- 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 in Glasgow, Edinburgh and Aberdeen, showed that hotels in Europe’s oil capital recorded the least steep reduction in occupancy in over a year. Meanwhile, hotels in Glasgow recorded moderate overall growth and those in Edinburgh achieved flat performance.
Having recorded 12th months of consecutive double-digit decreases in occupancy, Aberdeen hotels achieved an occupancy rate of 62.6% in April 2016 which was down by only 2.5% compared to last year. Despite the decrease and the occupancy figure being nearly 19% below that of two years ago, the data suggests some signs of stabilisation in the market. This finding is further highlighted as forward bookings for the next three months – May to July – are over 3% higher compared to last year.
That said, evidence of the ongoing challenges in the Granite City was all too apparent as the average room rate (ARR) decreased by 26.8% to £67.74. As a result Revenue Per Available Room (RevPAR) – the industry’s main performance measure which combines occupancy and room rate performance – decreased for the 17th consecutive month falling by 28.7% to £42.37.
Glasgow achieved the highest occupancy across the three Scottish cities with 83.1% of its rooms sold in April 2016, up 1.6% from last year. ARR grew for the 5th consecutive month by 1.3% to £72.33. Highlighting Glasgow’s rapid growth over the last two years, the ARR figure was 13.1% than in April 2014. Combining both the increases in ARR and occupancy resulted in RevPAR of £59.92 – up 2.9%.
Looking ahead to the next three months, just over half of all rooms have already been sold by Glasgow hotels. This result indicates a decrease of 3.5% in forward bookings compared to this time last year.
Accommodation demand in Scotland’s capital fell by a sizeable 5.7% as an average occupancy of 79.2% was recorded. Making up for the notable drop in occupancy, Edinburgh hoteliers benefitted from a continued trend of room rate growth as ARR rose for the 5th consecutive month to £90.45 – up 5% from last year. Balancing the impact of a reduction in occupancy and growth in room rates, RevPAR was relatively flat at £71.64.
There was evidence of declining room sales looking at business on the books over the next three months. Nearly 60% of rooms are already booked which constituted a 4% reduction in demand compared to last year.
Steve Harris, Chief Executive of VisitAberdeenshire, said: “The past few months have been difficult for hoteliers in Aberdeen, but it is promising that occupancy rates across the city now appear to be levelling out. With forward bookings also on the increase, it is a sign that hotel occupancy in Aberdeen is getting back on its feet.
“The oil and gas downturn hit at a time when a number of new hotels were opening. With more rooms available than ever before, and business people choosing to telecommute rather than travelling due to the economic situation, it was expected that occupancy rates would be lower.
“It’s important to note, though, that while business tourism levels may have decreased, the number of leisure visitors to the region has remained consistent. New flight routes – including those to the USA via Icelandair – have opened up new possibilities for travellers and those working in the tourism sector are capitalising on this, providing excellent accommodation opportunities for those wishing to explore Aberdeen and Aberdeenshire.”
Councillor Frank McAveety, Leader of Glasgow City Council and Chair of Glasgow City Marketing Bureau, said: “Glasgow’s appeal as a year-round leisure and business tourism destination was again evident in April, delivering the highest occupancy across all of Scotland’s cities as well as significant, continued room rate and revenue growth. The success of our first ever Glasgow Restaurant Festival combined with meetings of the British Rheumatology Society, the Inner Wheel Congress and the World Conference on Pharmaceuticals – which collectively attracted nearly 6,000 delegates – meant that the city was absolutely packed with visitors last month.”
Sean Morgan, Managing Director at LJ Research, said: “This month’s analysis shows a mixed picture for hotels in Scotland’s three largest cities. The slowing decline in occupancy in Aberdeen indicates some stabilisation but the continuing decline in room rates are heavily impacting on the sector.
Following moderate growth in March, Glasgow hotels recorded another successful month in April. Large scale international association conferences and leisure events contributed to successfully drive up both occupancy and ARR for hoteliers during the month.
Despite recording lower occupancy, flat performance was evident overall in Edinburgh. Looking ahead, our forward bookings analysis suggests weaker demand for hotel accommodation. Increasing hotel supply coupled with the growing presence of Airbnb are two factors which may be contributing to this trend.”