- 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 contrasting fortunes for hoteliers in Scotland’s three largest cities in June.
Demand for hotel beds was highest in Glasgow as room occupancy soared to 92.7% (a growth of 7.4% compared to June 2014). Buoyed by a number of large scale business and leisure events, room occupancy in the city was 95% or above on 16 separate nights during the month. Edinburgh hotels too benefitted from a surge of business and leisure guests as average occupancy for the month was an impressive 90.9%. Meanwhile, in Aberdeen the trend observed throughout the year was again apparent as fewer rooms were sold compared to last year (69.1% compared to 79.9% in June 2014 which constituted a fall of 13.5%).
Average room rate (ARR) was highest in Edinburgh as the average cost of a room was £112.62 followed by Aberdeen (£86.33) and then Glasgow (£80.63). Comparing performance with last year, these figures showed buoyant growth of 15.4% in Glasgow and, for the second month in a row, a double digit decline (-12.7%) in Aberdeen. Meanwhile, flat lining performance was evident in Edinburgh.
Factoring in both occupancy and average rate performance, average Revenue Per Available Room (RevPAR) or yield – the industry’s main performance measure – was highest in Edinburgh at £102.42 (up by 1.2% compared to June 2014). RevPAR in Glasgow soared by 24.3% compared to last year to £74.76 which for the second consecutive month outperformed Aberdeen (£59.66) where yields fell by 24.6%.
Looking to the next few months ahead, the LJ Forecaster Intercity Report shows that accommodation bookings are building steadily for hoteliers in Glasgow and Edinburgh and to a lesser extent in Aberdeen. For the latter, there is evidence of a double digit reduction in bookings for July which signals a continuation of challenging trading conditions for the hospitality sector in the North East.
Sean Morgan, Managing Director at LJ Research said: “As we near the first anniversary of Glasgow’s Commonwealth Games, the spotlight is again on Scotland’s largest city. Significant conference activity combined with world renowned music and events have helped to generate remarkable growth for hoteliers in the city. Conversely, the clouds continue to darken in the North East as hotel demand and rate for the second successive month each fell by over ten percent. News that oil supply is set to expand due to the relaxing of Iran sanctions is likely to generate even greater uncertainty for hotels in Aberdeen.”
Scott Taylor, Chief Executive of Glasgow City Marketing Bureau (GCMB) said: “Glasgow continues to be the go-to destination for major events and international conferences with substantial visitor and delegate footfall contributing to a tangible increase in our June figures compared to the same time last year.”
Looking towards the future, he continued: “By the end of the year Glasgow will see the opening of three new hotels including the Village Hotel, the Travel Lodge and ibis Styles. Not only will these new openings stimulate job creation and provide an extensive economic boost to the local economy; but it will meet demand in the city’s hospitality and tourism industry as we continue to welcome growing numbers of visitors to enjoy all the city has to offer.”
Iain Watson, Chairman of the Aberdeen City and Shire Hotels’ Association said: “Room occupancy is falling and while we need to acknowledge this as a serious issue, we do need to put it in context. For the past three years demand has been at an exceptional level: it would never have been possible to sustain that long-term and what we are now seeing is a return to the levels pre-2012.
“We also need to remember that the number of hotel bedrooms in Aberdeen has significantly increased and that the number of hotels being developed continues to grow. The increased number of bedrooms impacts on occupancy levels but, more importantly, this needs to be viewed positively as it now gives leisure and business travellers more choice.”
“We are aware that there are fewer business travellers in the city because of the oil and gas downturn, but the number of leisure travellers is increasing because of the work of our partners at VisitAberdeen in highlighting the exceptional rates available at the weekend.”