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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 occupancy fell in Glasgow and Edinburgh and rose in Aberdeen for the month of July.
However, as average room rates grew more than occupancy fell in Glasgow and Edinburgh and, reversely in Aberdeen, as rates fell more than occupancy grew, the overall room yield performance was positive in Glasgow and Edinburgh and negative in Aberdeen.
The year-on-year figures showed that Edinburgh’s occupancy fell by 1.9% to 89.8%. This was, however, outweighed by a steeper increase in average room rate of 3.8% to £131.04 which resulted in overall positive revenue per available room (RevPAR or room yield) growth of 1.7% to £117.67.
A similar yet more positive picture was evident in Glasgow as occupancy fell by 2.4% to 87.4% and room rates increased by a significant 10.4% to £80.49. Consequently, RevPAR grew by a buoyant 7.8% to £70.24.
Meanwhile, the opposite trend occurred in Aberdeen as despite solid occupancy growth of 4.4% to 68.2% there was a hefty 18.1% fall in daily rates to £65.07. Overall, yields as a result fell by 14.5% to £44.36.
In addition to historic hotel performance, LJ Forecaster collects hotels’ business-on-the-books figures to assess how accommodation demand is building across destinations. Forward booking data for July, being the first full month following the UK’s vote to leave the EU, provides a useful early indication of the economic impact of Brexit.
LJ Forecaster data suggests that there are reasons to be hopeful: looking at the volume of new bookings achieved by hotels over the last month, it is apparent that hotels in Scotland’s two largest cities have secured more new bookings in July this year compared to July last year. For example, in July 2016 Edinburgh hoteliers sold 1.8% and 1.6% more rooms for August and September, respectively, compared to the same period a year ago.
A similar trend was evident in Glasgow as pick up rates were generally higher this year than last year. These results indicate more bookings for the next 12 months were achieved during the month of July 2016 compared to July 2015.
In Aberdeen, however, the findings were reversed as, owing to different market forces at play, there was evidence of lower pick up rates and, hence, signs of reduced booking activity compared to a year ago.
The overall positive trend in Glasgow and Edinburgh is backed up by anecdotal evidence collected by LJ Research. Feedback from Scottish hotel general managers identified that roughly half anticipate that Brexit will not make a difference to their business and, among the remainder, there were more who believed Brexit will be a positive rather than a negative factor on performance. This sentiment was especially pronounced in Edinburgh, as hoteliers indicated that the weaker pound will result in more leisure guests from both overseas and the UK.
In addition, other hotel operators who are more exposed to business travellers (though not necessarily in the oil and gas industry) expect increased domestic activity as companies reorganise and need to travel more for business meetings.
Sean Morgan, Managing Director at LJ Research said: “July saw solid performance for Glasgow and Edinburgh following the EU referendum. In Aberdeen we continue to see the consequences of the declining oil and gas market.
As far as Brexit goes, our forward bookings analysis shows an interesting spike in hotel bookings in Edinburgh and Glasgow within the last month compared to a year ago. In addition, general manager feedback on the impact of Brexit was fairly optimistic with the highest optimism evident looking two years out. Business confidence over the coming months will continue to be shifted by ongoing developments as lines are drawn for the negotiation of the UK’s departure from the EU.”More info on LJ Forecaster Join LJ Forecaster Get in touch for further insights