- 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 Scotland’s two largest cities minimised the impact of occupancy reductions by growing room rates whilst both occupancy and rates fell by around 20% in Aberdeen.
Glasgow achieved the highest room occupancy in February (74.7%) despite falling by 2.3% compared to last year. In Edinburgh, occupancy also recorded a drop (4.9%) on last year as hotels sold 68.7% of their room stock. Meanwhile, Aberdeen’s occupancy saw the 15th consecutive month of decline as average occupancy of 55.7%, was achieved which constituted a 19.2% decrease compared to last year.
Despite recording occupancy losses, Edinburgh and Glasgow hotels achieved increases in their average room rates (ARR). The cost of a room in February 2016 was highest in the capital as ARR of £85.18 was achieved – this was a 3.9% increase from last year. Glasgow saw a slightly higher increase of 4.5% which produced on ARR of £67.02.
Revenue Per Available Room (RevPAR) – the industry’s main performance measure which combines occupancy and room rate performance – declined slightly in Edinburgh (by 1.2%) and rose slightly in Glasgow (by 1.7%) as respective RevPAR figures of £58.54 and £50.07 were achieved.
Despite tumbling 22.9% to £72.46, ARR in Aberdeen remained above Glasgow’s rate. However, the double digit contractions in both occupancy and ARR generated a hard-hitting reduction of 37.7% from last year as RevPAR fell to £40.39.
Looking ahead, all three Scottish cities saw reductions in forward bookings for the next three months compared to figures from this time last year. Aberdeen saw the largest decrease of 7.3% with Edinburgh and Glasgow trailing behind at 4.8% and 2.4%, respectively.
John Donnelly, Chief Executive, Marketing Edinburgh said: “To have average room rate increase of 3.9% on last year’s results is an incredibly strong result and a demonstration of Edinburgh’s ongoing appeal to both leisure and business visitors. Earlier this week, TripAdvisor announced, that for the second year in a row, Edinburgh was the UK’s most popular destination outside London in its international Travellers’ Choice Awards. The city’s popularity as a world leading destination is showing no signs of abating in 2016.”
Sean Morgan, Managing Director at LJ Research, said: “Following strong performance last month, hotels in Scotland’s two largest cities suffered lower occupancy compared to a year ago as business and leisure events contributed less to drive up demand for accommodation. That said, hoteliers in Edinburgh and Glasgow will reflect positively on February’s and, indeed, the previous two month’s room rate trend as three successive months of growth are apparent.
In Aberdeen occupancy was most affected by the continued loss of corporate demand linked to the oil and gas sector. Hoteliers in the Granite City recorded their fourth consecutive month of 30%+ reductions in RevPAR which highlights the extent to which the hotel sector is feeling the financial strain of the energy sector’s woes.
There is a continued note of caution to Edinburgh hotels as sales on the books over the next few months were notably below last year’s level. This is also the case for Aberdeen. Meanwhile, in Glasgow there is evidence of flat or slightly higher demand over the next two months and indications of significantly fewer bookings for May.”