Travellers are upgrading their choice of hotel as cost of living pressures appear to be easing, according to new analysis.

Scotland’s mid market and luxury hotels benefited at the expense of budget-priced alternatives, with more visitors opting for extra luxury.

The trend also suggests that visitors will be unphased by the additional cost of a room resulting from tourist taxes being imposed by a number of local authorities.

Data compiled and produced by Hotstats and analysed by RSM UK shows occupancy of Scotland’s mid market hotels rose from 74.9% in 2023 to 78.5% in 2024.

Luxury hotels remained consistent year-on-year at 69.8%, whereas budget hotels fell from 81.2% in 2023, to 77.6% in 2024.

Average room rates of luxury hotels jumped from £275.71 in 2023 to £287.79 in 2024. Mid market hotels also saw room rates increase from £111.68 to £124.59. Rates for budget hotels rose slightly from £100.40 in 2023 to £106.23 in 2024.

Gross operating profits (GOP) per available room of luxury hotels in Scotland were up from £106.76 in 2023 to £123.81 in 2024. Mid market GOP increased from £38.92 to £49.74, whereas budget hotels saw flat growth from £41.51 to £41.72 for the same period. 

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “Scotland’s luxury and mid market hotels were the big winners across hotel classes in 2024, at the expense of budget hotels.

“As the cost-of-living pressures eases, tourists have had more disposable income, so we’ve seen a shift towards high-end, quality experiences, boosted further by the introduction of direct flights to Edinburgh from the US and Dubai.”

He added: “There are still some challenges for the hotel industry heading into 2025. With consumers now more willing to spend more money on high-end, quality experiences, budget hotels are feeling the squeeze of falling occupancy rates, which they rely on to offset operating costs.

“There are also the incoming cost pressures from increasing labour costs, which will impact cashflow this year. However, as consumers expect a certain level of service in mid market and luxury hotels, reducing staff may not be an option. Hoteliers therefore need to prioritise optimisation and investment in technology to enhance efficiencies and consumer experience.”