- Hotel Market Research
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The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance showed that events in September had a significant influence on hotel performance in Scotland’s three largest cities: Aberdeen, Edinburgh and Glasgow.
The 2015 SPE Offshore Europe Conference and Exhibition in Aberdeen brought an expected – and much needed – increase of business to the city. Whilst room occupancy overall fell by 12.8% (from 86% in September 2014 to 75%), a spike in demand during the week of the conference fuelled high occupancy of 90% and, in particular, a staggering midweek occupancy of 99%.
Room prices in the Granite City rose for the first time in eight months (by 5.4%) to achieve an Average Room Rate (ARR) of £104.72. Room rates were significantly influenced by the conference with prices soaring to £223.70 during the biennial event.
However, factoring in the overall occupancy and revenue performance, Revenue Per Available Room (RevPAR) or yield – a key hotel performance metric – fell for the 10th consecutive month (by 8.1%) to £78.51.
Troubled times remain on the horizon for Aberdeen hotels as forward bookings for the next six months were down compared to the same time last year, with October bookings down by as much as 18%.
Meanwhile in Edinburgh, it was the lack of a large hallmark event that brought about significant change to the hotel performance landscape. September 2014 saw Scotland host the Ryder Cup at nearby Gleneagles and the worlds’ journalists convene for the build up and outcome of the historic referendum.
Occupancy in the city suffered the least and remained the highest in the country with 91.8% of the room stock sold (down by 1.9% on last year); there was a notable total of 23 nights where 90% or above occupancy levels were reached.
Room rates tumbled as an ARR of £111.53 was achieved. The 12.4% decline in rate constituted the first double digit loss of this decade so far. That being said, ARR only dropped below the £100 mark on five occasions during the month.
RevPAR overall in Scotland’s capital was £102.38 which marked a 14.1% contraction compared to last year.
Looking forward, events will continue to affect hotel demand as the Rugby World Cup nullifies the usual international rugby autumn tests. However, with a healthy schedule of business events coming to town, forward bookings for the next three months are roughly on par with last year.
Laura Keay, Senior Revenue Manager of Central Edinburgh Hotels, G1 Group said: “The gap left by the Ryder Cup meant that the drop in ARR, RevPAR and rooms revenue to the Edinburgh hotel industry in September 2015 was to be expected, however from our point of view, the month shaped up much better than initially forecasted. The winter season to our four Edinburgh properties is building up steadily and if October’s weather continues to bless us with good fortunes, a late pick up might counteract the lack of November Rugby business.”
Glasgow was the only city to achieve an increase in the number of rooms sold (by 0.5%) and in doing so achieved its fourth consecutive month of occupancy growth resulting in an impressive 91.5% of the city’s room stock sold.
Glasgow’s continued steady stream of sporting events, concerts and business conferences contributed to an impressive 24 nights where 90% or above occupancy levels were secured, with 14 of those nights achieving 95% or above occupancy.
Events, concerts and conferences held in Glasgow in September included Scotland’s European Championship football qualifier match against Germany at Hampden; Great Britain’s Davis Cup tennis semi-final against Australia at the Emirates Arena; performances by Kevin Bridges, Jerry Lee Lewis and Florence and The Machine at the SSE Hydro and three major conventions: the European Association of Archaeology annual meeting, the annual meeting of the Association For Medical Education in Europe and the European Association for International Education’s annual congress.
Similar to Edinburgh, Glasgow’s revenue performance was also affected (although to a lesser extent) by the 2014 Ryder Cup as ARR fell by 6.6% from last year to £82.22. Put in broader context, however, Glasgow’s ARR result in September 2015 was over 15% higher than the same figure two years ago.
Offset by the decline in revenue, RevPAR dropped by 6.1% to £75.35 which was the smallest RevPAR decline among the three cities.
With a continued strong mix of events coming to the Scotland’s largest city including the World Gymnastics Championships later this month, forward bookings for the next three months are looking healthy with 2.1% more rooms sold compared to the same time last year.
Scott Taylor, Chief Executive of Glasgow City Marketing Bureau, said: “As the only city in Scotland to deliver occupancy growth last month, our 91.5% was the highest Glasgow has ever achieved for September.
“With our occupancy now on par with, and close to overtaking, Edinburgh, this latest report shows that Glasgow is undoubtedly Scotland’s leading tourism destination and the real success story of our three major cities; leading the country’s growth in this vital sector.
“We’re on an upward bounce following our delivery of the best ever Commonwealth Games and our tourism industry – from hotels to restaurants, taxis and airlines – is running at full tilt. Last month alone, we welcomed some 25,000 conference delegates, which equated to more than 70,000 room nights.
“Our investment in new infrastructure, such as the SSE Hydro and Emirates Arena, has helped to create and sustain a level of demand that most European cities can only dream of.”
Sean Morgan, Managing Director at LJ Research, said: “A Ryder Cup hangover affected hotel performance in the central belt last month and, in particular, in Edinburgh where an unprecedented double digit decline in rate was observed. Less influenced by the stalling demand this month, Glasgow hotels continue to post strong growth compared to 2013. Meanwhile, as has characterised performance so far in 2015, Aberdeen hotels continue to suffer from weak global oil demand. Following recent news of slowing growth in the Chinese economy, it’s unlikely that the downward pressure on the oil industry will abate any time soon.”