae continued: “Inverness and Glasgow both had an excellent month with the former hosting the SAIF meeting and the Marine Energy Supply Chain event which boosted demand in the pre-tourist season. Glasgow continues to benefit from both its conference and entertainment offerings with the Hydro clearly playing a strong part in benefiting the hospitality sector in the city.”

“For Edinburgh the tourist season seems to start sooner each year although the early Easter may have boosted the leisure market in the capital. It seems clear that the leisure market continues to provide the city with enormous demand and consequent high revenue numbers.”

Mr Rae concluded: “Aberdeen aside, the Scottish hotel figures point to a very good year with both leisure and business visitors returning to the market in considerable numbers. This can only be good for the sector with the one caution being the need for Aberdeen’s hoteliers to monitor the local market closely in the run-up to summer as it is clear the free spending days of recent years have been replaced by greater restraint and occupancy and revenue are likely to continue to decline.”