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LJ Forecaster: Scotland hotel results for August
The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance showed flat overall performance for hoteliers in Glasgow, strong growth in Edinburgh and a continuation of double digit negative yields in Aberdeen for the month of August.
Average room occupancy was highest in Edinburgh with 92.0% of hotel rooms filled during the month – a month which saw the capital host no less than six separate Edinburgh Festival events. That said, a reduction in room occupancy of 1.7% compared to last year was evident in the city.
However, the small occupancy loss was offset by buoyant room rate growth of 12.7%. This was the ninth successive month of room revenue growth in the capital. Edinburgh’s strong revenue growth was largely driven by the superior performance of 4-5 star hotels in the city as they achieved ARR growth of circa of 15%.
The resulting overall Average Room Rate (ARR) was £181.96 which marked the highest ARR Edinburgh figure on record since LJ Forecaster monitoring began over 10 years ago. Combining the occupancy and room revenue performance, the overall yield or RevPAR (Revenue Per Available Room) – a key performance metric for the sector – was £167.40 which was 10.7% higher than the August 2015 figure.
Glasgow hotels also recorded high room occupancy of 89.8% and, like their counterparts in Edinburgh, also saw a contraction in room occupancy – of 3.9% – compared last year. The reduction in occupancy in Glasgow constituted the fourth successive month of year-on-year occupancy declines in Scotland’s largest city.
Meanwhile, ARR in Glasgow grew by a healthy 4.1% to £77.83. As a result, the room rate growth combined with the occupancy loss generated relatively flat RevPAR of £69.91 (0.2% higher than last year).
Aberdeen experienced its strongest year-on-year occupancy growth (6.6%) since September 2013 and has now achieved four consecutive months of occupancy growth. That said, the 74.6% occupancy rate for August 2016 was still down by nearly 6% compared to August 2014.
Room rates in the Granite City continued to achieve double digit declines which resulted in an ARR of £66.07, down by 16.3% compared to last year. However, this was the smallest reduction in over a year indicating that the pace of decline in the market has slowed. The occupancy growth combined with the slowing reduction in ARR resulted in RevPAR of £49.30 which was 10.7% below that of last year.
John Donnelly, Chief Executive at Marketing Edinburgh said:
“It’s been a bumper summer for Edinburgh with the city being at capacity thanks to the summer festivals. It’s fantastic to see nine consecutive months of increased room revenue growth due to the high-end accommodation offerings in the city.
Edinburgh is seeing a consistent positive growth in REVPAR, once again showcasing the Capital as having the strongest growth rates across all of Scotland’s cities.
Councillor Frank McAveety, Leader of Glasgow City Council and Chair of Glasgow City Marketing Bureau, said: “Despite a marginal occupancy reduction last month when compared to August 2015, Glasgow’s return was virtually the same as in Edinburgh, but without the festival, which shows that our city’s tourism appeal is year round.
It’s also notable that, at 90%, it was our second highest August occupancy since records began in 1999 – with nine nights in the month reaching occupancy of 95% or greater. Against a backdrop of growing accommodation stock, with nearly 350 new hotel rooms available per night in the city since January this year, there continues to be clear demand for hotels in Glasgow and investor confidence remains high.
Leisure and business tourism are crucial pillars of Glasgow’s economic strategy and August was another mega month for the city. Alongside flagship events such as the World Pipe Band Championships, Piping Live, the UDO World Street Dance Championships, Ignition Festival of Motoring and the Summer Sessions music festival in Bellahouston Park, August also brought a number of high-profile conferences to Glasgow including the International Bible Students Association’s Annual Congress and the World Conference of the Society for Music Education, which collectively attracted more than 11,000 international delegates; boosting our economy by some £4 million.”
Steve Harris, Chief Executive of VisitAberdeenshire, said:
“That occupancy levels are continuing to grow and room rates are beginning to level out are huge positives for accommodation providers in the north east of Scotland. It is an indicator that things are definitely moving in the right direction.
It is important to remember that although occupancy rates may be down on 2014, there are a number of contributing factors – not least that thanks to new developments there are now more rooms available to visitors than there ever have been previously. Occupancy levels have continued to swell despite this increase in available rooms which should not be ignored.
There are a number of high profile business events on the horizon, including LiftEx 2016 and SPE Offshore Europe 2017, which will provide a welcome boost for hoteliers in the city. Add to this that leisure travellers are increasingly attracted to Aberdeen and Aberdeenshire as a destination, and we look forward to seeing occupancy levels and room rates rise further.”
Sean Morgan, Managing Director at LJ Research said:
“It is interesting to see for the second successive month reducing occupancy in Scotland’s two largest cities. Increases in hotel supply along with the influence of Airbnb are likely to be a few of many disrupting factors in these markets.
In August, Edinburgh hoteliers benefitted again from a premium associated with the internationally renowned festivals. As a result strong, double digit room revenue growth helped to ensure a positive bottom line. In Glasgow, a flat overall picture was evident which is by-and-large on par with the year to date trend. Meanwhile, Aberdeen hotels continue to show signs of market stabilisation although with evidence of declining business on the books for the next few months it will be hard for the sector to shrug off the current challenges.”