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Edinburgh and Glasgow capitalise on Valentine’s Day weekend with positive outlook ahead whilst demand continues to weaken in Aberdeen
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 varying performance trends in February across the main cities.
Glasgow achieved the highest room occupancy in February (76.4%) despite falling by 2.4% compared to February last year. In Edinburgh, occupancy rose by 2.0% on last year to 72.3%. Meanwhile, Aberdeen’s occupancy decreased by 5.1% compared to last year to 68.9% during the month.
Occupancy growth coupled with Average Room Rate (ARR) of £81.96 (an increase of 1.7% compared to February 2014) in the capital generated Revenue Per Available Room (RevPAR) – the industry’s main performance measure – of £59.25 which constituted a growth of 3.7% for Edinburgh hotels compared to last year.
Contributing to Edinburgh’s growth were two RBS Six Nations ties at Murrayfield and the Valentine’s Day weekend which saw occupancy levels rise to 97% and room rates soar to £154.46.
Hoteliers’ sales on the books for the next two months indicate a continuation of the positive start to the year in Edinburgh with bookings roughly 5% higher compared to the same period last year. Commenting on Edinburgh’s February performance, Edinburgh Hotels Association Chairman, Tristan Nesbitt stated: “Exciting events such as the Six Nations Championship help to attract visitors to our city outside the peak summer season. It is essential that Edinburgh continues to present a diverse calendar of events all year round, as well as offering the best possible hospitality experience to visitors of all budgets.”
Whilst room occupancy fell in Glasgow, room revenues continued to grow with February marking the 14th consecutive month of Average Room Rate (ARR) growth. The average cost of a room in the city was £64.15, up 1.3% on a year ago. Combining the occupancy and revenue performance in Glasgow during the month, RevPAR was down (only marginally by 0.4%) for the first time in 14 months reaching £49.23.
Despite the relatively flat performance overall, hoteliers in Glasgow also capitalised on the Valentine’s Day weekend as occupancy reached 97% and ARR significantly outperformed the monthly average.
With many festivals and events on the horizon over the next two months, demand for accommodation continues to be strong as forward bookings were around 4% above those recorded a year ago.
For the second consecutive month both occupancy and ARR fell in Aberdeen. However, despite the 5.3% decrease in ARR compared to February 2014, room rates in Aberdeen remained the highest of the Scottish cities at £93.97. The weaker room revenue performance combined with a decrease in occupancy generated for the third successive month negative RevPAR growth (-10.1%) with RevPAR standing at £64.79.
Commenting on Aberdeen’s performance, Aberdeen City and Shire Hotels Association Chairman, Chris McGuinness pointed out that members of the trade organisation are taking a measured approach to the slump in the energy sector. “We know only too well that the oil industry has peaks and troughs: the sector has enjoyed a phenomenal performance over the past couple of years, so the current downturn has not been unexpected. However, we are not panicking by entering into a rates war as previous experience tells us that this will not be a long-term issue.”
Despite a broad line up of leisure and business events over the next two months, a continuation of declining accommodation demand is apparent with forward bookings down by 4% compared to last year.
Mr McGuinness added: “The current decline will not last forever, and as global demand for oil starts to increase so too will the price of Brent crude oil. When that happens, Aberdeen’s hotel industry will be in a stronger position than before with more bedroom availability for those visiting the city on business.”
Sean Morgan, Managing Director at LJ Research, said: “Welsh and Italian rugby fans have no doubt contributed to the growth recorded by Edinburgh hoteliers last month. Following two successive months of RevPAR growth and positive forward bookings performance for the coming months, 2015 is shaping up nicely for hotels and other tourism businesses in the capital. It will be interesting to see how performance continues during the shoulder months prior to the major summer festivals. In Aberdeen, our LJ Forecaster results have identified a steepening decline in hotel performance as both occupancy and room revenue metrics fell by 5% compared to last year. Next month’s figures will help us better understand the extent to which corporate demand for accommodation in the city is being buoyed by the recovering oil prices.”
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