The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance showed positive performance in Edinburgh, an expected decline in Glasgow – one year on from the Commonwealth Games – and sustained losses in Aberdeen.
As the summer festival season began to take hold, Edinburgh hoteliers achieved the highest room occupancy with a staggering 91.6% of hotel rooms sold in July 2015 (down slightly by 0.7% compared to last year).
Following the trend of buoyant Edinburgh festival ticket sales, hotels saw significant room revenue growth. The average room rate (ARR) in the city grew a noteworthy 10.3% from last July to £126.30 which lead to the third consecutive month of £100+ ARR.
Complementing Edinburgh Art Festival and Edinburgh Jazz & Blues Festival which took place during the month, city hoteliers benefitted from increased demand due to the Scottish Open Golf held in nearby Gullane and The 2015 Open at St Andrews.
Factoring in both occupancy and revenue performance, Revenue Per Available Room (RevPAR) or yield – a key hotel performance metric – was £115.66, up 9.6% compared to last year.
John Donnelly, Chief Executive of Marketing Edinburgh said: “July’s hotel occupancy continues the city’s strong performance of recent months. Along with flagship events such as the Scottish Open and Edinburgh Jazz Festival attracting thousands of visitors to the city, July also saw a number of high profile business tourism events. The four day Controlled Release Annual Meeting, for example, saw 1,425 delegates arrive in Edinburgh from more than 52 counties and generated an estimated £3m for the local economy.”
“The city also looks set for a busy September, with more than 8,000 delegates expected to attend 26 conferences throughout the Edinburgh region, giving its accommodation providers a substantial boost in the post-Festival season.”
Glasgow’s occupancy performance surprised many, as the city sold 1.1% more rooms this year than in July 2014 – a month which registered an impressive 8% rise on July 2013 due to hosting the Commonwealth Games. Unsurprisingly, however, room revenues tumbled from their record high level last year as ARR dropped by 22.3%.
Combining the occupancy and revenue figures, RevPAR stood at £65.18 which although 21.5% below last year remained some 30% higher than in July 2013. This growth compared to July 2013 highlights the extent of a longer term path of growth in the hotel sector in Glasgow.
Councillor Gordon Matheson, Leader of Glasgow City Council and Chair of Glasgow City Marketing Bureau, said: “We had forecast a strong July in 2015 but we were surprised by demand for hotels in the city being greater last month than during the same period of the Commonwealth Games. Hotel performance is a key indicator of Glasgow’s tourism industry – in just 24 months we have experienced significant growth, with occupancy up 7.5% and yield having risen by some 32% compared to July 2013, which reinforces the legacy benefits of having hosted the best ever Games.”
In Aberdeen, meanwhile the trend observed throughout the year was again apparent as fewer rooms were sold compared to last year (65.3% compared to 81.7% in July 2014 which constituted a large fall of 20.2%).
A double digit contraction was also evident in hoteliers’ room revenue figures as ARR dropped by 18.9% to £79.43. Overall, this equated to an eye-watering RevPAR reduction of 35.2% from £80.04 in July 2014 to £51.86. This month’s RevPAR of circa £50 signalled comparable performance in Aberdeen to that of four years ago in July 2011.
Whilst the city awaits an influx of business for the biennial SPE Offshore Europe Conference & Exhibition in September, LJ Forecaster forward bookings analysis suggests that the oil and gas conference will do little to revert the downward trend observed in recent months.
Sean Morgan, Managing Director at LJ Research, said: “The Met Office defines July 2015 as cool, dull and wet. For hoteliers in Edinburgh it will be remembered more fondly as the golf and start of the summer festivals contributed to a successful month.
One year on from the Commonwealth Games the negative performance in Glasgow belies an upbeat trend in the city. With significant impact from business and leisure events in the coming months, the strong demand for accommodation recorded in July is unlikely to abate.
Aberdeen hotel performance has again been heavily affected by a global oversupply of oil. Historically hotel yields have correlated closely with oil prices so it is interesting, and perhaps of some comfort to hoteliers, to see yield trends in recent months outperforming oil price reductions.”
LJ Research is a full-service market research agency based in Edinburgh, Scotland undertaking quantitative and qualitative market research. We’re experts in analysing customer feedback and delivering actionable insights.
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