The increase represents a significant jump from the £54m in transaction volumes reported for all hotels during the same period in 2022.

Driving this growth in the boutique hotel sub-market are key transactions such as the sale of a seven-property portfolio by Blantyre Capital Limited and Fairtree Hotel Investments, comprising four and five-star hotels across multiple locations in Scotland including Ballater, Glencoe, Inverurie, Oban, the Isle of Mull, Inverary and Nairn, which fetched £45m.

Steven Fyfe, director in the hotel capital markets team at Savills Scotland, said: “Boutique hotels offer the experience and impartiality we have all craved, particularly since the onset of the pandemic in 2020.

“This ever more popular sub-market offers plenty of differentiation and both consumers and investors alike are attracted to boutique hotels like never before.”

Overall, the Scottish hotel market has seen a threefold increase in investment volumes so far in 2023, with transactions totalling £165m compared with £54m in the same period last year. The significant increase is largely due to the sale of the Waldorf Astoria Edinburgh, the Caledonian, which alone accounted for 51% of the total figure. Savills notes that this is against a backdrop of a 60% year-on-year decline across the UK hotel sector, proving the resilience of the Scottish market.

Coupled with the increase in deal volumes, hotel operational performance is also holding up well across Scotland. Year-to-date, Savills has seen revenue per available room (RevPAR) up by 26% year-on-year at £80. In turn, this has increased by 16% to £61 and 36% to £108 in Glasgow and Edinburgh respectively. This is a similar story to the serviced apartment market, which saw RevPAR increase by 21% year on year to just over £80 in Q1 2023.

Mr Fyfe continued: “Whilst we have seen transaction levels climb for hotels in Scotland at the start of 2023, we are also seeing significant numbers of visitors which is having a positive impact on revenue.

“What’s more, it’s interesting to note that RevPAR growth is outpacing inflation, despite the assumption the two are closely correlated. The ongoing trend for staycations has seen Scotland become an increasingly popular holiday destination, therefore we expect figures to remain largely positive in the second half of the year.

“However, we do not expect to see a continued jump in transaction volumes whilst we deal with ongoing economic uncertainty.”