Scottish hotel occupancy and revenue dip in 2015 due to Aberdeen fall

Scotland’s hospitality sector saw occupancy and revenue fall during 2015 due to the dramatic collapse in activity in Aberdeen according to the latest report by accountants and business advisers, BDO.

The firm’s hotel survey found that during 2015 occupancy dipped 0.9 per cent compared with an increase in occupancy of 1.5 per cent in regional UK; a rise of 1.5 per cent in England and a 2.3 per cent increase in Wales. Revenue in Scotland last year fell 2.2 per cent compared with an increase of 7.3 per cent in regional UK; a rise of 8.5 per cent in England and up 10.4 per cent in Wales.

However, within these national figures there is a marked division between the performance of Aberdeen and the rest of the country. Edinburgh had the fifth highest revenue across of any city outside London (the first four were Bath, Chester, Oxford and Portsmouth) while Glasgow had the third highest occupancy figure outside London after Chester and Southampton.

In Edinburgh revenue for the year was £60.27 which was up by 0.5 per cent on the previous year and occupancy rose 3.1 per cent from 78.0 per cent to 80.4 per cent.

In Inverness revenue was up 4.3 per cent to £55.26 while occupancy fell 1.7 per cent to 80.5 per cent whilst in Glasgow revenue fell 0.1 per cent to £51.82 but occupancy increased 0.3 per cent to 81.6 per cent. However, in Aberdeen revenue fell 22.0 per cent from £68.71 to £53.60 and occupancy was down 18.5 per cent from 78.5 per cent to 64.0 per cent.

Alastair Rae, a partner in the property, leisure and hospitality sector at BDO, said: “Scotland’s hospitality sector had a pretty good year in 2015 with the exception of Aberdeen and it is that city’s figures which have skewed the overall performance of the hotel industry in these numbers.”

“But, although the fall in occupancy and revenue in Aberdeen is severe it is partially because it was from such a great height. Despite a 22.0 per cent revenue fall year on year Aberdeen still has a higher figure at £53.60 than Glasgow at £51.82. This reflects the very rarefied market that Aberdeen occupied prior to the fall in the oil price.”

Mr Rae continued: “There are signs of some stabilising in the oil price so I would expect the downward curve in the occupancy and revenue in Aberdeen to reduce somewhat as the market comes to terms with its new operating environment.”

“Across the wider market I would expect the coming year to be slightly better but not exceptionally so. The hospitality sector is prone to the broader economic mood which still seems slightly uncertain at present. Until consumers and business can see some certainty the hospitality sector will continue to experience short term fluctuations in activity.”

Mr Rae concluded: “But I do believe that many in the hotel industry will be quietly pleased to have had such a positive 2015 and will be looking forward to the coming year anticipating steady and improving profitability.”

This hotel trends survey has been published since the early 1970s and features a broad range of hotels in the 3 – 4 star categories.