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The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance showed year-on-year decreases in occupancy and room rates across the Edinburgh, Glasgow and Aberdeen hotel markets in November 2015.
Demand for accommodation was highest in Glasgow with hoteliers selling 86.4% of their total room stock. Whilst this was down 1.4% on last year, it is worth noting that on 17 different occasions occupancy soared to 90% or more.
Room rates in Scotland’s largest city underwent a much larger fall of 7.8% compared to last year as Glasgow hoteliers achieved an Average Room Rate (ARR) of £75.70. Factoring in the occupancy and ARR performance, hotel yield – or Revenue per Available Room (RevPAR) – dropped by 9% compared to last year to £65.50.
However, as has been the trend throughout 2015, soaring levels of growth compared to 2013 were evident with the November 2015 RevPAR figure in Glasgow some 20% above that of two years ago.
Meanwhile in Edinburgh, performance was also down with average occupancy in the capital reaching 80.5% (falling by 0.6% compared to last year). Although room rates in the city centre decreased by 4.0% compared to last year, the ARR of £84.76 was the highest amongst the three Scottish cities. Consequently, hotel yield contracted by 4.5% to generate RevPAR of £68.23.
Hoteliers in Edinburgh and Glasgow identified corporate and leisure events as significant factors influencing the downturn in November. The cancellation of the traditional autumn international rugby tests at Murrayfield – owing to the recent 2015 Rugby World Cup – dampened demand in Edinburgh. Whilst in Glasgow, the absence of a biennial conference was noted.
A positive picture is apparent assessing the build up of demand for the next few months in Glasgow and Edinburgh as the level of forward bookings for December and January outstripped those of a year ago.
Reflecting the ongoing downturn in the oil and gas sector, Aberdeen hotels continued to suffer as average occupancy fell year-on-year for the 12th consecutive month. 68.5% of all rooms in Aberdeen were sold in November 2015 which constituted an 11.5% reduction compared to last year. November also saw falling room rates in the Granite City as ARR fell by 21.3% compared to November 2014. Combining the ARR and occupancy performance, RevPAR tumbled by a staggering 30.3% compared to last year to £52.45 – slightly above the historic low of £49.18 recorded last month.
Hoteliers in Aberdeen identified the ongoing challenges in the sector as critical factors influencing their performance. The implementation of new shift rotas by oil companies being one issue which has contributed to reduced accommodation demand in the city.
Sean Morgan, Managing Director at LJ Research, said: “The importance of business and leisure events in stoking demand for a destination was underlined this month as Glasgow and Edinburgh hoteliers saw reductions in RevPAR linked, at least in part, to a reduced events schedule.
This outcome coupled with another month of sizeable year-on-year reductions in Aberdeen highlights a challenging month for hotels in Scotland’s three key cities.
The future for Aberdeen hotels continues to look challenging with Brent crude at an 11-year low and forward bookings well below previous years. In Glasgow and Edinburgh, there are positive indications of growth for the Festive Season. The December performance will help shape prospects for 2016, the Year of Innovation, Architecture and Design – themes which Scotland’s key cities will be keen to capitalise on.”More info on LJ Forecaster Join LJ Forecaster Get in touch for further insights