- Hotel Market Research
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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 increases in occupancy and room rates in Glasgow and Edinburgh, but sustained losses for the Aberdeen hotel market in December 2015.
In Glasgow and Edinburgh, hoteliers recorded occupancy growth of 2.7% and 2.1%, respectively, compared to December 2014. This amounted to an average occupancy in December 2015 of 71.3% in Glasgow and 80.4% in Edinburgh.
Hogmanay celebrations in the country’s two largest cities contributed to this growth with 95% of Glasgow rooms and a staggering 98% of Edinburgh rooms sold on New Year’s Eve.
Coinciding with the growth in occupancy and bucking the trend of the past few months, Glasgow and Edinburgh hotels achieved solid average room rate (ARR) growth of 2.6% and 3.4%, respectively. This resulted in ARR of £66.79 in Glasgow and £94.05 in the capital.
Festive events contributed to drive up demand in both cities during the month. In Glasgow, a notable increase of 10% in weekend rates was apparent as the city continued to benefit from high profile acts at the SSE Hydro, including Simply Red, Duran Duran, Texas’ 25th anniversary tour and Madonna concluding the European leg of her Rebel Heart Tour.
For New Year’s Eve itself, rates in Glasgow soared to £90.98 while Edinburgh hoteliers enjoyed a steady run up with ARR reaching a whopping £229.66 on Hogmanay.
The upbeat occupancy and revenue figures combined to generate strong yield or Revenue Per Available Room (RevPAR) growth for the month of 5.7% and 5.6% for Glasgow and Edinburgh, respectively.
Meanwhile in Aberdeen, hotel market challenges were again starkly evident. Notably below the levels recorded in Glasgow and Edinburgh, just over half (51.6%) of hotel rooms in Aberdeen were occupied in December 2015. This signified a drop of 16.9% in occupancy and marked the 15th consecutive month of year-on-year occupancy losses: a gloomy trend which highlights the extent to which ongoing challenges in the energy sector are affecting the Granite City.
Alongside the decline in occupancy, hotels in Aberdeen recorded shrinking ARR. The average cost of a room in the city tumbled by 19.8% compared to last year to £72.13. The December rates continued to be driven by the traditional corporate markets as midweek (Monday to Thursday) ARR was £79.99 compared to the weekend (Friday to Sunday) ARR of £58.20.
Coinciding with the plummeting prices of Brent Crude during the month, a historically low RevPAR performance of £37.25 – which constituted a 33.3% drop compared to last year – was achieved in Aberdeen.
Councillor Frank McAveety, Leader of Glasgow City Council and Chair of Glasgow City Marketing Bureau, said: “Glasgow’s tourism industry – from our hotels and restaurants to our retailers, venues and taxis – was operating at full tilt during December. The city was jam-packed, with thousands of Glaswegians and visitors alike drawn into the city centre by the strength of our festive offering and underpinned by the success of our highly-visible Glasgow Loves Christmas TV marketing campaign. As this latest report from LJ Research shows, Glasgow is undoubtedly Scotland’s fastest growing tourism destination and the real success story of our three major cities.”
John Donnelly, Chief Executive, Marketing Edinburgh, said: “The substantial year on year growth in occupancy and room rates for Edinburgh throughout December is a testament to the ever increasing popularity of the city’s overall winter festival celebrations and retail offering throughout the month. However, when it comes to Hogmanay and the incredible 98% occupancy, it simply reaffirms Edinburgh’s position as one of the world’s most iconic and must-attend destinations to welcome in the New Year.”
Sean Morgan, Managing Director at LJ Research, said:
“Last month our forward booking analysis identified evidence of a much welcomed upturn in prospects for Glasgow and Edinburgh hotels. It’s good news to see a realisation of this as hoteliers achieved strong RevPAR growth of around 5.5% in December. This upbeat finish to the year will do much to shape expectations and momentum for 2016 among hotels and other tourism businesses in these cities.
In Aberdeen, the downward spiral of hotel performance linked to ongoing energy sector challenges culminated this month with a new record low RevPAR. With the price of oil hovering at around $30 a barrel and evidence of a significant reduction in demand for accommodation in the coming months, it seems likely that hotel market challenges in Aberdeen will continue into 2016.”