Rise in price of accommodation
Glasgow leads UK growth for cost of a hotel room
Glasgow Hotels are seeing price rises
A significant boost to hotel room numbers in Glasgow helped meet surging demand as the cost of staying in the city rocketed over the past year.
Scotland’s largest city added 10.5% more rooms last year as the price of accommodation grew by more than 3.5 times the national average. Edinburgh’s prices remained static as hotels fended off competition from “disruptive” lettings organisations such as Airbnb.
PwC’s latest UK Hotels Forecast Update shows Glasgow’s hotel sector was the fastest growing in the UK when measured by average daily revenue (ADR), with its 6.1% growth to £76.52 well ahead of the national average of 1.7%
Occupancy rates slipped 1.7% to 80.7%, largely due to the opening of almost 1,000 new rooms, while the key Revenue Per Available Room (RevPAR) metric grew by 4.4% to £61.77, marking a successful year for hoteliers in the city, though growth has slowed from the 5.2% seen in 2017.
Edinburgh remained the most expensive place to spend the night in the UK outside of London, at £103.72, up 0.5% from the previous period. A reduction in occupancy rate however, to 82.9% from 83.6%, meant that RevPAR slid by 0.3% to £86.04. This follows +12.4% RevPAR growth in 2017.
Edinburgh hoteliers face further pressure from the Scottish Government’s proposed tourist tax which could add 2% or £2 to the cost per night of staying in the capital. The measure has the support of councillors but requires legislation from the Scottish Parliament, which is not expected until next year.
Claire Reid, head of retail & leisure for PwC in Scotland, commented: “Edinburgh continues to enjoy the status of being the most in-demand city in the UK outside of London.
“This is reinforced when you consider that hotel operators in Edinburgh have been challenged more than anywhere else in Scotland by disruptive new accommodation offerings, and yet occupancy rate remains well above 80%.”
A Hilton recently opened at Edinburgh airport which is seeing a boom in demand (pic: Terry Murden)
Edinburgh has seen almost 3,000 new rooms in the past five years and a further 2,000 are set to open this year and in 2020. New hotels to open this year include the Hyatt Regency (187 rooms), a Point A and a Yotel (280 rooms). In 2020 the Moxy Edinburgh Fountainbridge opens as well as the Voco Edinburgh (150 rooms).
There has also been investment at Edinburgh Airport, where record numbers of air travellers are increasing demand for on-site hotels. In January Marriott International opened a further Moxy hotel at the Airport.
The growth rate in rooms in Edinburgh of 3.9% was ahead of the UK average of 1.3%.
In Aberdeen, the growing confidence in the local economy did not translate to growth in the city’s hotel sector. While the occupancy rate climbed 4.4%, it remained the lowest of the 22 UK cities analysed by PwC, at 64.8%. The average daily rate fell by 3.1% to £56.14, leading to a modest 1.1% increase in RevPAR to £36.36.
In January the 50 room Highland Hotel closed its doors, leaving Aberdeen with 136 hotels offering 7,030 rooms – down 2.1% on the previous year. However, the opening of the Sandman Signature Aberdeen Hotel and the proposal to develop the hospital site at Woolmenhill illustrates a willingness among investors.
Kevin Reynard, Aberdeen senior office partner for PwC, commented: “The stability that Aberdeen and the surrounding area craves is returning, of that there is no doubt. However it will take time to fully adapt following the ongoing impact of the 2014 collapse in the oil price.
“With less (sic) people required in Aberdeen on Oil & Gas business it follows that hoteliers will face challenges, and while those challenges remain it is encouraging to see an increase in RevPAR.
“The Aberdeen Harbour expansion is also likely to have a positive impact on the city with cruise ships set to arrive from 2020, while the opening of The Event Complex Aberdeen in the summer will increase demand for hotel rooms. Notably, a 4-star Hilton with 200 bedrooms and an Aloft Hotel with 150 bedrooms are scheduled to open close to the venue.”