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Airbnb testing hotels

Short term lets now used by more than half Edinburgh’s peak visitors

Festival-goers are opting for short term lets (pic: Terry Murden)

Short term lettings are being blamed for a softening of hotel demand during Edinburgh’s peak tourism season, with more than half of city visitors now opting for Airbnb-style accommodation.

Key data shows a 2% fall in hotel occupancy in 2018 with data analysts saying indications point to a further fall this year.

While the number of visitors is rocketing, more are choosing to stay in rented rooms, many through booking sites such as Airbnb, according to figures compiled by STR, a provider of data benchmarking, analytics and marketplace insights for the global hospitality sector.

More than half (55%) of leisure visitors to Edinburgh have stayed in hotels over the past 12 months whereas 20% have opted for Airbnb or other short term rental properties. However, for the first time the survey shows that during the key tourism periods of Q2 and Q3 2018, the proportion of leisure visitors staying in hotels fell below 50%.

Revenue per available room (RevPar) for Edinburgh hotels rose by 8% in 2016 and 11.1% in 2017 as both occupancy and average daily rate (ADR) grew, with an average rate of £165.45. 

However, during the 2018 Edinburgh Festival there was 2% decline in occupancy and softer ADR growth (+3.9%) leading to RevPar growth of just 1.8%.

As of 29 July, four days prior to the Festival opening, hotel bookings were trailing behind 2018 levels for 22 of its 25 nights. “With one night on par in terms of forward-looking occupancy and only two nights ahead of the previous year, there is indication that occupancy during the festival will decline in comparison with 2018,” said STR.

“Are Airbnb and other festival lets to blame? Possibly, yes. It has been reported that there are 12,000 Airbnb properties in Edinburgh, half of Scotland’s total, and in 2018 60% of these listings were for fewer than 30 days.”

While the short term lettings market is booming, Edinburgh hotels provide 15,894 rooms across 239 properties. The sector has been expanding in each of the eight quarters leading to Q1 2019, growing at an average rate of 4.9%, which also has its own impact on hotel occupancy.

STR’s latest forecast is that Edinburgh’s supply will grow more aggressively between Q3 2019 and Q3 2020—at an average rate of 7.9%.

Sean Morgan, STR’s director of research, said: “As travellers increasingly seek unique, authentic and affordable experiences, Edinburgh has seen a surge in supply of alternative accommodations.

“During the month of August, when the population of the city doubles, Airbnb supply has grown significantly to absorb the additional demand, much to the dismay of hoteliers.

“However, as the Scottish government considers a range of measures to curb the growth of short-term rentals, there may be light at the end of the tunnel for hoteliers and some easing of competition from this burgeoning sector.”

Granton Marina go-ahead

The Edinburgh Marina development in Granton’s Western Harbour, which will includes a new hotel and more than 1,850 homes, has been given the go-ahead by a Scottish Government Reporter.

The £500m development includes a Hyatt Regency Spa and Conference hotel, a retirement scheme, homes for sale and rent, a medical hub and neighbourhood shopping. 

Strong pre-sales enquiries have already been received following the launch of the first phase of Royal Wharf, the retirement scheme.

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