The data, which is compiled and produced by Hotstats and analysed by RSM UK, highlights that although consumers are continuing to feel the pinch and noticeably cutting back on luxury goods, they are still willing to spend on high-end hotels, showing experiences continue to come out on top.

Average room rates of Scotland luxury hotels jumped from £222.07 in November to £292.36 in December. There were also slight increases in the middle market and budget hotels, from £99.31 to £111.53 and from £86.48 to £97.31 respectively.

The increase in room rates also filtered through to the bottom line of Scotland luxury hotels, with gross operating profits per available room (GOP PAR) rising from £46.65 (November) to £80.56 (December). GOP PAR also rose in the middle market from £24.71 (November) to £28.66 (December), and from £30.34 (November) to £34.39 (December) in budget hotels. This shows that Scotland is bucking the wider UK trend, as cost pressures hit the UK middle market and budget hotels, with GOP PAR down from £53.14 to £48.68 and from £34.21 to £29.78 respectively.

However, Scottish occupancy was down slightly month-on-month across the board in luxury (7%), middle market (7%), and budget (5%) hotels.

Stuart McCallum

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “Overall it was a strong end to 2023 for Scotland’s hotel industry, with the luxury market emerging as the clear front runner in December, as room rates jumped almost 31.6%, with GOP PAR seeing at 72.6% increase.

“The sharp increases in room rates and consequently profits reflect that Scottish hoteliers are focusing on maximising their yield in the luxury market, rather than achieving total occupancy.

“While occupancy was slightly down in December, it’s clear that demand is there despite squeezed household budgets, as consumers prioritise luxury experiences over luxury goods.”

He continued: “The large uptick in luxury hotel room rates and profits shows that Scotland is bucking the wider UK trend, which has seen middle market and budget hotel profits fall in December.

“UK luxury hotels also saw a more modest increase in profits. This indicates that Scottish hoteliers are more than holding their own, with Scotland standing out as a destination of choice for consumers due to many renowned spectacles throughout the year.

“However, Scottish tourism is not quite back to pre-pandemic levels, which is further compounded by government policy changes including tourism tax in Edinburgh and restrictions to the nighttime economy such as late-night parking charges.”

Mr McCallum added: “Despite the challenges facing Scottish tourism, the latest profits show the sector’s strength, as well as the range of hotels available for varying consumer budgets.

“The positive shift in consumer behaviour is likely to continue, especially looking towards the spring and summer months, when the country hosts a number of international music, cultural and sporting events.

“As inflation also continues to ease, this will enhance hoteliers’ ability to manage costs and increase profits, which would be a real boost for Scottish businesses.”